Madras High Court
Veerathamizhan vs The Administrator on 28 April, 2021
W.A.Nos.1664 to 1666/2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 28.04.2021
CORAM
THE HONOURABLE MR.JUSTICE T.RAJA
and
THE HONOURABLE MR.JUSTICE V.SIVAGNANAM
W.A.Nos.1664 to 1666/2010 and
M.P.No.1/2010 in all the 3 appeals
Veerathamizhan ... Appellant in W.A.No.1664/2010
Rajamohan ... Appellant in W.A.No.1665/2010
Arulmani ... Appellant in W.A.No.1666/2010
-vs-
1. The Administrator,
Nadipisai Pulavar K.R.Ramasamy
Co-operative Sugar Mills Limited,
Thalainayar,
Mayiladuthurai Taluk,
Nagapattinam District.
2. The Principal District Judge,
Nagapattinam.
3. The Joint Registrar/Administrator,
MRK Co-operative Sugar Mills Limited,
Sethiyathoppu, Cuddalore-608 702.
4. The Commissioner for Sugar Department,
Tamil Nadu Sugar Department,
474, Anna Salai,
Nandanam, Chennai-35 ... Respondents in all W.As.
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W.A.Nos.1664 to 1666/2010
Writ Appeals filed under Clause 15 of the Letters Patent against
the Common Order dated 22.01.2010 passed in W.P.Nos.14827 to
14829/2001 by a learned Single Judge of this Court.
For Appellants : Mr.S.Sounthar
For respondents : Mr.L.P.Shanmugasundaram,
1, 3 and 4 Spl.G.P. (Co-op.)
COMMON JUDGMENT
(Judgment of the Court was pronounced by T.RAJA, J.)
The above three Writ Appeals have been brought up questioning
the correctness of the impugned Common Order passed by the learned
Single Judge of this Court in W.P.Nos.14827 to 14829/2001 dated
22.01.2010, reversing the Common Judgment and Decree passed by
the learned Co-operative Tribunal, namely, the Principal District Judge,
Nagapattinam, the 2nd respondent herein in CMA.Nos.22 to 24/2000,
thereby allowing the appeals and setting aside the Section 87
Proceedings initiated against the appellants on two grounds, namely,
(a) there was a violation of the principles of natural justice in not
furnishing a copy of the Enquiry Report under Section 81; and (b) the
six months time to pass an order on completion of the 87 proceedings
contemplated under Section 87(1) of the Co-operative Societies Act
has also not been followed.
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2. Mr.S.Sounthar, learned Counsel appearing for the
appellant in all these three appeals assailing the impugned Common
Order pleaded that when the appellants were working as Cane Officers
in the 1st respondent Co-operative Society registered under the Tamil
Nadu Co-operative Societies Act and Rules made therein, between the
period 06.06.1995 and 13.09.1996, an audit inspection has been
made under Section 82 of the Tamil Nadu Co-operative Societies Act
(hereinafter referred to as, 'the Act'). During the course of the said
audit made u/s.82 of the Act, it was noticed that the appellants,
namely, Veerathamizhan, Rajamohan and Arulmani, had caused loss to
the tune of Rs.2,72,982.85p to the said Co-operative Society. When a
report was submitted to that effect, the Administrator of Nadipisai
Pulavar K.R.Ramasamy Co-operative Sugar Mills Limited, Thalainayar,
Mayiladuthurai Taluk, Nagapattinam District, the 1st respondent
herein, sought permission from the Commissioner of Sugar Cane to
initiate Surcharge Proceedings against the appellants under Section 82
of the Act. After obtaining necessary permission from the
Commissioner/Registrar of Co-operative Societies for Sugar Mills for
initiation of surcharge proceedings by an order dated 02.05.1998,
the Joint Registrar/Administrator, MRK Co-operative Sugar Mills
Limited, Sethiyathoppu, Cuddalore-608 702, the 3rd respondent herein,
was appointed as Surcharge Officer. Thereafter, a Surcharge Notice
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was also issued on 31.08.1999. On receipt of the same, the three
Cane Officers/appellants herein submitted their explanation on
15.09.1999 denying their involvement in the alleged loss said to have
been caused to the 1st respondent Co-operative Society. Thereafter, a
detailed enquiry was also held. Finally, the Surcharge Officer passed a
Surcharge Recovery Order under Section 87 (1) of the Act on
26.02.2000 fixing the responsibility that Rs.1,03,709.80p should be
payable by Mr.P.Veerathamizhan, Rs.1,02,618.15p by Mr.Rajamohan
and Rs.66,654.90 by Mr.Arulmani with interest at the rate of 21% p.a.
