Madras High Court
The Deputy Registrar Of Co-Operative ... vs S.Muthu on 18 October, 2024
C.R.P.No.2119 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 18.10.2024
CORAM
THE HONOURABLE MS.JUSTICE R.N.MANJULA
C.R.P.No.2119 of 2022
and
C.M.P.No.10935 of 2022
1.The Deputy Registrar of Co-operative Societies,
Thulasingam Pillai Street,
Sankarampalayam, Vellore.
2.Kavanoor Primary Agricultural Co-operative Bank,
Rep. by its Secretary, Kavanoor, Arakonam Taluk,
Vellore District. ... Petitioners
Vs.
S.Muthu ...
Respondent
Prayer: Civil Revision Petition filed under Article 227 of the Constitution
of India, praying to set aside the order passed by the Principal District
Judge, Vellore dated 31.03.2015 in C.T.A.No.16 of 2010 against the
surcharge order passed in proceedings No.08/2006-2007 dated
31.10.2006.
Page No.1 of 12
https://www.mhc.tn.gov.in/judis
C.R.P.No.2119 of 2022
For Petitioners : Mr.L.P.Shanmugasundaram
For Respondent : Mr.G.Jeremiah
******
ORDER
The Civil Revision Petition has been filed challenging the orders of
the learned Principal District Judge, Vellore/ Special Tribunal for
Cooperative Cases dated 31.03.2015 made in C.T.A.No.16 of 2010.
2. The respondent has filed the above appeal before the Tribunal
challenging the surcharge proceedings initiated against him by holding
that he had caused a loss of Rs.1,07,888/- to the petitioner Bank. The
above appeal has been allowed in favour of the respondent and aggrieved
over that, this civil revision petition has been filed by the petitioners/ Co-
operative Society.
3. The learned counsel for the petitioners submitted that the order
of the Tribunal is erratic, as it has omitted to note that the respondent is
also a party to the surcharge proceedings and that the order has been
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passed on an assumption that only the former Secretary Monoharan alone
was a party to the surcharge proceedings.
4. On a complete reading of paragraph No.6 of the impugned order
of the Tribunal dated 31.03.2015 it is seen that the Tribunal has not
misunderstood the fact that the respondent is also a party to the surcharge
proceedings. In fact, an explicit reference has been made in the above
paragraph that the surcharge order has been passed against both the
persons, denoting the respondent and the former Secretary Manoharan.
There is no quarrel on the point that the mis-appropriation has been
committed only by Manoharan and not by the respondent. Even in the
surcharge proceedings the above fact has been recorded in a crystal clear
manner. So far as this respondent is concerned, he invited the surcharge
order against him in view of his failure to recover 21% interest on the
amount liable to be paid by Manoharan and he had chosen to recover
only 6% interest. The Tribunal has also recorded the above fact in its
order. However it has rendered a finding that the respondent did not
commit any mis-appropriation, but, only by abundant caution the
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surcharge order binding the respondent to the tune of Rs.1,07,888/- has
been passed.
5. The learned counsel for the respondent submitted that the
surcharge order cannot be passed against an employee for a mere
negligence and the petitioners ought to have made out that the party
concerned has committed wilful negligence. In support of his above
contention, he relied on the decision of the Division Bench of this Court
in S.Ramadevi Vs. Special Officer, Ambur Co-operative Sugar Mills
reported in 2016 SCC OnLine Madras 11328. In the said judgment it is
held that in order to pass surcharge order by initiating surcharge
proceedings under Section 87 of the Act, it has to be proved that the loss
has been caused due to wilful negligence and it is not sufficient to prove
that there is mere loss.
6. Admittedly, the respondent has not benefited himself by
committing any mis-appropriation. Even by awarding lesser interest than
the mandatory rate, the respondent did not get any personal benefit.
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The surcharge order does not stated that the respondent had acted with
premeditation or in a wilful manner. It is neither the case of the
petitioners that the respondent has entered into conspiracy with
Manoharan in order to levy lesser interest at 6%.
7. So far as the 'wilful negligence' is concerned, the said phrase has
not been defined in the Tamil Nadu Co-operative Societies Act. In the
earlier judgments of the Division Benches of this Court in K.Ajay Kumar
Gosh Vs. Tribunal for Co-operative Cases reported in (2009) 4 MLJ
992 and S.Subraanian Vs. The Deputy Registrar of Co-operative
Societies (Housing), Cuddalore reported in 2002 (3) LW 185 it has been
held that mere negligence cannot be a ground for surcharge and it should
be wilful negligence or intentional negligence and not mere carelessness
or intention or inadvertence or a single lapse by oversight. In fact, the
order has also extracted a portion of another judgment reported in
Sathyamangalam Co-operative Urban Bank Ltd. Vs. Deputy Registrar
of Co-operative Society (1980) 2 MLJ 17, where it is held as under:
“The degree of negligence that is contemplated
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under Section 71(1) of the Tamil Nadu Cooperative
Societies Act is not mere negligence, but wilful
negligence. The word ‘wilful’ has not been defined in
the Act. ‘Wilfulness’ or ‘wantonness’ imports pre-
meditation or knowledge and consciousness that an
injury or loss is likely to result from the act done or
from the omission to act. It imports a constructive
intention as to the consequences which, entering into
the wilful act, the law imputes to the offender and in this
way a charge, which otherwise would be mere
negligence, becomes by reason of a reckless disregard
of probable consequences, a wilful wrong. The act done
or omitted to be done must be intended or must involve
such reckless disregard of security and right as to imply
bad faith. In examining whether there is wilful
negligence, it has to be seen first whether the person
concerned is guilty of negligence and if so, whether the
said wilful negligence is the proximate cause of the
injury or loss sustained.”
