Madras High Court

The Management vs R.Dhayalan on 25 August, 2021

W.A.No.1395/2021

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 25.08.2021

CORAM

THE HONOURABLE Mrs. JUSTICE PUSHPA SATHYANARAYANA
and
THE HONOURABLE Mr.JUSTICE KRISHNAN RAMASAMY

W.A.No.1395 of 2021
and C.M.P.No.8647 of 2021

The Management
V.T.742 Tiruvannamalai District Consumer
Co-operative Wholesale Stores Ltd.
Rep. by its Managing Director,
No.34A, Gandhi Nagar,
Tiruvannamalai,
Tiruvannamalai District. .. Appellant/Respondent 2

Vs.

1. R.Dhayalan .. Respondent 1/Petitioner

2. The Joint Registrar,
Tiruvannamalai Region,
Tiruvannamalai. .. Respondent 2/Respondent 1

***
PRAYER : Writ Appeal filed under Clause 15 of the Letters Patent
against the order dated 25.07.2019 made in W.P.No.17064 of 2019.
***
For Appellant : Mr.M.S.Palaniswamy

For Respondents : Mr.Balan Haridass for R1

Mr.R.Neelakandan
State Government Counsel
for R2

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W.A.No.1395/2021

JUDGMENT

PUSHPA SATHYANARAYANA, J.

The management of the appellant Society has preferred this

appeal against the order dated 25.07.2019 passed in W.P.No.17064

of 2019.

2. The challenge in the writ petition was to the orders passed

under Sections 153 and 154 of the Tamil Nadu Co-operative

Societies Act, 1983. The writ petitioner, who was an Assistant with

the appellant Society, was issued with a charge memo containing

three charges. The charge memo was issued on 20.03.2017 and an

explanation was given by him denying the charges on 25.03.2017.

Upon enquiry, a report was submitted on 18.05.2017, for which, an

explanation was given by the petitioner on 03.06.2017. When the

writ petitioner attained the age of superannuation on 31.05.2017,

he was not allowed to retire. Challenging the same, a revision under

Section 153 of the Act was filed, which was dismissed on

29.11.2018. A review petition filed by him under Section 154 of the

Act also met with the same fate on 13.02.2019. The above orders

were under challenge in the writ petition.

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3. The Writ Court had allowed the writ petition, placing

reliance on the judgment of the Full Bench of this Court in

S.Andiyannan V. The Joint Registrar, Co-operative Societies,

Madurai Region, Madurai and another, 2015-3-L.W. 513,

wherein, it was specifically held that once an employee of the

Society reaches the age of superannuation, no disciplinary action

could be initiated or continued against him beyond the date of his

retirement.

4. The learned counsel for the first respondent contended that

the surcharge proceedings against the writ petitioner has reached

finality, wherein, it was ordered to recover Rs.65,65,071.28 from

the first respondent. But the Full Bench judgment referred to by the

first respondent dealt with only the disciplinary proceedings, not the

recovery proceedings.

5. According to the learned counsel for the appellant, if the

recovery proceedings are barred after the retirement of the person,

then the Society would incur huge loss. Therefore, till such recovery

is being made, the writ petitioner may not be entitled for retiral

benefits.

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6. Even prior to the Full Bench decision, a Division Bench of

this Court in W.A.No.1856 of 2012, vide the judgment dated

23.03.2011 (R.Murugesan V. The Joint Registrar of Coop.

Societies, Thiruvannamalai Region, Thiruvannamalai) held

that the co-operative employee cannot be kept under suspension

beyond the date of superannuation, in the absence of any provision

under the Tamil Nadu Co-operative Societies Act or under the Bye-

laws of the Societies. At this juncture, it is apt to reproduce

paragraphs 6 and 7 of the judgment of the said Division Bench of

this Court in the following manner :