3. Learned Counsel for the appellants further pleaded that
aggrieved thereby, all the appellants approached the 2nd respondent
Co-operative Tribunal, namely, the Principal District Judge,
Nagapattinam, raising inter alia that the report filed under Section 81
of the Act was not furnished to them and thereby Sec.87 proceedings
are vitiated due to the non-compliance of the principles of natural
justice. Secondly, when the appellants have made a representation
requesting the Officer holding Sec.87 proceedings to permit them to
engage a counsel to assist them, after receiving the same, the
appellants were not provided with any legal assistance, as a result,
they were not able to effectively take part in the 87 proceedings.
Thirdly, when the 87 proceedings were initiated on 02.05.1998 and the
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W.A.Nos.1664 to 1666/2010
same came to an end on 26.02.2000 by passing an Award, as a result,
the mandatory time limit given for completion of the 87 Surcharge
Proceedings that it should be completed within a period of 6 months
from the date of commencement, has not been followed. Although,
this was opposed by the 1st respondent herein before the learned
Tribunal, the 2nd respondent herein, taking note of the fact that when
the 81 enquiry was ordered, a copy of the report on completion of the
enquiry was not furnished except furnishing the 2nd part of the Enquiry
Report, has held that when the parts I and III of the Enquiry Report
were not admittedly furnished to the appellants, it goes without saying
that the appellants were not able to find where the Enquiry Officer has
committed errors and mistakes while reaching the conclusions.
Fourthly, the appellants were not even permitted to take part in the
enquiry by adducing both oral and documentary evidence and that
when S.81 of the Act categorically says that only in the event of
proven willful negligence, the surcharge proceedings under Section 87
can be proceeded against the appellants, insofar as there was no
finding given by the Enquiry Officer under Section 81 of the Act holding
that there was a deliberate and willful negligence on the part of the
appellants, Section 87 proceedings ought not to have been initiated
against them, he pleaded.
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W.A.Nos.1664 to 1666/2010
4. Arguing further, learned Counsel for the appellants
contended that it was not in dispute that one Mr.Rajendran who was
the main culprit, is said to have been misappropriated the entire
money, causing loss to the 1st respondent Society. Since the said
Rajendran has committed suicide along with two of his family
members, namely, his wife and one of his children, it clearly shows
that he has admitted the guilt. When the matter stands as above, it is
not known why the 1st respondent Co-operative Society, after
admission and acknowledgment of the guilt by the said Rajendran, has
released the retiral benefits, namely, Gratuity, Provident Fund and
Insurance amount to him. After realising the above said amounts,
they have launched proceedings against the appellants herein. When
they were only Cane Officers working for the period from 06.06.1995
to 13.09.1996 and there was no any direct connection or evidence to
show that they have conspired joining hands with the deceased
Rajendran to cause any loss to the 1st respondent society, the initiation
of 87 Proceedings without even furnishing a copy of the full report of
Section 81 Enquiry, it would also be not only opposed to settled law
but highly impossible for the appellants to participate in the 87
proceedings. This has been clearly overlooked by the learned Single
Judge of this Court whereas it was appreciated by the learned Co-
operative Tribunal, the 2nd respondent herein.
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5. Concluding his arguments, learned Counsel for the
appellants drawing our notice to paragraph 13 of the impugned order
stated that the learned Single Judge also after appreciating the case of
the appellants has come to the conclusion that the loss was caused by
one Mr.G.Rajendran, who is no more. Therefore, necessary
proceedings have to be initiated against him and after his death, it
should be proceeded against his legal heirs. When there was a specific
finding given against the said Rajendran that goes to show that the
appellants were not responsible, however, the learned Single Judge
while reversing the well reasoned order passed by the 2nd respondent
herein allowed the Writ Petitions, the same is, therefore, liable to be
interfered with by allowing these appeals, he pleaded.
