WP/3147/1996 of R.KAMALAM. Vs DY.REGISTRAR OF COOP.SOCIETIES on 24 December 2003

:ORDER

The petitioner challenges surcharge proceedings initiated by the DeputyRegistrar of Co-operative Societies, Thuckallay, first respondent herein andthe ultimate order of the Co-operative Tribunal, confirming the said surchargeproceedings in this writ petition.

2. According to the petitioner, the first respondent initiated suo motu enquiry under Section 87 of the Tamil Nadu Cooperative Societies Act, 1983 forrecovery of nearly Rs.97,225.05 alleging that there was some irregularitywhile the petitioner was working as Secretary of Y-191, Senni Thottam PrimaryAgricultural Co-operative Bank. The first respondent issued a show causenotice on 19-1-89, calling upon him to show cause why surcharge proceedingsunder Section 8 7 of the Tamil Nadu Co-operative Act, 1983 should not beinitiated for penal recovery. By letter dated 9-2-89, the petitionerrequested the first respondent to furnish copies of certain documents reliedon by the respondent for initiating action under Section 87 of the said Act.Since in spite of several requests and representation, he was not suppliedwith those required documents. Ultimately, the first respondent passed anorder on 17-01-1990 holding against the petitioner. He filed an appeal beforethe Co-operative Tribunal (District Judge), Nagercoil in C.M.A.No.3 of 95which was also dismissed on 20-10-95 ; hence the present writ petition.

3. The first respondent contesting Co-operative Bank has not filed counteraffidavit disputing various averments made by the petitioner.

4. Heard learned counsel for the petitioner as well as contesting secondrespondent/Co-operative Bank.

5. (i) Mr. M. Saravanakumar, learned counsel for the petitioner, aftertaking me through the surcharge proceedings and the order of the Co-operativeTribunal as well as the relevant provisions, namely, Section 87 of the TamilNadu Co-operative Societies Act, 1 983, would contend that in the light of thetime limit prescribed and of the fact that final order was passed after theprescribed limit of six months and no authorisation by the authorityconcerned, the entire proceedings are liable to be quashed. He also contendedthat since he was not provided with required documents in the enquiry, theultimate order of the first respondent cannot be sustained. He furthercontended that the third respondent-Co-operative Tribunal committed an errorin confirming the said order.

(ii) On the other hand, Mr. M.M. Sundaresh, learned counsel for thecontesting second respondent-Co-operative Bank, would contend that thelimitation prescribed under the Act is not applicable to the case on hand,since the matter could not be concluded within six months because of theattitude of the petitioner. He also contended that in the absence ofprejudice caused to the petitioner for non-furnishing of those documents andthe report of the enquiry officer, the ultimate decision cannot be interfered.

6. I have carefully considered the rival submissions.

7. If this Court finds that the second proviso to Section 87 of the TamilNadu Co-operative Societies Act, 1983 ( hereinafter referred to as "the Act")has not been complied with, it is unnecessary to go into the othercontentions, particularly the merit of the claim made by both parties. In sofar as the said contention, it is relevant to note that suo motu proceedingswas initiated on 19-1-89 by issuing a show cause notice to the petitioner andfinal order was passed only on 17-1-90 which is against the specific provision of the Act. Section 87 of the Act deals with surcharge proceedings. We areconcerned with the proviso to the said Section which reads as under:- "Provided that no action shall be commenced under this sub-section after theexpiry of seven years from the date of any act or omission referred to in thissub-section:

Provided further that the action commenced under this sub-section shall becompleted within a period of six months from the date of such commencement orsuch further period or periods as the next higher authority may permit butsuch extended period or periods shall not exceed six months in the aggregate."

As per the second proviso, action taken shall be completed within a period ofsix months from the date of commencement and further period of six months ispermissible subject to permission by the higher authority. However, theextended period shall not exceed six months in the aggregate. I have alreadyreferred to the fact that show cause notice was issued on 19-01-89 and finalorder was passed only on 17 -01-90. There is no material to show that thehigher authority has granted permission. In this regard, it is relevant tonote Ground-"b" in the affidavit wherein the petitioner has specifically takenthis point:

"b) .......In this case admittedly the suo motto proceedings was initiated on19-1-1989 by issuing a Show Cause Notice. The entire proceedings ought tohave been completed on or before 18-7-198 9. Admittedly the next higherauthority did not extend the time limit beyond 6 months. Hence the impugnedorder which was passed on 19-1-1990 is without jurisdiction and against thespecific provision of law and hence the same is liable to be quashed."

