Madras High Court
Kalaimagal Sabha Uruppinargal vs The State Of Tamil Nadu on 1 November, 2021
W.P.Nos.43650/2006, 22557 to 22571/2011
& 6654/2006
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 01.11.2021
CORAM
THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.Nos.43650 of 2006, 22557 to 22571 of 2011
and 6654 of 2006
W.P.No.43650 of 2006
Kalaimagal Sabha Uruppinargal
Pathukappu Sangam [Regn. No.008/03]
Rep. by its President Kovai Sakthi,
No.811, Salivan Street,
Coimbatore – 641 001. .. Petitioner
-vs-
1.The State of Tamil Nadu,
rep. by Secretary to Govt.
Commercial Taxes Department,
Secretariat, Chennai – 600 009.
2.The Special Officer/Joint Receiver
of Kalaimagal Sabha [Regn. No.16/84],
67, New Pallipalayam Road,
Kumarapalayam, Salem – 638 183.
3.The Joint Receiver,
Kalaimagal Sabha [Regn.No.16/84]
No.48, New Usman Road,
T.Nagar, Chennai – 17.
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W.P.Nos.43650/2006, 22557 to 22571/2011
& 6654/2006
4.R.Karupannan .. Respondents
[R4 impleaded vide order dated 08.10.2021
made in W.M.P.No.34277 of 2019]
Petition filed under Article 226 of the Constitution of India praying
for issuance of Writ of Mandamus directing the respondents to divide the
lands in the name of Kalaimagal Sabha on the basis of its registration value
or market value and allot the same in favour of the members of Petitioner
Association on the basis of the amount invested by them in Kalaimagal
Sabha.
For Petitioner in
W.P.No.43650/2006 : Mr.R.Singaravelan
Senior Counsel
Assisted by Mr.V.S.Jagadeesan
For Petitioner in
W.P.Nos.22557 to
22571 of 2011 : Mr.S.Selvathirumurugan
For Petitioner in
W.P.No.6654/2006 : Mr.R.Suresh Kumar
for M/s.K.M.Vijayan Associates
For Respondent No.1
in all W.Ps. : Mr.C.Kathiravan
Government Advocate
For R2 & R3 in
W.P.Nos.43650/2006,
22557 & 22558/2011
and 6654/2006 : Mr.I.Abrar Md. Abdullah
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W.P.Nos.43650/2006, 22557 to 22571/2011
& 6654/2006
For R2 & R3 in
W.P.Nos.22559 to
22571/2011 : Mr.T.R.Rajaraman
For Respondent No.4
in W.P.No.43650/2006 : Mr.P.Chinnadurai
Receiver : Mr.K.R.Hariharan
******
COMMON ORDER
The genesis of the batch of writ petitions on hand emanated from a
registered Society “Kalaimagal Sabha” and pursuant to the directions issued
by this Court in W.P.No.514 of 1999 dated 30.03.1999. The untold agony
of 5,33,356 members of th said Kalaimagal Sabha resulted in institution of
litigations and unfortunately even after lapse of 22 years, these poor
investors, who deposited their hard earned money are unable to get back
money and still legal battle is on and on.
2.Let us not go back and conduct post mortem in respect of the black
areas with reference to the actions, inactions, omissions, commissions made
by the parties and court receivers. The endeavour of this Court at this
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length of time is to adopt a practical and pragmatic approach and to ensure
that the untold agony of these 5,33,356 members are redressed to the extent
possible and in the manner known to law.
3.The 'Kalaimagal Sabha' was registered and commenced its activities
with a laudable object of collecting deposits and returning the same along
with interest by conducting certain real estate business activities. Huge
amount of money was collected from these 5,33,356 members. The money
collected were invested in purchase of immovable properties not only across
the State of Tamil Nadu but also outside the State of Tamil Nadu, more
specifically in Andhra Pradesh, Karnataka, Delhi and Kerala.
4.The Society, namely, Kalaimagal Sabha committed certain
irregularities and mismanagement in dealing with the funds of the Society.
Thus, complaints were filed by the members and the Government of Tamil
Nadu proposed to appoint a Special Officer to manage the affairs of the
Society as the complaints received were found to be serious and the
financial implications are wider.