6. Mr.L.P.Shanmugasundaram, learned Special Government
Pleader (Co-op.) appearing for the respondents 1, 3 and 4 submitted
that Section 81 of the Co-operative Societies Act states that if there is
any loss caused to the society, the Registrar either on his own motion
or on the application of the majority of the Board can hold an enquiry
to find out whether there was any misappropriation or fraudulent
retention of any money or property, breach of trust, corrupt practice or
mismanagement in relation to the Society. When there was an
admitted misappropriation made by one Mr.Rajendran to the tune of
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Rs.3,42,456.85 by using 71 forged receipts as if fertilizers were
distributed to the needy farmers, while serving as a clerk in the 1st
respondent Sugar Mill from 06.06.1995 to 13.09.1996, it was found
clearly that the said Rajendran was responsible for misappropriation.
After finding that he was responsible for misappropriation of the said
amount, he, on his own came forward and paid Rs.69,474/- and the
balance amount of Rs.2,72,982.85p could not be paid. In the
meanwhile, for the reasons best known to him, he committed suicide
along with his wife and one of his children. This mishap had occurred
only in view of the willful negligence committed by the appellants who
were all Cane Officers working for the period from 06.06.1995 to
13.09.1996 because they did not undertake any inspection of the
works done in the said Co-operative Society Hence, the appellants are
liable.
7. Learned Special Government Pleader for respondent Co-
operative Society further submitted that when the appellants were
serving as Cane Officers, the said Rajendran along with one
Venkatesan have forged 71 receipts as though fertilizers taken from
the 1st respondent co-operative society were distributed to the needy
farmers. If the arguments of the appellants are to be accepted that
they had discharged their duties as superior officers meticulously and
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W.A.Nos.1664 to 1666/2010
carefully, then a proper check could have been carried out, as a result,
the said Rajendran along with Venkatesan would not have ventured in
the misappropriation. As there were misappropriation made jointly by
both Rajendran and Venkatesan, causing huge loss of Rs.3,42,456.85p
to the Society, an enquiry was ordered under Section 81 of the Act
and after completion of the enquiry under Section 81, a copy of the
Part-II of the report was furnished to the appellants. On receipt of the
same, they have not approached the 1st respondent stating that they
were put to face prejudice in not furnishing the other parts of the
report and the other parts of the report are not relevant to the alleged
negligence committed by the appellants. Therefore, the learned Single
Judge has rightly come to the conclusion that the appellants have not
even established the prejudice suffered by them. Since the appellants
have also received the report of the Enquiry Officer and acknowledged
the same in their letter dated 15.09.1999 without saying anything, it
may be presumed that there was no such prejudice caused to them.
8. Learned Special Government Pleader also submitted that
the simple charge made against the appellants was that while they
were working as Cane Officers for the period between 06.06.1995 and
13.09.1996 in the 1st respondent Co-operative Society, they kept quite
even without discharging their obligation as supervisors. When 71
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forged receipts were used by that Rajendran joining hands with one
Venkatesan causing huge loss to the Society, this aspect has been
completely forgotten to be established by them. Therefore, the learned
Single Judge has rightly come to the conclusion that once the
appellants in their letter dated 15.09.1999 acknowledging the report of
the Enquiry Officer have participated in the 87 proceedings, the
question of prejudice said to have been caused to them cannot be
raised.
9. I find some merits on the submissions made by the learned
Special Government Pleader appearing for the respondents 1, 3 and 4.
The reason being that firstly, after conducting a detailed enquiry under
Section 81 of the Act, a copy of the Part II of the Enquiry Report was
served on the appellants and after receipt of the same, they have
acknowledged the said report without raising any objection that Parts I
and III of the report have not been served on them. This Court has
laid down the legal position that non-furnishing of Enquiry Report
under Section 81 of the Act to the delinquent before the Surcharge
Proceedings enabling him to give proper explanation is fatal to
surcharge proceedings. But the case on hand is different that the
appellants have received copy of Part II of the Enquiry Report.
