Madras High Court
D.Kanchana vs The Surcharge Officer on 6 January, 2025
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
C.R.P.No.5349 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 06.01.2025
CORAM:
THE HONOURABLE MR. JUSTICE D.BHARATHA CHAKRAVARTHY
C.R.P.No.5349 of 2024
and
C.M.P.No.29706 of 2024
D.Kanchana ... Petitioner
Vs
1. The Surcharge Officer,
Deputy Registrar of Cooperative Societies,
Vellore Zone, Vellore.
2. The Joint Registrar of Cooperative Societies,
Vellore Zone, Vellore.
3. The Joint Registrar/Managing Director,
Vellore District Central Cooperative Bank Limited,
Vellore.
4. The General Manager,
Vellore District Central Cooperative Bank Limited,
Vellore.
... Respondents
Prayer: Civil Revision Petition filed under Article 227 of Constitution of
India to set aside the common Judgement and Decreetal order passed in
Cooperative Tribunal/Principal District Court, Vellore District, in
1/9
https://www.mhc.tn.gov.in/judis
C.R.P.No.5349 of 2024
C.M.A.(C.T.A) No.10 of 2021 dated 30.09.2024 confirming the Surcharge
order in Na.Ka.No.941/2021 sapa (Tha.Thee.No.01/2021-2022 sapa) dated
01.09.2021 passed by the first respondent.
For Petitioner : Mr.J.Jayamalan
For R1 to R3 : Mr.M.Murali
Government Advocate
For R4 : Mr.D.Gopal
Government Advocate
ORDER
When the matter came up for hearing, it is submitted by the learned
counsel appearing for the petitioner that arising out of the same proceedings,
in respect of one J.Jayakumar, the connected Civil Revision petition in
C.R.P.No.4618 or 2024 has been allowed.
2. When the charge pertains to the recovery of loan amount and there is
no allegation with reference to misappropriation, this Court, after considering
the very same charge in respect of the manager, concluded that there was no
willful negligence or deliberate act. Therefore, the loss cannot be recovered
through surcharge proceedings. The relevant portions of the said order from
paragraph No. 6 to 10 are extracted here under:-
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“6. As against the petitioner, enquiry was conducted under
Section 81 of the Co-operative Societies Act on the ground that, after
sanctioning of loan to the small traders, he has not taken any steps to
recover the amount in time from the borrowers. It is not disputed that
the revision petitioner was working as Branch Manager from
01.12.2011 to 31.08.2016 and during his tenure, he had sanctioned
Small Traders loans to the tune of Rs.4,80,575/- to six persons and
thereafter, he was transferred to the fourth respondent bank on
01.09.2016. Though he has not taken any steps immediately to recover
the loan amount either by arbitration proceedings or some other
proceedings, the facts remains that the revision petitioner was
transferred on 01.09.2016 itself. As far as the recovery of the loan
amount is concerned, though limitation is applicable, the proviso to
Section 90(9) (b) of the Act clearly says that notwithstanding anything
contained in the Act for limitation, the Registrar may admit the claim, if
the applicant satisfies the Registrar that he had sufficient cause for not
referring the dispute within such period and the dispute so admitted
shall be a dispute which shall not be barred on the ground that the
period of limitation has expired. In such circumstances, to fasten the
liability on the person, the requirements for initiation of surcharge
proceedings under Section 87 of the Act must be established; and the
person must be acted in a manner of willful negligence to cause loss to
the assets of the society. Therefore, mere inaction on the part of the
employee would not suffice to proceed surcharge proceedings against
that person.
7. At this juncture, it is worthwhile to note that, in the case of
S.Ramadevi Vs. The Special Officer, Ambur Cooperative Sugar Mills,
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Vadapudupet, Vellore District and others reported in 2016 - 4 - L.W.
452 (W.A.No.1213 of 2008, dated 05.08.2016, arising out of the dispute
with regard to the loss caused to the Society, inview of willful
negligence on the part of the appellant, a Division Bench of this Court
held as follows.
Issue No.3 : Willful negligence
25.The third and the last plea is actually the most crucial as to
whether the appellant could be said to have acted with willful
negligence. In this behalf, the learned counsel for the appellant
has relied upon two judgments of this Court in S.Subramanian
vs. The Deputy Registrar of Co-operative Societies (Housing),
Cuddalore & others, 2002-3-L.W. 185, and K.Ajay Kumar
Gosh and Others vs. Tribunal for Co-operative Cases, (2009) 4
MLJ 992, to contend that when requirements of Section 87 had
not been satisfied, which warrants initiation of surcharge
proceedings, the liability cannot be fastened. There has to be
willful and wanton premeditation with a view to cause loss to
the assets of the Society and ''mere negligence cannot be a
ground for surcharge and it must be willful negligence or
intentional negligence and not mere carelessness or intention
or inadvertence or a single lapse by oversight''. We extract the
observations in the case of K.Ajay Kumar Gosh, supra, as
hereunder:
''19.A detailed discussion has been made by making
reference to various judgments on this aspect in
another judgment reported in Sathyamangalam
Cooperative Urban Bank Ltd. vs. Deputy Registrar of
Cooperative Society and Another, (1980) 2 MLJ 17, it
is held thus:
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''The degree of negligence that is contemplated 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 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
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the appellants with the loss caused to the society.''
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 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
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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.
8. In the instant case, no evidence was adduced during the
enquiry under Section 87 of the Act to prove the wilful negligence on
the part of the civil revision petitioner. Further more, it is not
established that there was willfull act in a deliberate manner by the civil
revision petitioner, which was the cause for loss to the society. The
respondents have not initiated any suit proceedings during his tenure.
In such circumstances, mere negligence or inaction on the part of the
petitioner, will not amount to willful negligence.
9. Inview of the foregoing discussion, this court is of the view
that the respondents have not made out a case of willful negligence on
the part of the petitioner to cause loss to the society and hence, the
surcharge order passed by the first respondent and confirmed by the
appellate authority are liable to be set aside.
10. Accordingly, this civil revision petition is allowed and the
impugned order passed by the learned Principal District Judge,
Cooperative Tribunal, Vellore in CMA (CTA) No.11/2021, dated
30.09.2024, confirming the surcharge order dated 01.09.2021 passed by
the first respondent is set aside. There shall be no order as to costs.
connected miscellaneous petition is closed.”
3. In view of the order passed in respect of the co-employee with
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reference to the self same charge, this civil revision petition is also allowed
on the same terms. Consequently, civil miscellaneous petition is closed. No
costs.
06.01.2025
Neutral Citation: Yes/No
nsl
To
1. The Surcharge Officer,
Deputy Registrar of Cooperative Societies,
Vellore Zone, Vellore.
2. The Joint Registrar of Cooperative Societies,
Vellore Zone, Vellore.
3. The Joint Registrar/Managing Director,
Vellore District Central Cooperative Bank Limited,
Vellore.
4. The General Manager,
Vellore District Central Cooperative Bank Limited,
Vellore.
D.BHARATHA CHAKRAVARTHY, J.
https://www.mhc.tn.gov.in/judis
nsl
06.01.2025
https://www.mhc.tn.gov.in/judis