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& 6654/2006
5.At that point of time, one Mr.M.Krishnamoorthy filed a writ
petition in W.P.No.514 of 1999 claiming that he is a member of the Society,
Kalaimagal Sabha and sought to quash the notice issued by the Government
of Tamil Nadu for appointment of Special Officer and to direct the first
respondent for appointment of Retired High Court Judge as the custodian to
take control of funds and assets of the Society intended for the benefit of the
members and to distribute the same either in the shape of funds or property
or both to the members of the Society to prove their entitlement.
6.This Court considered the issues and Thiru.N.Meenakshi Sundaram,
Advocate [Retired District Judge], Chennai, Thiru.S.Navaneethakrishnan,
Advocate, Chennai and the Special Officer appointed to the Society were
appointed as Joint Receivers to take charge of the properties so purchased
by the Kalaimagal Sabha, a registered Society as well as the funds available
and the entire accounts and to take care of the affairs of the Society for the
purpose of distributing the outcome of the properties purchased for the
benefit of its members from the sale proceeds of the same and the funds
available in the Society for that purpose.
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7.The procedures were also formulated for the purpose of functioning
of these Joint Receivers. The procedures formulated would reveal that the
Joint Receivers are directed to sell the properties on the basis of the time
bound program, either by public auction or calling for tenders. The Joint
Receivers should get prior approval from this Court before even confirming
any such offer. A specific direction was issued to the Special Officer to
render full co-operation with his team of officers for the other Joint
Receivers in working out the above scheme.
8.This Court in the year 1999 while passing orders in the said writ
petition intended to deal with the affairs of the Society, sell the properties
and distribute the benefits to its members as quick as possible. It is
specifically stated that the Joint Receivers are directed to sell the properties
on the basis of the time bound program, either by public auction or calling
for tenders.
9.The direction to sell in a time bound program has been materialized
or not is not the question to be considered at this point of time after 22
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& 6654/2006
years. Unfortunately, the answer is No. The next question would be,
whether the Special Officer appointed by the Government extended his
co-operation with his team of officers for the other Joint Receivers in
working out the above scheme or not. Once again the answer is 'No' even as
per the statement of one of the Joint Receivers. It is brought to the notice of
this court that the Special Officer has not co-operated for the purpose of
implementing the orders passed by this Court in the year 1999.
10.Be that as it may. An important factor beyond all such initial facts
of the case is that one Mr.R.Kumaresan filed Civil Appeal No.4683-84 of
2007 questioning the validity of the order passed in Writ Appeal No.3707 of
2002 dated 27.12.2002, wherein the said R.Kumaresan sought for a
direction to implead himself and to remove the Joint Receivers. The
Hon'ble Supreme Court of India passed an order on 05.10.2007, which
would be more relevant to deal with the present situation and reads as
follows:
“Having heard the learned counsel for the parties
we are of the opinion that the High Court was not correct
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in its approach in delegating its power to deal with the
matter in terms of Order 40 rule 4 to delegate the same in
favour of the Joint Receiver against whom allegations had
been made. We, therefore, set aside the impugned order
and direct the High Court to consider the appellant's
application on its own merit. The appeals are disposed of
accordingly.”
11.The Hon'ble Apex Court in an unequivocal terms observed that the
High Court was not correct in its approach in delegating its powers to deal
with the matter in terms of Order 40 Rule 4 to delegate the same in favour
of the Joint Receivers against whom allegations have been made. The order
impugned before the High Court was set aside and a direction was issued to
the High Court to consider the application filed by the said R.Kumaresan on
its own merits.
12.Perusal of the grounds filed before the Hon'ble Supreme Court
would reveal that allegations are raised against the Joint Receivers also. It
is to be construed that the Hon'ble Supreme Court also had taken note of
such grounds and passed an order on 05.10.2007.
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& 6654/2006
13.The order was communicated to the Joint Receivers. Proprietary
requires in such circumstances, the Court Receivers ought to have recused
themselves. Contrarily, they continued and functioning till now, which
became unnecessary and unwarranted.
14.Once certain serious aspirations are made against the Court
appointed Joint Receivers and the Hon'ble Supreme Court has also taken
note of and passed orders, it would not be appropriate for its continuation
and, it would be appropriate to deal with the matter in accordance with law
instead of High Court taking over the administration in its hands in view of
the volume of works involved, the nature of duties to be performed, huge
amount and large number of properties, which are all the subject matters to
be dealt with. Undoubtedly, it would be difficult for such Receivers to deal
with such nature of matters as they are not having required administrative
machinery to carry on such activities. They have to depend on various
factors and Government machineries, which may not be workable on many
occasions.
