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2010 Supreme(Mad) 1096
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE K. CHANDRU
J. Bhagiraj & Others
Versus
The Deputy Registrar Cooperative Societies, Kanniakumari District & Others
W.P.Nos.3725 & 7217 of 2004 & WPMP No.4383 of 2004 in W.P.No.3725 of 2004
Decided On :18-03-2010
For the Petitioners:R. Kannan, Advocate.
For the Respondents:R1, P. Subramanian, A.G.P. S.M. Subramanian, Advocate.
Liability of individuals in surcharge proceedings under the Tamil Nadu Cooperative Societies Act, 1983.
Headnote:
Surcharge Proceedings - Cooperative Tribunal - Tamil Nadu Cooperative Societies Act, 1983, Section 87(1) - The court discussed the surcharge proceedings initiated under section 87(1) of the Tamil Nadu Cooperative Societies Act, 1983 and the liability of the petitioners for the loss caused to the bank. The court also highlighted the role of the petitioners in sanctioning loans and their failure to take recovery steps in accordance with the law.
Fact of the Case:
The surcharge proceedings were initiated against the petitioners and others under section 87(1) of the Tamil Nadu Cooperative Societies Act, 1983. The court found that the petitioners were responsible for recommending the loan to a society that was not functioning, leading to a substantial loss to the bank.
Finding of the Court:
The court held that the surcharge order passed by the Deputy Registrar was proper and that the petitioners were liable for the loss caused to the bank. The court dismissed the writ petitions filed by the petitioners.
Issues: The issues raised by the petitioners included the time taken for the enquiry, the authority to sanction the loan, and the auction proceedings against the defaulting society.
Ratio Decidendi: The court rejected the objections raised by the petitioners regarding the time limit prescribed under the Act and the failure to proceed against the defaulter on time. The court also emphasized the individual roles played by the petitioners in the surcharge proceedings.
Final Decision: The court dismissed the writ petitions and held the petitioners liable for the loss caused to the bank.
These two Writ Petitions are filed against the order of the third respondent Cooperative Tribunal made in C.M.A.Nos.8 and 9 of 2000 respectively. By these two orders, the Tribunal dismissed the appeal and confirmed the order passed by the 1st respondent Deputy Registrar in Surcharge Proceedings made in A.R.C.No.6/1998 dated 29.11.1999.
2. In the first Writ Petition, the petitioner Bhagiaraj had worked in various capacities and finally retired as General Manager on 31.12.1998. He had also worked as Secretary of the Kanniyakumar District Central Cooperative Bank for 6 years.
3. In the second Writ Petition, the petitioners are wife and two sons and one daughter of late Chelladurai, who was working as Assistant General Manager in Kanniyakumar District Central Cooperative Bank. During the pendency of the appeal, the said Chelladurai passed away on 24.5.2003. Therefore, on an application being taken out, the legal representatives have come on record to prosecute the appeal.
4. The surcharge proceedings were initiated against the said Chelladurai and Bhagiaraj as well as the other employees, namely the Assistant Secretary, Clerk, Manager, Assistant Manager, Special Officer, Supervisor and several others. The surcharge proceedings came to be issued under section 87(1) of the Tamil Nadu Cooperative Societies Act, 1983 and suo motu cognizance was taken by the 1st respondent/Deputy Registrar. After Notice to the parties, by his order dated 29.11.1999 he concluded that the petitioners and others are liable for surcharge and the total loss caused to the Bank was arrived at Rs.9,70,518/-.
5. In the surcharge proceedings, the late Chelladurai was arraigned as respondent No.2 and Bhagiaraj was arraigned as respondent No.8. The surcharge Officer found that the late Chelladurai was responsible for the loss to the extent of Rs.50,000/- in respect of the first item along with another person. In respect of item No.5, he along with Bhagiaraj were made responsible for the loss of Rs.8,69,668/-. However, in respect of the item No.2, Bhagiaraj was responsible for the loss along with 7th respondent in the surcharge proceedings to the extent of Rs.38,200/-.
6. In the present case, the substantial loss was under item No.5, which related to granting of cash loan to the extent of Rs.6 Lakhs for the period from 2.12.1993 to 15.2.1994. Even before that, the Headquarters of Khadi Board had granted Rs.1.5 Lakhs, the State Government had given Rs.1,64,500/-. Without noting these, two loans were granted by the District Central Cooperative Bank. The said loan was not repaid. Because of the non-repayment upto 31.3.1997, the due from that loan account became Rs.8,69,668/-. It was charged that the two petitioners herein along with several other employees were the root cause for the loss.
7. When an enquiry under section 81 of the Tamil Nadu Cooperative Societies Act was made, with reference to the Banking operations, it also came to the notice that the Semmanvilai Cashewnut Processing Industrial Cooperative Society was not even functioning. Therefore, the Surcharge Officer after going into the details came to the conclusion that the two petitioners had a crucial role in sanctioning the loan and in not taking any due recovery steps in accordance with law. In fact, he found that the said Cashewnut society is stated to have been started during the year 1993-1994. They installed the machineries. An inaugural function was allegedly conducted and the processing work was started on 14.12.1993. But in the application form, though it was given that the society was started on 17.8.1990 and the Assistant Executive Officer when he visited the place on 19.11.1993, he stated that the society is functioning and 25 workmen are working. The society also owns a substantial land.
8. Later, it transpires that such a certification was done without even visiting the place. The loan application, which was sent to the Bank was processed by the clerical department and kept