Though Rule Nisi was served on the contesting second respondent as early as8-5-96, no counter affidavit has been filed controverting the above factualstatement. Likewise, though a faint argument was made at the time of hearingthat the delay was caused due to several adjournments made at the instance ofthe petitioner, the same has not been substantiated by producing necessaryrecords. In the absence of neither counter affidavit, nor the relevantrecords to the proceedings, this Court has no other option except to acceptthe assertion made in Ground-"b" and hold that the order passed on 17-1-90 isagainst the specific provision of the Act. For this, the learned counsel forthe petitioner has relied on a judgement of T. Meenakumari, J., in Ekambaramv. Co-operative Tribunal-cum-District Judge, reported in 2000 ( II) CTC 659.In that decision, the learned Judge had an occasion to consider the very sameprovision, namely, 87 of the Act. In that case, a show cause notice has beenissued on 18-9-89 and the action should have been completed by 18-3-90, butthe proceedings have been completed only on 2-5-90. It is further seen thatthe second respondent therein, namely, Society did not seek the extension ofhigher authority as the period of six months was over by 18-3-90. In thosecircumstances, relying on an unreported decision rendered in Writ PetitionNos. 4724 and 17955 of 1997 dated 15-12-1998, held that, "6.........Under the circumstances it has to be held, that the second provisoto Section 87 of the present Act of 1983 is mandatory in nature and theproviso also stated that the action "shall be" completed within a period ofsix months and if it exceeds beyond the period of six months, there must be anextension from the higher authority. As the second respondent has notobtained the extension from the higher authority, the action initiated has tobe held to be non-est in the eye of law. The second respondent has notfollowed the second proviso to Section 87 (1) of the present Act of 1983 whichis mandatory. As the impugned order has been passed without following thesecond proviso to Section 87 of the Act of 1983, the same is quashed...."

While considering the very same provision, namely, second proviso to Section87 of the Act, K. Gnanaprakasam, J.,in Gabriel v. The Deputy Registrar(Housing), Cuddalore, reported in 2003 (3) CTC 23 has taken the same view andheld that in the absence of specific order from the higher authority, theorder passed beyond the period prescribed is barred by time and liable to beset aside. In the light of the statutory provision-Second proviso to Section87 of the Act, though this point has not been taken before the authorities,since it goes to the root of the matter and of the fact that this objectionhas been raised in the affidavit-vide Ground-'b', in the absence of counteraffidavit and records, I hold that Second proviso to Section 87 of the Act ismandatory in nature and in the absence of any order for extension from thehigher authority, it is to be held that the impugned order has been passed bythe second respondent without following the second proviso to Section 87 ofthe Act; hence the same is liable to be quashed. Though learned counsel forthe second respondent by relying on a decision of the Supreme Court in thecase of State of U.P. v. Harendra Arora, reported in 2001 (3) CTC 176, wouldcontend that petitioner was not caused any prejudice by not furnishing thedocuments and the copy of the report of the enquiry officer, in the light ofthe conclusion namely the mandatory compliance of second proviso to section 87has not been followed, as observed earlier, it is unnecessary to go into allother aspects and the impugned order of the first respondent, as well as theorder of the third respondent confirming the order of first respondent areliable to be quashed.

8. In the light of what is stated above, the impugned orders of the first andthird respondents are quashed in so far as the petitioner is concerned and theWrit Petition is allowed. No costs.

R.B.

Index: Yes.Internet: Yes.To:-

1. The Deputy Registrar ofCo-operative Societies,Thuckallay, Kanyakumari District.

2. Y.191, Senni Thottam Primary

Agricultural Co.operative Bank,represented by its Special Officer,Senni Thottam, Thuckkalay,Kanyakumari District.

3. The District Judge, Nagercoil.