20. In the light of the decisions referred to above,
it is clear that to pass surcharge order under Section 87
of the Act, appellants should have done an actionable
wrong either by commission or omission in a deliberate
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and reprehensible manner with reckless callousness and
with a supine indifference, without taking due care and
caution ordinarily expected from a reasonable and
prudent man under those existing circumstances. In the
absence of such categorical finding by the Respondents,
it is not possible to mulct the appellants with the loss
caused to the society.”
8. As per the above interpretation, for the phrase 'wilful negligence'
the petitioners ought to have established that the respondent had pre-
meditation or knowledge and consciousness that an injury or loss is likely
to result by the act done by him and that it is a wilful wrong. In order to
support an allegation that the respondent has caused loss to the Society
by acting in a wilful negligent manner, it has to be established that the
respondent had acted in a careless and selfish motive for gain and as such
there is no such motive has been attributed against the respondent.
9. For a better understanding of the above legal principles
concerning 'wilful negligence', I feel it is appropriate to extract the
following paragraph of the judgment of the Division Bench of this Court
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in S.Ramadevi case (cited supra)
26. We are, thus, of the view that as the legal
principles are quite settled, we have to only look into the
application of the same in the facts of the present case.
We are of the view that the appellate authority was right
in coming to the conclusion that there is no willful
negligence in the case of the appellant and this aspect
has really not even been seriously touched upon by the
learned Single Judge. Merely because loss is caused
would not suffice. The appellant is not the beneficiary.
There is no such willful negligence attributed to her. This
is apparent from even the enquiry report, which we have
referred to aforesaid. Mere use of the words “negligence
and careless with selfish motive for gain” would not
suffice when actually the facts do not make out such a
case. Thus, the surcharge officer certainly fell into an
error in imposing the liability on the appellant. The
enquiry report discussed aforesaid itself shows that it is
the third respondent who is found to have taken
advantage of the situation in seeking to obtain illegal
gain for himself. The pay bill was prepared by the third
respondent in the computer and the abstract of the
department wise pay bill alone used to be furnished to
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the Accountant and the Chief Accountant (appellant) and
signatures obtained. Thus, both of them had been
signing on the department wise pay bill abstract without
seeing the pay bills. The third respondent/Mr. A. Kabali,
thus, took advantage of the fact that it was not possible
for others to verify the cheques and test the salary list
which was running into 300 pages. It is in these
circumstances that the fourth respondent has been
exonerated of the liability even though the abstract pay
bill was required to be verified by him as an Accountant
and he alone was supervising each and every matter.
The cheques signed by the appellant are actually in the
nature of counter-signature and the Accountant himself
had been exonerated. Merely because the appellant was
the head of the department, the liability could not be
fastened on her as no case of willful negligence is made
out.
10. In fact, the above order would further clarify that even while
stating that there is negligence and carelessness with selfish motive for
gain, it should not be a mere statement or words, but, there should be
material to substantiate the same. In the instant case, the appropriate
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authority in his order made during the surcharge proceedings has not
mentioned even by words that the respondent has acted in a wilful
negligent manner with some ulterior motive for gain or neither any
finding had been rendered in this regard.
11. In the absence of establishing any wilful negligence against the
respondent, it is not right on the part of the appropriate Authority to pass
any surcharge orders against the respondent. As the appellate Tribunal
has rightly appreciated the matter and rendered a finding that the
surcharge order binding the respondent has been issued only by abundant
caution and not by establishing the actual wilful negligence, I feel that the
impugned order does not require any interference.
12. It is needless to state that the respondent is entitled to get the
entire terminal benefits without any deduction in terms of the surcharge
order passed against him and that it is obligatory on the part of the
petitioners to release full/ part of the terminal benefits withheld in view of
the earlier surcharge order.
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13. Accordingly, this Civil Revision Petition is dismissed. No
costs. Consequently, connected miscellaneous petition is closed.
18.10.2024
Index : Yes /No
Neutral Citation : Yes / No
Speaking / Non-speaking
dsa
To
1.The Principal District Judge,
Vellore.
2.The Deputy Registrar of Co-operative Societies,
Thulasingam Pillai Street,
Sankarampalayam, Vellore.
3.The Secretary,
Kavanoor Primary Agricultural Co-operative Bank,
Kavanoor, Arakonam Taluk,
Vellore District.
https://www.mhc.tn.gov.in/judis
R.N.MANJULA, J.
dsa
18.10.2024
https://www.mhc.tn.gov.in/judis