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15.Though the Hon'ble Supreme Court passed an order on
05.10.2007, the Joint Receivers continued. It is brought to the notice of this
Court that originally appointed Joint Receiver Thiru.N.Meenakshi
Sundaram [Retired District Judge] recused himself at the initial stage even
before assuming office on 30.04.1999. Thereafter, Thiru.Shanmugam, IAS
[Retired] was appointed and Thiru.K.Natarajan [Retired District Judge] was
appointed. Thiru.Shanmugam and and Thiru.K.Natarajan were passed
away and one Thiru.Kathirvel, Advocate was inducted by order dated
11.04.2003. He relinquished on account of ill health and thereafter,
Thiru.K.R.Hariharan, was appointed by order dated 06.04.2006. It is further
brought to the notice of this Court that Thiru.S.Navaneethakrishnan died on
07.06.2021 and as of now, Thiru.K.R.Hariharan alone is functioning as
Receiver and the Receiver has informed that an application stating the facts
has been filed to induct new Joint Receivers.
16.This Court heard the learned Receiver Mr.K.R.Hariharan, who in
turn relying on his report made a submission that he is working for about six
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hours per day for a meagre monthly remuneration of Rs.25,000/-, all along
he is working from the year 2006 onwards and taking efforts to settle the
issue. However, the processes are going on and several properties are under
encroachment and civil suits are also filed and pending before various
Subordinate Courts. The learned Receiver made a submission that as of
now around a sum of Rs.94 Crores are lying in the Bank accounts, more
specifically, in the form of Fixed Deposits and it is periodically renewed.
He had further submitted that 12176 acres of land are yet to be disposed of
and already, 870.13 acres of land were sold by way of auction and
confirmed by this Court. Further, 40% of the amount had already been
settled in favour of 1,72,000 members out of 4,20,894 eligible members.
This Court passed an order on 14.11.2019 permitting the Joint Receivers to
disburse 60% of the remaining subscription to the eligible members and
after disbursement, the Joint Receivers are directed to file a report before
this Court. The learned Receiver made a submission that pursuant to the
orders of this Court actions are being initiated for disbursing the 60% of the
amount.
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17.In connection with the Status Report and the submissions made,
the learned senior counsel appearing on behalf of the petitioners raised
serious questions about the pendency of these matters for about 22 years
and the likelihood of incurable irregularities and illegalities if it is allowed
to continue for an indefinite period. Referring the nature of transactions, the
vast extent of immovable properties spread over in four States and
considering the amount of Fixed Deposit of Rs.94 Crores lying in the Bank
accounts and the number of eligible members, which is approximately
4,20,894, it is contended that it would be inappropriate to allow the
Receivers to continue and in such circumstances, the Government would be
the appropriate person to deal with the matters and the Court cannot monitor
for such a long period and more so, even at this point of time the Receivers
are unable to say as to how long they will take for settlement of the issues.
18.The learned senior counsel drew the attention of this Court with
reference to the grounds raised before the Hon'ble Supreme court against the
Joint Receivers and relied on the observations made by the Hon'ble
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Supreme Court, which is stronger enough to take an appropriate decision
even in the year 2007, however it was not taken and further prolonged for
about 14 years. The learned senior counsel further contended that huge
number of depositors are now left in lurch and they are unable to get back
their deposits along with interest as per the bye laws of the Kalaimagal
Sabha, a registered Society. These issues cannot be prolonged and if it is
allowed to be prolonged, there is a possibility of corrupt activities between
the parties and while dealing with the properties, which all are in vast
extent. As of now, one Receiver is functioning and even by appointing
another Receiver, it may not be possible to deal with this magnitude of
immovable properties and the huge money, which is lying in the bank
deposits. It may not be possible for the High Court to monitor this nature of
transactions and in the event of allegations, the repercussions will be
serious. It is rather contended that the High Court better not interfere in such
administrative works, which will create lot of doubt in the minds of the
people and as pointed out by the Hon'ble Supreme Court, High Court was
not correct in its approach in delegating its powers to deal with the matter in
terms of Order 40 Rule 4.
