Madras High Court
T.Radhakrishnan … vs The Deputy Registrar Of ... on 3 January, 2022
W.P.No.27585 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.01.2022
CORAM :
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
Writ Petition No.27585 of 2021 & W.M.P.No.29113 of 2021
T.Radhakrishnan …. Petitioner
-Vs-
The Deputy Registrar of Co-operative Societies
Salem Region, Salem-636 001. …. Respondents
Prayer : Writ Petition 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 surcharge
proceedings initiated based on impugned surcharge notice dated 19.11.2021 issued
under Section 87(1) of Tamil Nadu Cooperative Societies Act, 1983 by the respondent
and quash the same as being illegal, arbitrary and unconstitutional.
For Petitioner : Mr.R.Balaramesh
For Respondents : Mr.P.Ganesh,
Additional Government Pleader
ORDER
The prayer sought for herein is for a Writ of Certiorari to call for the records
relating to the surcharge proceedings initiated based on impugned surcharge notice
dated 19.11.2021 issued under Section 87(1) of Tamil Nadu Cooperative Societies Act,
1983 by the respondent and quash the same as being illegal, arbitrary and
unconstitutional.
1 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
2. The petitioner was working as the Secretary of a Co-operative Society
between the period 01.05.2009 and 30.09.2014. Subsequently, as per Section 82 of
the Tamil Nadu Cooperative Societies Act, 1983 (In short 'the Act') inspection was
conducted and a report to that effect was filed in respect of the Society viz., S.681,
Chinnathirupathi Urban Co-operative Credit Society.
3. Based on the said Section 82 report, Surcharge proceedings was initiated
under Section 87 of the Act by the impugned proceedings dated 19.11.2021. The said
proceedings is under challenge in this writ petition on the ground that, as per the first
proviso to Section 87(1) of the Act, there is 7 years limitation period within which, the
surcharge proceedings under Section 87 should have been initiated and in this case,
according to the learned counsel for the petitioner, since the petitioner himself was
working in the Society only upto 30.09.2014, if at all any Section 87 proceedings has
to be initiated, it should have been initiated on or before 30.09.2021, whereas
admittedly the impugned proceedings has been initiated only on 19.11.2021.
Therefore, it violates the mandatory limitation period of 7 years and therefore, on that
ground itself, the impugned proceedings is vitiated.
4. However, Mr.P.Ganesh, learned Additional Government Pleader appearing for
the respondents, on instructions would submit that, because of the inspection to be
conducted under Section 82 of the Act and a report to be submitted in this regard, it
2 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
has taken some reasonable time and based on the inspection report, where there are
number of persons against whom such Surcharge proceedings has to be initiated, this
reasonable time of a little ahead of 7 years ie., only 1 ½ or 2 months period beyond
the 7 years limitation period has been taken by the respondent to issue the impugned
proceedings under Section 87 of the Act. Therefore, this can be taken as a
proceedings initiated within the 7 years limitation period because the 2 months period
beyond the 7 years limitation period is only a marginal period that can be accepted,
he contended.
5. I have considered the point canvassed by the learned counsel for the
petitioner as well as the submissions made by the learned Additional Government
Pleader.
6. In fact, the very same issue has already been raised in W.P.No.10386 of
2021, where, I had an occasion to consider this point and pass the following order
dated 21.12.2021.
5. Heard Mr.K.Raja, learned counsel appearing for the
petitioner, who, among other grounds, has raised a preliminary
ground that, under the first proviso to Section 87(1) of the Act,
there was a limitation prescribed under which, within 7 years from
the date of commission of the act, the surcharge proceedings
under Section 87 should have been initiated. Here in the case in
3 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
hand, though the alleged commission or act was prior to 2012, the
surcharge proceedings was initiated and concluded only in the year
2021, therefore it is beyond the 7 years limitation period and
hence in view of the mandatory time limit prescribed under Section
87(1) first proviso, the impugned proceedings ought not to have
been issued, as the same is vitiated for the said reason alone.
6. Since such a preliminary ground as prime ground is raised
by the petitioner's counsel, this Court wanted to examine the
same, for which Mr.M.R.Gokul Krishnan, learned Government
Advocate appearing for the first respondent has given his
assistance, stating that, whether the proviso referred to in Section
87(1) of the Act was to be considered as mandatory one or it is
only directory, there has been divergent views taken by the Writ
Courts, wherein one set of judgments take it as a mandatory
requirement and another set of judgments makes it clear that it is
only directory, as against which when intra-Court appeals were
filed, and those judgments since have been affirmed by different
Division Benches, the issue has been referred to a Full Bench of
this Court for an authoritative pronouncement.
7. In this context, it is the contention of the learned
Government Advocate appearing for the first respondent that, in
“H.Rajasekar and Others -Vs- The Deputy Registrar of Co-
operative Societies and Others” reported in (2009) 4 LW
427, the view taken by the Writ Court was that, this proviso is a
mandatory one, whereas a contra view has been taken in the
matter of “K.Murugan -Vs- The Deputy Registrar of
Cooperative Societies and Others” reported in (2011) 3 CTC
4 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
689 by another learned Judge of the Writ Court that it is only
directory.
