Ratios:
Surcharge proceeding for recovery can be initiated against an employee of co-operative society only if the loss is caused by an act which was callous, reprehensible or deliberate and with supine indifference.

Mrs. Aruna Jagadeesan, J.

1. This writ appeal is directed against the order passed by the learned single Judge in W.P.No.21158 of 2004 dated 19. 2007, declining to quash the surcharge proceedings dated 111. 2001 passed in E.P.No.1 of 2001-2002 Sa.Pa. on the file of the second respondent, Deputy Registrar of Cooperative Societies, Nagercoil, confirmed by the first respondent, Joint Registrar of Cooperative Societies, Nagercoil, pursuant to the enquiry conducted under Section 82 of the Tamil Nadu Cooperative Societies Act, 1983 (for short, the Act).

2. Surcharge proceedings were initiated under Section 87 of the Act in and by which, the second respondent passed an order dated 111. 2001 directing the Appellants to pay a sum of Rs.1,41,825,20 holding that a financial loss to the said extent has been caused by them jointly and severally. Aggrieved over the said order, the Appellants preferred an appeal before the Cooperative Tribunal/District Judge, the second respondent herein and the same was dismissed. Aggrieved against the said order, Appellants filed W.P.No.21158 of 2034 and the learned single Judge rejected the plea of the Appellants and held that the appellants have failed to obtain approval of the Registrar of Cooperative Societies/Government before effecting promotion, consequential revision of salary, appointment etc., and have committed wilful negligence and caused loss to the society and therefore, the learned single Judge declined to interfere with the concurrent findings of the respondents.

3. The main contention of the appellants in assailing the surcharge proceeding is that they have neither misappropriated or fraudulently retained any money or other property or been guilty of breach of trust nor caused "any deficiency in the assets of the cooperative society. They have only enforced the settlement arrived at between the Management (society) and the employees under Section 12(3) of the Industrial Disputes Act. Therefore, such acts cannot be termed as a wilful act of negligence, warranting surcharge proceedings. It was pointed out that no prior approval is required from the Registrar of the Cooperative Societies or the Government under Rule 149 of the Tamil Nadu Cooperative Societies Rules (for short, the Rules) and as such, there was no violation of the said provision.

4. The learned counsel for the Appellants Mr. S. Subbiah submitted that in the course of carrying on business and the affairs of the Society, the appellants have entered into an agreement with the employees under Section 12(3) of the Industrial Disputes Act and neither the State Act nor the Rules nor the Bye-laws of the Society make it obligatory to get prior permission or ratification to enter into such settlement.

5. Per contra, the learned Special Government Pleader Mr. R. Thirugnanam submitted that Rule 149 provided specific instructions regarding recruitment of the employees and fixation of cadre strength in cooperative Societies, requiring sanction to be obtained from the Registrar of Cooperative Societies now, after amendment, the words "with the prior approval of the Registrar of Cooperative Societies" has been substituted with the expression "prior approval of the Government" vide G.O.Ms.No.373, Cooperation Food and Consumers Protection Department dated 10. 2003. Thus, according to him, the Appellant in not getting such approval have wilfully neglected the instructions laid down in Rule 149.

6. Rule 149 prevents societies from making any recruitment until compliance of the mandate of the above said rule. Taking into account the cadre strength, classification of various categories of posts and the qualification required thereto for each post, recruitment can be made by adopting a special bye law in that regard. In this case, admittedly, no permanent recruitment has been made by the appellants. It is the categoric submission of the appellants that the appointment made by them is only temporary and in fact, there is reference to the status