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& 6654/2006
19.The learned senior counsel is of the opinion that dealing of the
vast extent properties involve many Departments including, Revenue
Department, Registration Department, Police Department, etc. The Joint
Receivers may not be in a position to co-ordinate with all such Government
Departments and admittedly, the Special Officer has not co-operated for the
functioning of the Receivers. Thus, it is contended that the administration
atleast at this point of time must be shifted to the Government for the
purpose of disposal of the properties and to distribute the amount to the
eligible members, who all are longing to get back their money for several
years. The receiver has no objection for transferring the administration of
Sabha to the Government authorities as per the Act.
20.The learned Government Advocate appearing on behalf of the
Government of Tamil Nadu made a submission that the Government even at
the first instance proposed to appoint a Special Officer. However, pursuant
to the orders passed in W.P.No.514 of 1999, the Government could not able
to appoint the Special Officer exclusively to take over the administration of
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the Kalaimagal Sabha. However, even recently the Inspector General of
Registration in his letter dated 05.05.2020 made clear to the Registrar of
High Court of Madras that the Inspector General of Registration nominated
three eligible District Registrars for appointment of Special Officer to the
Kalaimagal Sabha.
21.Thus the Government is willing and ready to appoint a Special
Officer. However, due to the existence of the Joint Receiver, the
Government could not able to appoint Special Officer to take over the
administration.
22.It is most unfortunate that W.P.No.514 pf 1999 was disposed of on
30.03.1999 and for the past about 22 years, the Receivers have filed
hundreds of memos in W.P.No.514 of 1999. No doubt the writ petition in
W.P.No.514 of 1999 was finally disposed of by this Court. The procedures
for running the Kalaimagal Sabha are issued in the said judgment. One such
direction issued in the said judgment is that if any difficulty is experienced
by the Joint Receivers in carrying out the directions of this Court, they can
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approach this Court for clarification or for getting further directions in this
regard. Yet another direction is that while selling the properties on the basis
of the time-bound program, prior approval from this Court must be obtained
before confirming any such offer.
23.By virtue of these two directions, several memos are filed by the
Receivers for the past about 22 years. The question arises by filing
hundreds of memos in a writ petition which was disposed of in the year
1999, whether the Court can monitor the administration of a registered
Society, wherein disputed questions of fact are raised between the parties.
This Court is of the concrete opinion that High Court is not expected to
venture into monitoring Administration of this nature as it will create doubt
in the minds of the people in general regarding the manner in which the
properties are dealt with by the Receivers. It became unnecessary for the
High Court, more specifically, under Article 226 of the Constitution of
India. There are Government machineries under the provisions of the Act
and Rules, which all are to be pressed into service for the purpose of dealing
with any such irregularities or illegalities in any registered Society.
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Mechanisms are provided under the Act itself. Such mechanisms are to be
pressed into service instead of taking over the administration and appointing
an Advocate Receiver, who is allowed to continue for 22 years and is
continuing without much improvements in the matter of dealing with the
properties spread over in four States and more specifically, about 13000
acres of land. These kind of monitoring can never be allowed to continue
and if it is allowed to continue, the members will loose trust on the system
in getting back their hard earned money, which they had invested prior to
the year 1999.
24.This Court made it very clear that it became unnecessary to
comment upon the functioning of the Joint Receivers or the Special Officer,
who has not co-operated for the effective functioning of the Receivers due
to certain obvious reasons. It became unnecessary to make comments
regarding the functioning or the powers exercised pursuant to the directions
issued by this Court in the year 1999. It is all the matter of record, which
are to be gone into by the appropriate competent authority for further
continuance and for effective disposal of the immovable properties and the
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money lying in the Bank accounts. By making unnecessary observations in
respect of functioning of receivers, this Court is of an opinion that no
effective and useful services are done to the poor litigants, who are
struggling to redress their grievances through Court of law. Thus, with pain
regarding past, this Court looks forward to settle the issues in a positive and
practical manner.
25.Several allegations raised against the Receives need not to be gone
into by this Court as the records are to be verified for making any such
observations and it is for the competent authorities to conduct appropriate
inspection of those records. However, the learned Receiver pointed out that
they have spent considerable length of their professional time for the
purpose of doing services to the affected members. All these aspects need
not be commented upon as 22 years lapsed, many developments occurred,
part payments are made to few eligible members and major amount and the
large extent of properties are yet to be dealt with by the administration of
the Kalaimagal Sabha.
