Surcharge under Co-operative Societies Act requires finding of willful/deliberate negligence causing loss to society assets.

ORDER

The petitioner challenges the order dated 11.10.2013 passed by the learned Principal District Judge, Theni, in C.M.A.(C.S) 4/2008 confirming the order dated 16.10.2007 wherein Na.Ka.No.2152/2005/S.R. dated 16.10.2007 passed by the first respondent.

2. Based on the investigation conducted under Section 81 of the Tamilnadu Cooperative Societies Act, 1983 , surcharge proceedings were initiated against the petitioner and others under Section 87 of the Tamilnadu Cooperative Societies Act. Alleging that the petitioner was serving as Managing Director along with other had sanctioned loan and disbursed the same to P.S.Syed Sultan Ibrahim, a member of the Society without following the procedure prescribed under the Act and Rules.

3. The respondent authority, after hearing the petitioner, written the finding that there was a dereliction of duty on the part of the petitioner and others in disbursing loan to the said borrower and directed the petitioner and others to pay the Bank a sum of Rs.15,95,232/- jointly or severally with interest at the rate of 18% per annum till the date of recovery. The said order was assailed by the petitioner before the Principal District Court, Theni. The Principal District Court, after providing an opportunity of hearing the petitioner and after perusal of the material in record, confirmed the order passed by the respondent authority. Taking exceptional, the present Civil Revision Petition has been filed.

4. Mr.R.Suriya Narayanan, learned counsel for the petitioner submitted that the first respondent has not recorded any finding that the deficiency had been caused willfully or deliberately or with a view to cause loss to the assets of the Society by the petitioner and in the absence of the said findings, the impugned order passed by the 1strespondent confirmed by the Principal District Court, Theni, are not legally sustainable. He further submitted that the petitioner was not negligent in sanctioning of the loan to the said borrower and the petitioner after due diligence had sanctioned the loan. 5. However, contrary to the same, the respondent authority had passed the order holding that the petitioner was negligent in discharging the loan to the said borrower. In support of his contention, he placed reliance on the decision of the Division Bench of this Court in S.Subramanian v. The Deputy Registrar of Cooperative Societies(Housing), Cuddalore, reported in 2002-3-L.W-185.

6. In response, learned Standing Counsel for the respondent submitted that the material on record clearly established that the petitioner as Managing Director along with others, without following the procedure prescribed sanctioned loan to the said borrower which caused monetary loss to the society and therefore in the absence of any illegality or infirmity the impugned order passed by the first respondent confirmed by the Principal District Court, Theni, does not warrant any interference.

7. The arguments of the learned counsel for the parties and the materials placed on record had been duly considered.

8. Surcharge proceedings were initiated against the petitioner and others stating that the said borrower obtained loan by defrauding the Bank by providing original deeds for only two properties out of six properties including three lands, two houses and a vacant house by only provided certified copies of the deed for the four properties and a patta for the house.

The said borrower defaulted in repayment of the second instalments.

9. The further allegation is that the said borrower had already mortgaged the said four properties in favour of another creditor. The petitioner as Managing Director, w