BEFORE THE MADURAI BENCH OF THE MADRAS HIGH COURT DATED : 28/04/2006 CORAM: THE HONOURABLE MR.JUSTICE P.JYOTHIMANI W.P.No.1064 of 2004, W.P.No.1065 of 2004 and W.P.M.P.Nos.1052 and 1053 of 2004 S.Marimuthu ... Petitioner in W.P.No.1064 of 2004 I.Jeyaraman ... Petitioner in W.P.No.1065 of 2004 Vs. 1.The Deputy Registrar of Co-operative Societies(Housing), Madurai Circle, Madurai - 20. 2.The Special Officer, 2591, Madura Coats and other Public Service Co-op. Housing Society Ltd., 7/28, Theni Main Road, P.P.Chavadi, Madurai. ... Respondents in both the W.Ps. PRAYER Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, to call for the records relating to the order made in Tha.Va.No.53/2003-2004/Pa.Tho. dated 14.07.2004 on the file of the first respondent quash the same in so far as the petitioner is concerned. !For Petitioners .... Mr.R.Singaravelan for Mr.K.Samydurai ^For 1st Respondent .... Mr.K.V.Vijayakumar, Special Government Pleader. For 2nd Respondent .... Mr.S.Seenivasagam :ORDER
Heard the learned counsel appearing for the petitioners and the learned
Special Government Pleader for the respondents.
2. In these two writ petitions, the petitioners have chosen to challenge
the order of the first respondent dated 14.07.2004 insofar as it relates to the
petitioners under the impugned order of the second respondent purported to have
been issued under Section 87 of the Tamil Nadu Co-operative Societies Act. The
first respondent has issued surcharge proceedings against the petitioner in
W.P.No.1064 of 2004(S.Marimuthu) for the recovery of the amount due to loss to
the second respondent to the extent of Rs.1,17,213/-. Likewise, in respect of
the petitioner in W.P.No.1065 of 2004 (I.Jeyaraman) for having caused loss to
the second respondent society an amount of Rs.3,82,551/- along with interest at
the rate of 18% was directed to be paid jointly along with other persons.
3. The writ petitioners while working as Special Officer of the second
respondent Co-opearative society have paid salary to one Mrs.K.R.Latha. Her
appointment was subsequently terminated as illegal and audit objections were
raised. It was fixing the responsibility on the petitioners that she was
appointed illegally, the above said impugned proceedings came to be passed. The
said impugned order is challenged by the petitioners on various grounds
including that when a vacancy of a typist arose in the second respondent society
one Mrs. K.R.Latha who was then working as a typist in Pandiyan Roadways
Corporation Workers Co-operative Stores Limited, Madurai, has applied for the
post and after obtaining concurrence from the said Workers Co-operative Stores
Limited and no objection, a resolution of the second respondent was passed and
sent to the Registrar of Co-opertive Societies who issued order through the
first respondent to appoint the said Latha as a typist in the second respondent
society and therefore, there was no justification in fixing the responsibility
on the petitioners. The petitioners have only appointed as per the orders of
the Registrar under the Tamil Nadu Co-operative Societies Act and there was no
negligence on their part.
4. Moreover, the petitioners have challenged the impugned proceedings also
on the ground of laches or delay namely that when the appointment was made in
respect of said Latha on 08.09.1996, the show cause notice came to be issued on
17.01.2004 after 7 years.
5. The writ petitioner in W.P.No.1064 of 2004 has infact appeared before
the Appellate Authority under the Tamil Nadu Shops and Establishments Act appeal
filed by the said K.R.Latha and given evidence as R.W.I and fairly defended the
second respondent. Infact, as against the order of the Appellate Authority
under the Tamil Nadu Shops and Establishments Act, a legal opinion was given by
the Government Pleader from the High Court, Madras stating that it is not a fit
case for further filing of any writ petitions against the order of the Appellate
Authority under the provisions of Tamil Nadu Shops and Establishments Act. 6.
