Justification of the order of surcharge.

1. All the above writ petitions have been filed for the issue of a writ of certiorari for quashing the common judgment rendered by the District Judge of Coimbatore East at Erode (Tribunal constituted under section 96 of the Co-operative Societies Act) in the appeals preferred by the former office-bearers (President, Secretary and the Treasurer) and the other directors of the Satyamangalam Co-operative Urban Bank Limited, Sathyamangalam (hereinafter referred to as the Bank) in C. M. A. Nos. 111, 112, 125 and 146 to 151 of 1974 on his file, allowing the said appeals in part and dismissing them in other respects. Writ Petitions Nos. 104 to 109 and 111 of 1977 are filed by the Bank against the allowance in Part of C. M. A. Nos. 147, 149, 150, 151, 146, 125 and 148 respectively of 1974: Writ Petitions Nos. 696 to 701 of 1977 are individually filed by the different directors of the Bank viz., Thiruvalargal Arumugam, Ramachandran, Muthuswami, Narayanaswami, Govindarajulu Chettiar and S. A. Mohamed Jaffar (arrayed as third respondent in W. P. Nos, 108, 107, 104, 105, 106 and 111 respectively of 1977) against the decisions in C. M. A. Nos. 146, 151, 147, 149, 150 and 148 respectively of 1974. W. P. No. 523 of 1977 has been filed by Thiru. S. L. Giddiah, who was the President of the Bank and who has been arrayed as the third respondent in W. P. No. 109 of 1977, against the order in C.M.A. No. 125 of 1974. (At this juncture, it is represented to me that the Secretary, viz, S. M. Ramalingam of the Bank, whose appeal C. M. A. 123 of 1974 has been dismissed in toto by the Tribunal, has preferred W. P. No. 3907 of 1976 and the same is pending decision before some other learned Judge of this Court).

2. It is seen from the records that the inspection of the accounts of the Bank, conducted by the Deputy Registrar under section 66 of the Tamil Nadu Co-operative Societies Act (hereinafter referred to as the Act) revealed certain grave irregularities resulting in heavy loss to the Bank, Therefore, the Deputy Registrar of Co-operative Societies, Gobichettipalayam at Erode, issued notices dated 30th September, 1970 under section 71 (1) of the Act to the then office-bearers of the Bank viz., Giddiah (President), Ramalingam (Secretary) and Manickam (Treasurer) and also to the then directors, directing them to show cause as to why a surcharge order should not be passed against them for the recovery of a total sum of Rs. 1,33,825 under four heads viz,, (1) Rs. 17,500 under the head “Refund of Provident Fund” which relates to the withdrawal by the then Secretary, (2) Rs. 84,000 cash credit said to have been paid to the President, (3) Rs. 13,10 accumulations of interest not collected, and (4) Rs. 29,175 under the head “Loans issued in excess of the amount specified in the mortgage deeds”. As regards the first item, as per the order of the Deputy Registrar, a sum of Rs. 5,356.67, which was actually available to the credit of the Secretary, has been deducted and in the final order the loss under the first item has been arrived at Rs. 12,143.33. All the above writ petitions are only in respect of the amount of Rs. 12,143.33 under item 1 and Rs. 84,000 covered by item 2.

3. The writ petitions by the President and the directors are directed against the allowance of surcharge in respect of the amount in item-1 mentioned above, in favour of the Bank, whilst the Writ petitions by the Bank are filed against the disallowance of surcharge in respect of the amount in Item 2.

4. The first item relates to the withdrawal of the amount of Rs. 17,500 by the Secretary on the strength of a resolution passed on circulation by the Board of Directors sanctioning the Secretary to withdraw an amount of Rs. 17,500 standing to his credit in his Provident Fund account. This resolution sanctioning the withdrawal of the above said amount was passed with a view to enable the Secretary to make good the deficit in the cash balance of Rs. 19,800 detected by the Senior Inspector (Audi