IMPORTANT POINT
Section 48 of the Tamil Nadu Cooperative Societies Act allows recovery of loan dues from a guarantor's gratuity, overriding other laws.

JUDGMENT :

[Judgment of the Court was delivered by S.M.SUBRAMANIAM, J.]

Prayer: Writ Appeal filed under Clause 15 of Letters Patent praying to set aside the order dated 04.03.2022 passed in WP.No.16488/2013 in so far as appellant is concern.

The writ appeal on hand is instituted by the Secretary, Government Regional Workshop Employee Co-operative Thrift and Credit Society Limited challenging the writ order dated 04.03.2022 in WP.No.16488 of 2013. The appellant is the 3rd respondent in the writ petition. The appellant is a Cooperative Society registered under the provisions of The Tamil Nadu Cooperative Societies Act 1983. The employees working in the Government Regional Workshop are eligible to become the Members of the Cooperative Society and the Society itself was formed by the employees of the Government Regional Workshop and registered under the Tamil Nadu Cooperative Societies Act.

2. There is no Government funding for the Cooperative Society. The funds contributed by the members are utilized for the purpose of granting the loan to other eligible members.

3. Admittedly, the first respondent stood as a guarantor to the borrower, who is also a member of the appellant-Cooperative Society. The Principal committed default in repayment and the Society proceeded against the guarantor/first respondent. Liability of the Guarantor admittedly coexists with the liability of the principal borrower. That being the first principle in law, there is no impediment for the Society to proceed against the guarantor to recover the loan dues.

4. The competent Authority of the Government Automobile Workshop at Cuddalore issued an order dated 22.01.2013 recovering the gratuity amount of Rs.1,48,388/- of the first respondent. Challenging the said order, the Writ petition came to be instituted. The Writ Court allowed the writ petition mainly on the ground that no notice was issued to the first respondent and under the provisions of the Gratuity Act, the amount of gratuity cannot be recovered. Thus, the present writ appeal.

5. The learned counsel for the writ appellant Mr.P.K.Shiva Kumar, would submit that even under the Gratuity Act, recovery is permissible. Rule 70 of The Tamil Nadu Pension Rules, 1978 permits the employer to recover the loan dues and settle the same to the Society. Thus, the Writ Court has committed an error in allowing the writ petition filed by the first respondent. Regarding issuance of show cause notice, the same would not arise in view of the fact that the first respondent stood as a Guarantor and he is aware of the default committed by the Principal borrower and thus, such a show cause notice becomes a empty formality and as per the undertaking given by the guarantor in the loan forms is liable to repay the loan amount in the event of default by the principal employer.

6. Mrs.Geetha Thamaraiselvan, learned Special Government Pleader appearing on behalf of the respondents 2, 3 and 5 would submit that the Department Authorities are empowered to recover the gratuity amount and disburse the same to the Cooperative Society in order to clear the loan dues. Such an undertaking has been given by the Pay Disbursing Officer at the time of approval of loan application and therefore, the competent authority is duty bound to recover and settle the loan dues as per law. Thus, the writ Court has not considered the said position and consequently, the writ appeal is to be considered.

7. Heard the parties.

8. Curiously, none of the parties have raised the relevant provisions of the Tamil Nadu Cooperative Societies Act, which would be applicable for the loan transactions of the Cooperative Societies. Admittedly, the appellant is a Cooperative Society registered under the Cooperative Societies Act, and the said Act would be applicable for the purpose of grant of loan and recovery of a loan dues. The Government employees are the members of the Cooperative Society formed and registered by them. The transactions are governed under the provisions of the Coo