The main legal point established in the judgment is that the initiation of surcharge proceedings must adhere to the principles of natural justice, and willful dereliction of duty must be proven, not just mere negligence.

The prayer in this writ petition is to quash the order made in C.M.A. No. 26 of 1998 dated 37. 2000 on the file of the second respondent, confirming the order of the first respondent dated 2. 1998, initiating surcharge proceedings against the petitioners under Section 87 of the Tamil Nadu Co-operative Societies Act, 1983.

2. The case of the petitioners is that they are working as Junior Assistants in the Cooperative Stores of Cholan Roadways Corporation Employees Co-Operative Society, which is a Consumer Co-operative Society, in the said society, one Manager, three Assistants, four Junior Assistants, five Salesmen and two Security Guards are employed. The Manager and three Assistants are Higher cadre officers than the petitioners. There is one Assistant in-charge of the Godown, who is called the Godown Keeper. The sale transactions in the Society are made mostly on credit basis. The sale amount will be recovered from the monthly salary of the employees concerned by the Transport Corporation Officials and debited from the employees’ account. According to the petitioners, there was no resolution passed by the Board that the petitioners should manage the Godown. The petitioners are only Junior Assistants and they were not entrusted with the stocks of the Godown.

3. Petitioners and eight others were issued a show cause notice by the first respondent on 8. 1997 asking as to why a sum of Rs.3,90,463.80 shall not be recovered from the Manager, the petitioners, two Assistants and five Salesmen. According to the petitioners, the said notice was issued based on the report of enquiry, conducted under Section 81 of the Tamil Nadu Co-operative Societies Act, 1983. The Godown Keeper was not issued with any such notice. The petitioners sent their reply to the said show cause notice on 8. 1991 and stated that they are employed only as Junior Assistants in the office and they are not connected with the sales or Godown or stock in-charge and therefore, they are not responsible for the stock deficiency as per the bye-laws. They have also pointed out that no resolution or office order was passed entrusting the stock of the society of the petitioners and only the Godown Keeper is in-charge of the whole stock. Criminal cases were also registered against the petitioners and eight others and in the said criminal cases, the petitioners were acquitted. On 28. 1997, the petitioners met the first respondent and requested to furnish a copy of the enquiry report made under Section 81 of the Act, which was referred to and relied on in the show cause notice, dated 8. 1997. However, the said report was not furnished to the petitioners. The first respondent on 2. 1998 passed the order of surcharge against the petitioners and three other salesmen and ordered to pay a sum of Rs. 48,541.38 each, for the stock deficiency. Petitioners filed appeal under Section 152 of the Tamil Nadu Co-Operative Societies Act, 1983, before the District Court in C.M.A.No.29 of 1998 and the said CMA was also dismissed on 37. 2000, as against which this writ petition is filed.

4. The first respondent filed counter affidavit by stating that even though the petitioner were designated as Junior Assistants, their works were related to sales and during the occurrence of stock deficit, they were authorised to work as salesmen. The Board of management had given office orders to the petitioners to work as salesmen. The surcharge notices have been sent to the petitioners since the Enquiry Officer, who conducted enquiry under Section 81 of the Act, recommended to initiate surcharge action against them and consequently the surcharge notice was served to the petitioners. It is also stated in the counter affidavit that Section 81 enquiry report was supplied to the petitioners by the Domestic Enquiry Officer. The CCIW Police, Thanjavur, charge sheeted the petitioners and the cases are under trial on the file of the Additional Chief Judicial Magistrate Court, Kumbakonam, in C.C. No. 13 and