Thereafter only, the Surcharge Officer passed a Surcharge Recovery
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Order under Section 87 (1) of the Act on 26.02.2000 fixing the
responsibility that Rs.1,03,709.80p should be payable by
Mr.P.Veerathamizhan, Rs.1,02,618.15p by Mr.Rajamohan and
Rs.66,654.90 by Mr.Arulmani with interest at the rate of 21% p.a.
Therefore, the contention of the learned Counsel for the appellants
that the principles of natural justice has been violated by not serving
the report of the Enquiry Officer is unsustainable. Secondly, though
Surcharge Proceedings were initiated on 02.05.1998 and the same
came to an end on 26.02.2000 by passing an Award, as a result, the
mandatory time limit given for completion of the 87 Surcharge
Proceedings that it should be completed within a period of 6 months
gap has not been followed, learned Counsel for the appellants fairly
agreeing to the ratio laid down by this Court in the case in
S.V.K.Sahasraraman vs. The Deputy Registrar of Co-operative
Societies, Thirvannamalai and others reported in 2008 8 MLJ 231
holding that the order to be passed under Section 87 of the Act is not
mandatory stated that he is not pressing this point as this has become
the law of the land.
10. Thirdly, insofar as the contention of the learned Counsel
for the appellants that they were not permitted to engage a Counsel to
assist them during the surcharge proceedings, as held by the learned
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Single Judge, though the rules framed under the Tamil Nadu Co-
operative Societies Act do not provide any specific permission is
accepted, then also, they are responsible for the huge loss caused to
the respondent society because their deliberate and willful negligence
in discharging their duty as Cane Officers has resulted in
misappropriation of Rs.3,42,456.85p by the Clerk Rajendran along
with one Venkatesan by raising 71 forged receipts as if fertilizers were
distributed to the needy farmers. Fourthly, the contention that though
the said Venkatesan is now no more, proceedings under Section 87 of
the Act should be proceeded against his legal heirs is not accepted
because the appellants are only responsible for the willful negligence
leading to the loss caused to the Society by the said Rajendran.
Therefore, in the findings and conclusions reached by the learned
Single Judge, we are unable to find any infirmity or illegality to
interfere with the impugned order. However, taking into account the
fact that in the Section 87 surcharge proceedings, the appellants,
namely, P.Veeratamilan, R.Rajamohan and T.Arulmani were directed to
pay the amount of Rs.1,03,709.80p, Rs.1,02,618.15p and
Rs.66,654.90p respectively along with interest at 21% p.a., bearing in
mind that they have committed willful negligence in not undergoing
regular and routine supervision only which could have prevented the
said Rajendran and Venkatesan from causing loss, we are inclined to
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reduce the rate of interest alone from 21% to 9% because Section 87
of the Act empowers the Registrar to make an order requiring anyone
to repay the money with interest as he thinks just by way of
compensation in respect of the loss caused to the society.
11. With the above modification, the Writ Appeals are partly
allowed. No costs. Consequently, connected Miscellaneous Petitions
are also closed.
(T.R.J.,) (V.S.G.J.,)
tsi 28.04.2021
To
1. The Administrator,
Nadipisai Pulavar K.R.Ramasamy
Co-operative Sugar Mills Limited,
Thalainayar,
Mayiladuthurai Taluk,
Nagapattinam District.
2. The Principal District Judge,
Nagapattinam.
3. The Joint Registrar/Administrator,
MRK Co-operative Sugar Mills Limited,
Sethiyathoppu, Cuddalore-608 702.
4. The Commissioner for Sugar Department,
Tamil Nadu Sugar Department,
474, Anna Salai, Nandanam, Chennai-35
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W.A.Nos.1664 to 1666/2010
T.RAJA, J.
and
V.SIVAGNANAM, J.
tsi
W.A.Nos.1664 to 1666/2010
28.04.2021
https://www.mhc.tn.gov.in/judis/
