Madras High Court
The Deputy Registrar Of ... vs M.R.Janarthanan ... 1St on 9 October, 2023
W.A.(MD) No.1735 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 09.10.2023
CORAM
THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM
AND
THE HONOURABLE MR.JUSTICE V.LAKSHMINARAYANAN
W.A.(MD) No.1735 of 2023
and C.M.P.(MD) No.13271 of 2023
The Deputy Registrar of Cooperative Societies,
Office of the Deputy Registrar of Cooperatives,
Paramakudi Circle,
Singarathoppu Street,
Paramakudi Post,
Ramanathapuram District. ... Appellant/1st Respondent
-Vs.-
1.M.R.Janarthanan ... 1st Respondent/Writ Petitioner
2.Bogalur Primary Agricultural
Cooperative Credit Society,
Rep. by its President,
Bogalur, Ramanathapuram. ... 2nd Respondent/2nd Respondent
PRAYER:- Writ Appeal filed under Clause 15 of Letters Patent Act, to
set aside the order dated 04.08.2022 made in W.P.(MD)No.11585 of 2015
on the file of this Court.
For Appellant : Mr.N.Satheesh Kumar
Additional Government Pleader
1/10
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W.A.(MD) No.1735 of 2023
For 1st Respondent : Mr.C.Jeganathan
****
JUDGMENT
(Judgment of the Court was delivered by S.M.SUBRAMANIAM, J.)
This intra-Court appeal has been instituted questioning the
validity of the order dated 04.08.2014 passed in W.P.(MD) No.11585 of
2015.
2. By consent of both sides, the Writ Appeal itself is taken up
for final disposal at the time of admission. Considering the nature of the
order proposed to be passed in this Writ Appeal, protecting the interest of
the second respondent also, notice to the second respondent is dispensed
with.
3. The facts in nutshell as narrated would reveal that the first
respondent was an employee of the second respondent cooperative
society. The second respondent is the cooperative society registered
under the provisions of the Tamil Nadu Cooperative Societies Act, 1983.
A surcharge proceedings was initiated under Section 87 of the Tamil
Nadu Cooperative Societies Act and it is not in dispute that the first
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W.A.(MD) No.1735 of 2023
respondent employee participated in the process of enquiry. After
conducting the enquiry, the competent authority / Deputy Registrar of
Co-operative Societies passed an order under Section 87 of the Act,
which was challenged by way a writ proceedings before this Court. The
said Writ Petition was allowed on the ground that there is no reference
for initiation of surcharge proceedings in the report submitted under
Section 81 of the Tamil Nadu Cooperative Societies Act and in the
absence of any specific reference against the first respondent, the
surcharge proceedings initiated against the first respondent is untenable.
4. The learned Additional Government Pleader appearing on
behalf of the appellant mainly contended that Section 81 report would be
sufficient enough to institute the surcharge proceedings and it is only a
fact finding report based on which the authorities can conduct further
enquiry on the allegations of misappropriation, fraud etc., if any occurred
in the cooperative societies. Thus, the learned Judge has erred in
allowing the Writ Petition.
5. Learned counsel for the first respondent mainly contended
that since there was no reference for initiation of surcharge proceedings
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W.A.(MD) No.1735 of 2023
against the first respondent in the Section 81 report, the Writ Petition was
allowed on that ground and there is no infirmity.
6. We have Considered the rival submissions made between the
parties to the lis.
7. The scheme of the Tamil Nadu Cooperative Societies Act
contemplates a statutory enquiry under Section 81 and an inspection
under Section 82 of the Act. Under Section 81, an enquiry may be
ordered by the Registrar on his own motion and shall, on application of a
majority of the board or of not less than one third of the members or on
the request of the financing bank or of the District Collector, hold an
inquiry, or direct some person authorised by him by order in writing in
this behalf to hold an inquiry into the constitution, working and financial
condition of a registered society or any alleged misappropriation,
fraudulent retention of any money or property, breach of trust, corrupt
practice or mismanagement in relation to that society or into any
particular aspect of the working of that society.