That apart, the petitioners have not in their individual capacity made the
appointment of the said Latha and they have only implemented the orders of the
Registrar of Co-operative Societies. It is the further case of the petitioners
that when once the said petitioner in W.P.No.1064 of 2004 has taken effective
steps to defend the second respondent imputing motive on the Appellant Authority
namely quasi judicial authority is degrading the integrity of an officer
appointed under law. It is the further case of the petitioners that even
assuming that any irregularities in the appointment of the said Latha is there
it does not attract Section 87 of the Tamil Nadu Co-operative Societies Act. In
fact, when a proposal to take disciplinary action against the petitioner in
W.P.No.1065 of 2004 was sought to be made, the Government by G.O.(T)No.170 dated
30.06.2003 has decided not to be proceed with the disciplinary proceedings after
considering explanation submitted by him. Whileso, the impugned proceedings of
the first respondent against him under Section 87 of the Tamil Nadu Co-operative
Societies Act for surcharge is unsustainable.
7. On the other hand, it is the case of the second respondent who has
filed the counter affidavit that as per the decision of the Full Bench of this
Court, no writ petition lies against the co-operative institution as a matter of
course. Further it is the case of the second respondent that the impugned order
is appealable under Section 152 of the Tamil Nadu Co-operative Societies Act and
therefore, this writ petition is not maintainable. It is the further case of
the second respondent that when the petitioners were holding the post of
supervising the co-operative society as Sub Registrar, the proposal for
appointment of Latha, her initial appointment was not proper since she was not
worked as typist 10 years and her services were not regularised in the society
where she was working and in such circumstances, both the societies have not
passed resolution for relieving her and also taking her and therefore, the
proceeding becomes void ab initio. The appointment of said Latha cannot be
treated as an appointment by transfer by prior approval but a fresh appointment.
Since it is an illegal appointment by payment of salary to her the second
respondent had to incur huge loss. It is proved on the part of the petitioners
that they have wrongly recommended the proposal for transfer based on false
particulars and it was based on the audit objection, the proceedings under
Section 87 of the Tamil Nadu Co-operative Societies Act was initiated. The
period of limitation mentioned in Section 87(1) of the Act namely, 7 years for
the purpose of initiating action should be taken from the date of knowledge
which came to the lime light only after the audit report. The audit objection
was received in October 2003 and it was only based on the said objection the
second respondent came to know about the irregularities committed by the
petitioners. Therefore, according to the second respondent, the cause of action
for invoking powers under Section 87 of the Act is the source of information
under Sections 80, 81,82,83 and 84 of the Act which is based on inspection and
investigation of books etc.,
8.Mr.R.Singaravelan, learned counsel appearing for the petitioner would
submit that apart from the fact that for the action to be initiated under
Section 87 of the Act a fraudulent intention or wilful negligence must be the
basic requirement. In the present case, it was not as if the petitioners have
made appointment of said Latha but it was based on the resolution passed by the
second respondent itself as approved by the first respondent as per the
direction of the Registrar of the Co-operative Societies as a Special Officer,
performing supervisory function, she was appointed and the petitioners cannot
independently make any decision. Therefore, according to the learned counsel
for the petitioner there is no wilful or deliberate misconduct or negligence.
He would rely upon the judgment of this Court in B.S.Somasundaram Vs.The
Thanjavur District Co-operative Supply Market Society Ltd., represented by the
Liquidator, Tiruvarur and others reported in 1983 (II) MLJ 523 by referring to
the corresponding section 71 of the old Act of 1961 which is equivalent to the
present Section 87 of the new Act to say that it is not merely negligence that
attracts the surcharge proceedings but it must be proved to be a wilful or
deliberate conduct. He has placed reliance on another judgment reported under
the said old Act in Sathyamangalam Co-operative Urban Bank Limited Vs.The Deputy
Registrar of Co-operative Society and another reported in 1980 (II) MLJ 17 for
the same proposition.