8. Moreover, the order passed by the learned Single Judge
taking a similar view as that of the view in H.Rajasekar's case,
which was taken in W.P.No.34043 of 2006 was taken up on appeal,
where a Division Bench of this Court, on 23.12.2008 in W.A.No.316
of 2008, in the matter of “Registrar of Cooperative Societies
and another -Vs- C.Mariappan” had affirmed the said view.
Thereby, the view taken in “H.Rajasekar and Others -Vs- The
Deputy Registrar of Co-operative Societies and Others”
reported in (2009) 4 LW 427, followed by another case ie., in ie.,
“K.Murugan -Vs- The Deputy Registrar of Cooperative
Societies and Others” reported in (2011) 3 CTC 689 since has
been affirmed by a Division Bench, it seems that the matter has
been referred to the Full Bench of this Court, where, though a
prima facie view has been expressed by an order dated
02.03.2020, the Full bench has posted the matter for further
hearing to decide and to give an answer directly as to whether the
first proviso to Section 87(1) of the Act prevents the
commencement of proceedings upon a lapse of 7 years or it still
can allow the commencement of such proceedings by holding it to
be directory.
9. Since the said issue as framed by the Full Bench of this
Court by order dated 02.03.2020 is still pending or yet to be
resolved, the petitioner cannot seek any benefit by taking a clue
from the orders passed by the Writ Court, of course as confirmed
by the Division Bench, unless and until an authoritative
pronouncement is made by the Full Bench in the case referred to
5 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
supra. The learned Government Advocate submits that, the plea
now raised by the petitioner that the first proviso to Section 87(1)
is mandatory cannot be, for the present, pressed into service now
for the benefit of the present petitioner.
10. I have considered the rival submissions made by the
learned counsel appearing for both sides. In respect of the said
issue ie., whether the first proviso to Section 87(1) of the Act is
mandatory or directory, and in that case if it is mandatory, whether
it should be taken into account from the date of commission of the
act or detection of the commission of the act, the prima facie view
expressed by the Full Bench, of course by analyzing the view
expressed by the Writ Courts in the aforesaid judgments as well as
Division Bench, would be helpful.
11. In this context, in order to have a better understanding
of the issue as of now, the view expressed by the Full Bench, of
course during the interregnum, by order dated 02.03.2020, in
entirety, is extracted hereunder.
“We have heard learned counsel for the parties.
2.Much of our time has been consumed in
trying to understand the issue of reference having
arisen, but with the able assistance of all the learned
counsel, we have been able to locate the issue of
difference that has been made the subject matter of
this Full Bench, namely, as to whether the period of
seven years as prescribed in the first proviso to
Section 87 (1) of the Tamil Nadu Co-operative
6 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
Societies Act, 1983, would operate from the date of
the act or omission of the delinquent as mentioned in
Section 87 (1) of the 1983 Act, or from the date of
detection and commencement of the proceedings of
surcharge upon the contingencies as referred to in
Section 87 (1). The issue as to whether it is directory
or mandatory is not a point of reference, but, prima
facie, keeping in view the nature of surcharge
proceedings under Section 87, the provision of
limitation and prescribing of 7 years period which
begins with the phrase “no action shall be
commenced”, to us, appears to be negatively worded,
thereby prohibiting any action in respect of surcharge
proceedings and therefore, is mandatory.
2.The characteristics of a mandatory provision,
prima facie, in our opinion, have been correctly
explained by a learned Single Judge in the case of
H.Rajasekar and Others vs. Deputy Registrar of Co-
operative Societies, reported in (2009) 7 MLJ 942,
which is also one of the decisions under appeal in
which the reference has been made.
3.What we further find is that another learned
Single Judge, in W.P.No.34043 of 2006, had taken a
similar view and the said view was affirmed by a
Division Bench on 23.12.2008 in W.A.No.316 of 2008
(Registrar of Co-operative Societies and Another vs.
C.Mariappan).
7 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
4.However, a somewhat contrary prima facie
view has been taken by another learned Single Judge
in the case of K.Murugan vs. Deputy Registrar of
Cooperative Societies, reported in 2011 (3) CTC 689,
where, in paragraph 8, the learned Single Judge has
framed the question and has then proceeded to
answer it with the aid of dictionary meaning of the
words 'commence' and 'institution', which stands
enunciated in paragraphs 15 to 24 of the said
judgment. Prima facie, we do not find the words 'act'
or 'omission' having been considered for fixing the
date of commencement by the learned Judge in the
said decision and therefore, in order to proceed
further, this Court will have to define as to the date of
commencement in the light of the questions posed by
us right at the beginning.
5.The Section, as it stands, containing the
aforesaid proviso, is an exception to the main Section
and therefore, with the mandatory nature of the
words used therein as indicated above, the proviso
does not indicate that commencement has to be
counted for the purpose of limitation from the date of
detection of the act or omission. It categorically
mentions 7 years from the date of the act or
omission. The learned Additional Advocate General
contends that the same should be interpreted so as
to govern all such acts on being detected, or else, the
8 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
very purpose of surcharge and realisation and
recovery of the amount or property misappropriated
could be avoided on the strength of such a strict
interpretation of 7 years limitation.