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W.A.(MD) No.1735 of 2023
8. Therefore, it is a statutory enquiry contemplated in order to
regulate the affairs and administration of a Cooperative Society under the
provisions of the Act. Once an enquiry officer has been appointed under
Section 81 of the Act, he is empowered to scrutinize the records of the
society and submit his report. Report per se would not provide a cause
for the employees to move a Writ Petition. Based on the enquiry report
submitted under Section 81 of the Act three fold actions are permissible.
Firstly, surcharge proceedings may be initiated, if any financial loss has
been assessed by the enquiry officer. Criminal prosecution can be
initiated by registering a complaint before the commercial investigation
wing of the police department. Thirdly, department disciplinary
proceedings also can be initiated, if there is any misconduct or violations
of service conditions are identified. All the three fold actions are
permissible simultaneously and there is no impediment for the authorities
to institute proceedings independently and pass appropriate orders by
following the procedures as contemplated under the relevant rules and
by-laws in force.
9. Therefore, the finding made in the enquiry report under
Section 81 is to be considered for the purpose of initiation of all possible
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W.A.(MD) No.1735 of 2023
actions and thus, the findings made by the learned Single Judge that there
is no reference in the Section 81 report is immaterial and even in the
absence of any such reference, the authorities are empowered to initiate
surcharge proceedings, disciplinary proceedings and criminal
prosecution, if there are materials available on record for the purpose of
initiation of such actions.
10. Section 87 of the Tamil Nadu Cooperative Societies Act
denotes surcharge. Sub-section 1 to Section 87 enumerates 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 organization 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 willful negligence or has
made any payment which is not in accordance with this Act, the rules or
the by – laws, the Registrar himself or any person specially authorised by
him in this behalf, of his own motion or on the application of the board,
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W.A.(MD) No.1735 of 2023
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 the person
authorised as aforesaid thinks just or to contribute such sum to the assets
of the society by way of compensation in respect to the assets of the
society by way of compensation in respect of the misappropriation,
misapplication of funds, fraudulent retainer, breach of trust or willful
negligence or payments which are not in accordance with this Act, the
rules or the by–laws as the Registrar or the person authorised as aforesaid
thinks just.
11. Therefore, Section 81 report alone cannot be a ground to
initiate surcharge proceedings under Section 87. Numerous
circumstances are enumerated under the provisions of the Act for
initiation of actions. Ultimately, misappropriation of funds, fraud or
otherwise are identified, the authorities are empowered to initiate action
by invoking the provisions of the Act and Rules. This being the very
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W.A.(MD) No.1735 of 2023
object and scheme of the Act, non reference regarding surcharge
proceedings in 81 Report cannot be a ground to vitiate the entire
proceedings and thus we are inclined to consider the Writ Appeal on
hand.
12. Accordingly, the order dated 04.08.2014, passed in W.P.
(MD) No.11585 of 2015 is set aside. The first respondent is at liberty to
approach the appellate forum / jurisdiction Principal District Judge /
Special Tribunal for Co-operative cases under Section 152 of the Tamil
Nadu Cooperative Societies Act within a period of 30 days from the date
of receipt of a copy of this order. On receipt of any such statutory appeal,
the jurisdictional forum may adjudicate and decide the matter as
expeditiously as possible without being influenced by the observations
made in this Writ Appeal. It is open to the first respondent to raise all the
grounds.
13. Accordingly, the Writ Appeal stands allowed. No costs.
Consequently, connected Civil Miscellaneous Petition is closed.
[S.M.S.J.,] & [V.L.N.J.,]
NCC :Yes/No 09.10.2023
Index :Yes/No
SJ
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W.A.(MD) No.1735 of 2023
To
The Deputy Registrar of Cooperative Societies,
Office of the Deputy Registrar of Cooperatives,
Paramakudi Circle,
Singarathoppu Street,
Paramakudi Post,
Ramanathapuram District.
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W.A.(MD) No.1735 of 2023
S.M.SUBRAMANIAM, J.
AND
V. LAKSHMINARAYANAN, J.
SJ
W.A.(MD) No.1735 of 2023
09.10.2023
https://www.mhc.tn.gov.in/judis