9. Reliance has also been placed on a judgment of the Division Bench of
this Court by referring to the said act particularly Section 71 in Karuppiah.P.
Vs. The Deputy Registrar of Co-operative Societies and another reported in 1989
W.L.R 272. Further reliance has also been placed on the judgment of this Court
in P.N.Chockappan and others Vs. The Special Tribunal for Co-operative Cases,
High Court Campus, Madras and others reported in 1999 (I) MLJ 587 for the same
proposition. To show that the negligence under Section 71 of the old Act should
be wilful negligence he has also relied upon another judgment in M.Sambandam Vs.
The Deputy Registrar (Credit) Co-operative Societies, Mylapore, Madras and
others reported in 1999 (3) MLJ 310. The learned counsel would also submit
that inasmuch as the impugned proceedings are without jurisdiction, availability
of alternative remedy of filing of appeal under Section 152 of the Tamil Nadu
Co-operative Societies Act is not a bar for invoking the jurisdiction of this
Court under Article 226 of the Constitution of India. For that proposition he
has also placed reliance on the judgment of the Supreme Court in State of
Himachal Pradesh, Vs. Raja Mahendra Pal and others reported in 1999 (S.C.) 1786.
It is also submitted by the learned counsel for the petitioners that even
otherwise after two years of filing of the writ petition, the petitioners cannot
be denied the right in the writ petition on the basis of alternative remedy.
10. On the other hand, Mr.Seenivasagam, learned counsel appearing for the
second respondent has placed reliance on the judgment of the Full Bench of this
Court reported in 2000 4 CTC 556 wherein the Full Bench has held that filing of
the writ petition against the order passed under the Co-operative Societies Act
cannot be entertained as a matter of course. Therefore, according to the
learned counsel, the writ petition is not maintainable especially in the
circumstances that an appeal lies against the order under Section 87 of the Act
to the Appellate Authority under Section 152 to the Tribunal. The learned
counsel would submit that the 7 years period of limitation under Section 87 of
the Tamil Nadu Co-operative Societies Act has to be construed from the date of
knowledge as per Section 80, 81, 82 and 83 and in the present case it was only
after the audit report and enquiry report was filed in October 2003, the
proceedings under Section 87 were initiated and therefore, there is no delay on
the part of the second respondent in having initiated the surcharge proceedings.
It was only after the submission of such reports the proceedings were initiated
by the first respondent. The receipt of the report under Section 82 of the
Tamil Nadu Co-operative Societies Act was on 17.01.2004 and therefore, it can
never be said that the proceedings initiated is barred by limitation. The
learned counsel would also submit that as per rules framed under Section 149
(2) of the Act, the employment of the second respondent should be after
notifying the employment exchange in such circumstances, the appointment of the
said Latha would amount of breach of Trust and against the norms and it should
be treated as wilful negligence on the part of the petitioners. The learned
counsel contended that while the said Latha was terminated on 21.09.2002 the
appeal filed by her under Section 41(2) of the Tamil Nadu Shops and
Establishments Act in which the petitioners in W.P.No.1064 of 2004 has given
evidence on behalf of the second respondent, an order has been passed by the
Appellate Authority under the said Act on 03.10.2002 which is within 12 days
from the date of termination of the said Latha and according to the learned
counsel for the second respondent it speaks volume about the involvement of the
petitioners in colluding in the Shops and Establishments Appeal.
11. I have heard the learned counsel for the petitioners as also the
respondents and perused the entire records.
12. At the outset, as rightly pointed out by the learned counsel for the
petitioners, the law is well settled. In any of the surcharge proceedings the
condition precedentis that the liability can be fixed on the employees of the
co-operative societies when it is found that they were intentionally committing
some mistake and negligence. The judgments referred to by the learned counsel
for the petitioners which relate to Section 71 of the Tamil Nadu Co-operative
Societies Act 1961 which is in pari materia, the same as that of the Section 87
of the present Tamil Nadu Co-operative Societies Act, 1983, show categorically
that in all those proceedings of surcharge the conditional precedentis that
there must be a wilful negligence on the part of the co-operative employees.