"6. The core issue that arises for consideration in this writ appeal, is that in the absence of any rule, whether it is open to the first respondent to initiate and continue the disciplinary proceedings after attaining the age of superannuation. The said issue is no longer res integra, as it has been answered by a Division Bench of this Court reported in 2010 (2) CTC 569 (M.K.S.Balasubramanian vs. Kancheepuram Central Cooperative Bank Limited, rep. by its Special Officer). In the said judgment, the Division Bench, wherein one of us (NPVJ) is a member, has taken into consideration the judgments reported in 1999 (3) SCC 666 (Bhagsrathi Jena vs. Board of Directors, O.S.F.C., and others), 2006 (4) MLJ 504 (F.Muthusamy vs. Tamil Nadu Cements Corporation Ltd., 2007 (5) CTC 491 (N.Kunnai Gowder vs. The Coimbatore District Co-operative Milk Producers'' Union Ltd., 2008 (2) SCC 41 (U.P.State Sugar Cooperation Ltd., and Others vs. Kamal Swaroop Tondon) and also distinguished the judgment rendered by the Division Bench of this Court reported in 2010 (2) CTC 234 (Registrar https://www.mhc.tn.gov.in/judis/ Page 4/11 W.A.No.1395/2021

of Co-operative Societies, Kilpauk, Chennai-10 and another vs. G.Manoharan) and held as follows:

"9. It is an admitted case of the respondent that the byelaw though provided for a right to continue the Bank to proceed with disciplinary proceedings after allowing the appellant to retire the said amendment is stayed by this Court and the said stay order is still in force. Hence, the said amendment cannot be relied on by the respondent to sustain the order retaining the power to proceed with Disciplinary Proceedings after permitting the appellant to retire.

10. In the decisions reported in 2008(2) MLJ 585 and F. Muthusamy v. Tamil Nadu Cements Corporation Ltd., 2006 (4) MLJ 504, it is held that disciplinary proceedings cannot continue after retirement unless the service rules provides for such right to continue.

11. In the decision, reported in Bhagsrathi Jena v. Board of Directors, O.S.F.C., and others, 1999 (3) SCC 666, in a similar matter in para 7 it is held thus:

“In view of the absence of such a provision in the above said regulations, it must be held that the Corporation had no legal authority to make any reduction in the retiral benefits of the appellant. There is also no provision for conducting a disciplinary enquiry after retirement of the appellant and nor any provision stating that in case misconduct is established, a deduction could be made from retiral benefits. Once the appellant had retired from service on 30.6.1995, there was no authority vested in the Corporation for continuing the departmental enquiry even for the purpose of imposing any reduction in the retiral benefits payable to the appellant. In the absence of such an authority, it must be held that the enquiry had lapsed and the appellant was entitled to full retiral https://www.mhc.tn.gov.in/judis/ Page 5/11 W.A.No.1395/2021

benefits on retirement.”

12. Thus, the respondent is not justified in imposing the condition namely reserving its right to proceed disciplinary proceedings while allowing the appellant to retire from his service on 33. 2005. The direction given by the learned Single Judge to the respondent to retain the amount of Rs.2,69,933/- from terminal benefits payable to the appellant is perfectly justified as the respondent can effect recovery of the loss sustained after initiating surcharge proceedings under Section 87 of Tamil Nadu Co- operative Societies Act, 1983, which is extracted hereunder:

“87. Surcharge.- (1) Where in the course of an audit under Section 80 or an inquiry under Section 81 or an inspection or investigation under Section 82 or inspection of books under Section 83 or the winding-up of a society, it appears that any person who is or was entrusted with the organisation or management of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made any payment which is not in himself or any person specially authorised by him in this behalf, of his own motion or on the application of the board, liquidator or any creditor or contributory may frame charges against such person or officer or servant and after giving a reasonable opportunity to the person concerned and in the case of a deceased person, to his representative who inherits his estate, to answer the charges, make an order requiring him to repay or restore the money or property or any part thereof with interest at such rate as the Registrar or https://www.mhc.tn.gov.in/judis/ Page 6/11 W.A.No.1395/2021

the person authorised as aforesaid thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, misapplication of funds, fraudulent retainer, breach of trust or wilful negligence or payments which are not in accordance with this Act, the rules or the bye-laws as the Registrar or the person authorised as aforesaid thinks just: ….” The above provision empowers to proceed against a person whether he was an officer or a servant, either past or present and even if the person is dead recovery can be made from the legal heir of the said person if he inherited the property. In the decision reported in U.P. State Sugar Co-operation Ltd. and others v. Kamal Swaroop Tondon, 2008 (2) SCC 41, it is held that a retired employee could be proceeded to recover the loss caused by him and amount could be recovered from the retirement benefits. In para 40 it is held thus:

“……in our considered opinion, the High Court was wrong in holding that the proceedings were initiated after the respondent retired and there was no power, authority or jurisdiction with the Corporation to take any action against the writ petitioner and in setting aside the orders passed against him. In our judgment, proceedings could have been taken for the recovery of financial loss suffered by the Corporation due to negligence and carelessness attributable to the respondent employee. The impugned action, therefore, cannot be said to be illegal or without jurisdiction and the High Court was net right in quashing the proceedings as also the orders issued by the Corporation. The Appeal, therefore, deserves to be allowed by setting aside the order of the High Court.” Ultimately, the Division Bench has modified the order https://www.mhc.tn.gov.in/judis/ Page 7/11 W.A.No.1395/2021

passed by the learned Single Judge, by holding that the condition to continue the disciplinary proceedings after retirement against the appellant therein is unsustainable and granting liberty to the respondent to proceed with the surcharge proceedings under Section 87 of the Tamil Nadu Co-operative Societies Act, 1983 for the alleged loss."

7. In yet another judgment of this Court made in W.P.No.27170 of 2011, dated 29.11.2013, wherein one of us (NPVJ) is a member, a similar issue was considered in the light of the decision reported in 2012 (3) CTC 488 (P.Thangavel vs. The Chairman, Common Cadre Committee/Joint Registrar of Co-operative Societies), and M.K.S.Balasubramanian's case was also considered and all other decisions on that legal point, have been submitted and this Court held that the Co-operative employee cannot be kept under suspension beyond the date of superannuation, as there is no provision either under the Tamil Nadu Co-operative Societies Act or under the bye-laws and granted liberty to initiate surcharge proceedings for the alleged loss."

7. The writ Court has allowed the writ petition on the ground

that in the absence of rule or as per the dictum laid down by the Full

Bench in S.Andiyannan's case (cited supra), the disciplinary

proceedings cannot be continued against a person, who had retired,

however serious, the act of misconduct committed by the employee

of the Society.

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8. The contention of the learned counsel for the appellant is

that the Writ Court had not distinguished the disciplinary

proceedings and the surcharge proceedings. In the instant case, the

surcharge proceedings had concluded, as no appeal was filed by the

employee and it has reached finality. It is the argument of the

learned counsel for the appellant that if the first respondent/

employee is allowed to retire, it will be difficult for the Society to

recover the amount from him, as the retiral benefits have to be

disbursed to him.

9. As the employee, the first respondent is entitled for the

retiral benefits after his retirement and even the Gratuity of an

employee cannot be treated as a charge and it is for the service

rendered by him. Therefore, the statutes are conscious of the fact

that the Provident Fund and the Gratuity Fund cannot be attached

or be subject to any other process of any court or other authority,

which is made clear under Sections 78 and 79 of the Tamil Nadu

Co-operative Societies Act. Therefore, we see no reason to interfere

with the order of the learned Single Judge.

10. At this stage, it is pertinent to state that Section 87 of the

Tamil Nadu Co-operative Societies Act, which deals with the

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surcharge proceedings, itself provides for recovery of the quantified

amount from the employee by invoking the Tamil Nadu Revenue

Recovery Act, 1864 treating the same as an arrear of land revenue.

Therefore, there is no merit in the argument of the appellant stating

that if the retirement benefits are disbursed to the respondent, it

would be difficult for them to recover the amount.

11. With the above observations, confirming the impugned

order of the learned Single Judge dated 25.07.2019, the writ appeal

is disposed of. However, there is no order as to costs.

Consequently, connected miscellaneous petition is closed.




                                                                      [P.S.N., J.]   [K.R., J.]
                                                                              25.08.2021
                     Index          : Yes / No
                     Internet       : Yes
                     gg

                     To

                     The Joint Registrar,
                     Tiruvannamalai Region,
                     Tiruvannamalai.




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                                                W.A.No.1395/2021



                                   PUSHPA SATHYANARAYANA, J.
                                                       AND
                                       KRISHNAN RAMASAMY, J.


                                                             gg




                                          W.A.No.1395 of 2021




                                                    25.08.2021




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