The first proviso to Section 87(1) of the Tamil Nadu Cooperative Societies Act, 1983, which prescribes a time limit for initiating a proceeding, is mandatory.

1. Whether the time limit provided in first proviso to Section 87(1) of the Tamil Nadu Cooperative Societies Act, 1983 is imperative or only directory is the question which needs to be answered in these writ petitions.

2. An enquiry under Section 81 of the Tamil Nadu Co-operative Societies Act, 1983 (hereinafter referred to as "the Act") was ordered in respect of monetary loss said to have been caused by the petitioners herein, who were the employees of the Fourth Respondent Society. The Enquiry Officer submitted a Report on 18.08.2006 holding that the petitioners are responsible for the loss caused to the Society. Based on the said Report, on an application filed by the fourth respondent, a proceeding under Section 87(1) of the Act was initiated by the first respondent in Penal Assessment No.33/2008/Sa.Pa dated 01.08.2008 against the petitioners. Challenging the said proceeding on the ground that it is barred by limitation as provided in the first proviso to Section 87(1) of the Act, the petitioners are now before this Court. To the contrary, the contention of the respondents is that the time limit provided therein is not mandatory and the same is only directory and therefore, the impugned proceeding is not barred by limitation, warranting interference at the hands of this Court.

3. In order to appreciate the legal plea taken by either side, it would be, at the outset, useful to refer to Section 87(1) of the Act, which reads as follows:-

"87. Surcharge:- (1) 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 organisation 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 wilful negligence or has made any payment which is not in accordance with this Act, the Rules or the bye-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, liquidatory 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 the 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 of the misappropriation, mis-application of funds, fraudulent retainer, breach of tr5ust or wilful negligence or payments which are not in accordance with this Act, the Rules or the bye-laws as the Registrar or the person authorised as aforesaid thinks just.

First Proviso to Section 87(1) of the Act reads as follows:-

Provided that no action shall be commenced under this sub-section after the expiry of seven years from the date of any act or omission referred to in this sub-section".

4. A plain reading of the above proviso to Section 87(1) of the Act, at the first glimpse, would give an unambiguous impression that the time limit provided therein is mandatory. But, the learned counsel for the respondents would submit that similar time limits provided in second proviso to Section 87(1) and Section 81(4) of the Act have been held to be only directory by this Court and so, applying the same yardstick, the first proviso to Section 87(1) of the Act should also be construed to be only directory and not mandatory.

5. To appreciate the said argument, it is necessary to refer to second proviso to Section 87(1) and Section 81(4)