13. In view of the facts and circumstances of the case which show that by
making appointment of the said Latha who was admittedly not by the petitioners
on their own accord but on the basis of the direction issued by the Registrar of
Co-operative Societies as seen from the letter of the first respondent himself
in his letter dated 09.08.1996, the petitioner cannot be held to be solely
responsible for her appointment.
14. A reference to the said letter dated 19.03.2001 written by the first
respondent to the Special Officer by making a reference of a letter of the
Registrar dated 26.08.1996 would show that the Registrar of Co-operative
Societies has requested to inform the matter about the appointment of Latha as
typist and therefore, it can never be said that the appointment of said Latha
was directly done by the petitioners.
15. Likewise, a reference about the proceedings of the second respondent
dated 20.08.1996 also refers about the Registrar’s direct letter dated
15.08.1996. Eventhough the said letter dated 20.08.2005 has been signed by the
petitioner in W.P.No.1065 of 2004 as Special Officer (Housing), the same is
stated to have passed based on the communication of the Registrar of Co-
operative Societies.
16. In view of the same, I have no hesitation to come to the conclusion
that the appointment of the said Latha is not by any stretch of imagination by
the petitioners on their own accord. In any event there are absolutely no
records to show that there was any wilful negligence on the part of the
petitioners.
17. The contentions raised by the learned counsel for the second
respondent imputing motive on the Appellate Authority under the Shops and
Establishments Act which was initiated by K.R.Latha under Section 41(1) of the
said Act challenging her termination by the second respondent is not
appreciable. The mere fact that the said Latha was terminated from service on
21.09.2002 and the Appellate Authority under the Shops and Establishments Act
has passed orders in the appeal on 03.10.2002 setting aside the termination
order itself cannot be a ground to impute motive and in any event that can never
be a ground for taking action against the petitioner in W.P.No.1064 of
2004(S.Marimuthu) who was Special Officer and has infact given evidence before
the Appellate Authority as R.W.-I in support of the second respondent. An
attempt made on behalf of the second respondent to impute such motive is
unbecoming of a public authority which cannot be appreciated or encouraged in
the judicial parlour.
18. There is one other situation that admittedly in respect of the writ
petitioner in W.P.No.1065 of 2004, the Government itself has dropped further
departmental action as seen in the G.O.(T)No.170 dated 30.06.2003. Whileso, it
is not explained as to how the surcharge proceedings has been initiated against
the said petitioner also. This only shows that the respondents somehow or other
want to implicate the petitioners in respect of certain act which was not
exclusively within the control of the petitioners. While admittedly, the
appointment of the said Latha itself was on 09.08.1996, the show cause notice
issued in respect of the conduct to the petitioners is on 17.01.2004 which is
clearly beyond the period of 7 years.
19. A reference to the impugned order would show that the impugned
proceedings under Section 87 of the Tamil Nadu Co-operative Societies Act having
initiated by the first respondent suo motto and there is absolutely no reference
about any from audit report or enquiry report. The counter filed by the second
respondent now developing as if the enquiry report has subsequently revealed the
misconduct is unacceptable for the simple reason that such report has not been
mentioned in the impugned order.
20. In view of the reasons stated above, in my considered view that the
impugned order passed by the first respondent insofar as it relates to the
petitioners is not sustainable.
21. In view of the same, the impugned order passed by the first respondent
insofar as it relates to the petitioners in these writ petitions is quashed and
the writ petitions stand allowed. There is no order as to costs.
Consequently, connected W.P.M.Ps. are also closed.
sms
To
1.The Deputy Registrar of
Co-operative Societies(Housing),
Madurai Circle,
Madurai – 20.
2.The Special Officer,
2591, Madura Coats and other
Public Service Co-op. Housing
Society Ltd.,
7/28, Theni Main Road,
P.P.Chavadi,
Madurai.