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26.In view of the facts and circumstances, this Court is of an opinion
that it is not preferable to allow the Joint Receivers to continue the
administration of 'Kalaimagal Sabha' and even the Receiver is unable to
make any submission before this Court as to how long the Receivers require
for settlement of the issues. In view of such vagueness and infinitum, this
Court is of an opinion that administration is to be handed over to the
competent authorities under the provisions of the Tamil Nadu Societies
Registration Act, 1975 as the 'Kalaimagal Sabha', is admittedly a registered
Society under the Act.
27.Section 34A deals with Supersession of Committee. Under
sub-section 1(a) if in the opinion of the Government (i) the Committee of
the registered Society is not functioning properly or (ii) the affairs of any
registered Society are mismanaged, a Special Officer shall be appointed by
the Government. Section 34B deals with delivery of possession of records
and properties of a registered Society. Section 35 deals with Inspection of
Books. Section 36 provides power of Registrar to inquire into the affairs of
registered Society. The procedures for liquidation is also contemplated
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under the provisions of the Act. Thus, it is a self regulated mechanism,
which is well enumerated under the provisions of the Act and the provisions
are to be pressed into service for the purpose of dealing with the affairs of
the Society. This being the statutory provisions and the Government had
initiated action for appointment of Special Officer in view of the fact that
the writ petition in W.P.No.514 of 1999 was filed, the entire issues took a
turn during that period, and 22 years have lapsed.
28.Considering the facts and circumstances, this Court is inclined to
pass the following order:
1. The first respondent is directed to appoint Special Officer
not below the rank of Assistant Inspector General of
Registration to take over the administration of
“Kalaimagal Sabha” within a period of three weeks from
the date of receipt of a copy of this order.
2. The Joint Receiver, Mr.K.R.Hariharan, who is functioning
as of now as the sole Receiver is directed to hand over
the entire administration including Books of accounts,
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original documents, all other connected records and
materials, etc. to the Special Officer to be appointed by
the Government within a period of three weeks from the
date of appointment of the Special Officer.
3. The Assistant Inspector General of Registration to be
appointed as Special Officer is empowered to get the
assistance of the respective District Registrars and the
competent authorities of other Departments for the
purpose of effective functioning, more specifically to deal
with the immovable properties and to implement the
orders of the Court.
4. It is made clear that the Assistant Inspector General of
Registration is empowered to deal with the properties
outside the State of Tamil Nadu spread over in other
States.
5. The Receiver is directed to obtain the audited statements
from the Chartered Accountant, to furnish the accounts,
income tax particulars, etc., and handover the same within
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a period of six weeks to the Special Officer. On receipt of
the Books of accounts, audited statement, etc., from the
Chartered Accountant, the first respondent and the
Special Officer are directed to conduct special audit and
verify the correctness.
6. Any illegality, irregularity or malpractices are traced out
or identified or brought to the notice of the Special
Officer appointed, then all necessary actions are directed
to be initiated against all concerned by following the
procedures as contemplated under law. It is further made
clear that all lawful actions of the Receivers,
Administrators and staff members alone are protected.
7. The Receiver appointed by this Court stands relieved with
effect from the date on which, the administration of
'Kalaimagal Sabha' is handed over to the Special Officer.
Consequently, all memos filed by the Receiver became
unnecessary and no further orders are required in respect
of any such memo filed.
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29.In the result, the writ petitions are disposed of. No costs.
30.The Registry is directed to list these writ petitions on 22.12.2021
for reporting compliance.
01.11.2021
Index : Yes
Internet:Yes
Speaking Order
cse
To
1.The Secretary to Government,
Commercial Taxes Department,
Secretariat, Chennai – 600 009.
2.The Special Officer/Joint Receiver
of Kalaimagal Sabha [Regn. No.16/84],
67, New Pallipalayam Road,
Kumarapalayam, Salem – 638 183.
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3.The Joint Receiver,
Kalaimagal Sabha [Regn.No.16/84]
No.48, New Usman Road,
T.Nagar, Chennai – 17.
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S.M.SUBRAMANIAM, J.
cse/vm
W.P.Nos.43650 of 2006, 22557 to 22571
of 2011 and 6654 of 2006
01.11.2021
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