6.The issue, therefore, which has to be directly
answered by us is as to whether the first proviso to
Section 87 (1) prevents the commencement of
proceedings upon a lapse of 7 years or it still can
allow the commencement of such proceedings by
holding it to be directory.
7.The learned Additional Advocate General
prays that the matter may be taken up after four
weeks to enable him to assist the Court.”
12. On a reading of the aforesaid expression made by the
Hon'ble Full Bench, since a view has been expressed prima facie,
that view can be taken into account for the present, because of
the orders already concluded by the Writ Court in more than one
case and that view also has been affirmed by the Division Bench of
this Court.
13. In this context, in Para 2 of the Full Bench order
referred to above, the Full Bench has taken note of the view
expressed by the Writ Court in H.Rajasekar's case reported in
(2009) 4 LW 427. The Full Bench also has taken note of the
fact that when similar view was expressed by another learned
9 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
Judge of the Writ Court in W.P.No.34043 of 2006 and when the
same was appealed in W.A.No.316 of 2008 in the matter of “The
Registrar of Co-operative Societies -Vs- K.Murugan”, the
said view was affirmed by the Division Bench also.
14. The Full Bench also took note of the view expressed by
another learned Judge of this Court in Murugan's case reported
in (2011) 3 CTC 689, where a different view has been taken.
Ultimately, in para 2 and 5 of the Full Bench order referred to
above, it has been stated as a prima facie view that the first
proviso to Section 87(1) of the Act is mandatory and the 7 years
period mentioned shall be taken only from the date of the act or
omission. This can be culled out from the view expressed by the
Full Bench in Para 2 to 5 of the said Full Bench order dated
02.03.2020 and for easy reference, the order of the Full Bench has
already been quoted herein above.
15. Therefore, after having gone through the judgments,
right from the Single Judge orders referred to above as well as the
Division Bench judgment and also the view expressed prima facie
by the Full Bench in the order dated 02.03.2020, this Court is of
the view that, as of now the prevailing law is that, the first proviso
to Section 87(1) of the Act is mandatory and the 7 years limitation
shall be taken into account only from the date of the act or
omission, but not from the date of detection of the act or
omission.
16. If that principle is pressed into service in the present
facts of the case, admittedly there has been more than 7 years
10 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
between the act or commission of the alleged misconduct or
mismanagement by which the alleged loss was sustained by the
Society and the initiation of the surcharge proceedings under
Section 87 of the Act.
17. Therefore, this Court has no hesitation to hold that, the
preliminary plea or ground raised by the petitioner by quoting the
aforesaid proviso ie., 7 years limitation is to be sustained.
Accordingly, this Court is inclined to dispose of this writ petition
with the following order.
● That the impugned order, for the aforesaid reason of
limitation, is hereby quashed and accordingly, the writ
petition is allowed.
● However, if ultimately the Full Bench comes to the
conclusion that the 7 years limitation is not mandatory but
only directory, and the 7 years limitation shall be calculated
only from the date of detection of the act or omission and
not from the date of commission of the act, based on such
declaration of law, if any, to be made by the Full Bench in
future, it is open to the respondents to restore the Section
87 proceedings, which has been now quashed by this order,
without prejudice to the rights of the parties.
18. In the result, this writ petition is allowed in the above
terms. No costs. Consequently, connected miscellaneous petitions
11 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
are closed.”
6. Since the issue has already been decided in the above case, and when two
set of decisions were made and ultimately when the matter was placed before the Full
Bench as referred to above, and the aforesaid view was taken by the Full Bench,
though as an interim measure, as on date, that is the legal position that is prevailing.
Following the same, I am of the view that this writ petition can be allowed on the
same terms of the earlier order passed by this Court extracted herein above.
7. In that view of the matter, this Court is inclined to dispose this writ petition
with the following order.
● That the impugned Surcharge notice dated 19.11.2021, for
the aforesaid reason of limitation, is hereby quashed and
accordingly, the writ petition is allowed.
● However, if ultimately the Full Bench comes to the conclusion
that the 7 years limitation is not mandatory but only
directory, and the 7 years limitation shall be calculated only
from the date of detection of the act or omission and not
from the date of commission of the act, based on such
declaration of law, if any, to be made by the Full Bench in
future, it is open to the respondent to restore the Section 87
proceedings, which has been now quashed by this order,
12 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
without prejudice to the rights of the parties.
8. In the result, this writ petition is allowed in the above terms. No costs.
Consequently, connected miscellaneous petition is closed.
03.01.2022
Index : Yes/No
Internet : Yes/No
KST
To
The Deputy Registrar of Co-operative Societies
Salem Region, Salem-636 001.
13 / 14
https://www.mhc.tn.gov.in/judis
W.P.No.27585 of 2021
R. SURESH KUMAR, J.
KST
W.P.No. 27585 of 2021
03.01.2022
14 / 14
https://www.mhc.tn.gov.in/judis
