M. SATHYANARAYANAN, J.

1. The writ petitioners are the appellants and they made a challenge to the notice dated 16.02.2010, issued by the first respondent, for initiation of proceedings under Section 87 of the Tamil Nadu Cooperative Societies Act, 1983 [hereinafter referred to as “the Act”]. The writ petition, after contest came to be dismissed vide order dated 15.11.2011 and challenging the legality of the same, the present writ appeal is filed.

2. The appellants would state that the appellants 1 to 3 / petitioners 1 to 3 were working as Branch Managers and that rest of them were working as Assistants in the Branch Office of the second respondent cooperative bank. They would aver that one Mr.Ganagaraj was working as General Manager in the service of the second respondent bank and in his official capacity has entered into One Time Settlement (OTS) in the year 2002 with four creditors, namely, K.Senthoorpandi, Seeniammal, Sundararajan and A.Sowndhirapandi and waived the interest and the entire arrears amount was paid by the said creditors and their loan accounts were also closed in the year 2002 and 2003. It is also pointed out by the appellants that Mr.Ganagaraj had also retired from service on 30.11.2004 and as per the submission of the learned counsel appearing for the appellants, he is no more.

3. The appellants / writ petitioners would state that the second respondent Bank, has made allegation against Mr.Ganagaraj, the then General Manager stating that on account of the waiver of interest, a loss has been caused to them and upon receipt of the same, the first respondent has conducted an enquiry against Mr.Ganagaraj, the then General Manager and he has also submitted his explanation and the first respondent vide report dated 24.11.2004, has clearly indicated that no loss has been caused to the second respondent bank. The first respondent in turn sent a communication dated 27.11.2004 to the Joint Registrar of Cooperative Societies, Tuticorin, stating that the allegations made in the petitions are vexatious and no loss has been caused to the second respondent Bank. The appellants / writ petitioners also stated that nearly after a lapse of eight years, the first respondent appointed an Inspection Officer under Section 82 of the Act, on 02.03.2003, to enquire the fact with regard to the waiver of interest granted by the then General Manager Mr.Ganagaraj and upon receipt of the same, the Inspection Officer has issued summons and directed the appellants / writ petitioners to appear for enquiry to be held on 28.04.2009.

4. It is the specific case of the appellants / writ petitioners that without conducting true and proper enquiry and without following the due process of law and in gross violation of the principles of natural justice, the said official has submitted a report on 08.06.2009 based on which the first respondent has issued the impugned notice under Section 87 of the Act.

5. The first respondent has filed the counter affidavit stating among other things that the second respondent has issued a show cause notice to the then General Manager, Mr.Ganagaraj on 21.09.2006, calling upon him to explain as to why the loss of Rs.4,38,940/- should not be recovered from him and it was also followed by another notice dated 22.11.2006 and upon receipt of the same, the said official has issued legal notice dated 01.12.2006, denying the allegations and also took a stand that he is not responsible for any loss.

6. Thereafter, the second respondent has passed a resolution dated 12.12.2006, requesting the first respondent to permit him to recover the loss and the first respondent returned the same on the ground that it is not maintainable under Section 90 of the Act. Therefore, the second respondent requested the first respondent to cause inspection under Section 82 of the Act on 04.02.2009. Accordingly, the first respondent ordered an enquiry under Section 82 of the Act vide proceedings dated 02.03.2009 and appointed the Cooperative Su