CRP/4903/2026 of The Administrator, (Managing Director) Vs The Assistant Director of Handlooms and Textiles on 16 October 2026

COMMON ORDER

The Administrator (Managing Director) of the EH-113, Chennimalai Kongu Primary Handloom Weavers Co-opeartive Production and Sale Society Limited, Chennimalai - 638 051, is the revision petitioner. The revision petitioner challenges the common order dated 29.10.2025 in CMA (CS) No.6 of 2019 on the file of the Cooperative Tribunal, Erode and consequently, seeks to restore the conditional attachment order dated 14.02.2019, passed by the learned Arbitrator.

2. I have heard Mrs.R.Nasrine, learned counsel for the petitioner, Mr.P.Sunil, learned Government Advocate, appearing for the respondents 1 and 2 and Mr.Sricharan Rangarajan, learned Senior Counsel for Mr.Athiban Vijay, learned counsel for the contesting third respondent.

3. The learned counsel for the revision petitioner would contend that the learned Arbitrator had considered the entire records before passing the award against the third respondent. Taking into consideration the oral and documentary evidence, however, the Appellate Court has proceeded to discharge the third respondent from all liabilities on the sole ground of limitation in initiation of proceedings against the third respondent. The learned counsel for the petitioner would take me through Section 90(9)(b) of the Tamil

Nadu Co-operative Societies Act, 1983 (in short 'Act') and contend that the said provision has not been considered by the Appellate Court and the approach of the Appellate Court virtually renders 90(9)(b) of the Act meaningless. She would further state that the Appellate Court has not gone into the issue of negligence which has to be necessarily discussed by the First Appellate Court and has merely proceeded to allow the appeal filed by the third respondent, finding that the limitation issue was in his favour. She would further state that accounts have been fudged and huge loss has been caused to the Society and therefore, in such matters, the rule of Limitation should not be mechanically applied.

4. In support of her submissions, she has relied on the following decisions:-

(i) B.Chennamoorthy Vs. The Deputy Registrar of Cooperative Societies, Krishnagiri Circle, Krishnagiri District and two others, in W.P. No.15070 of 2025, dated 22.01.2026;

(ii) Kurudampalayam Co-operative House Building Society Limited Vs. The Deputy Registrar (Housing), O/o.Deputy Registrar of Co-operative Societies, and two others, in CRP. (NPD). Nos.5021 & 5022 of 2011, dated 27.01.2012;

(iii) V.Srinivasan (Died) Vs. R.Balaji and two others, in CRP(MD). Nos.1001 to 1003 of 2019, dated 08.12.2023;

(iv) S.V.K.Sahasramam Vs. The Deputy Registrar of Co-op Societies, Tiruvannamalai Circle, in W.A. No.949 of 2008, dated 29.08.2008;

(v) S.Ramadevi Vs. The Special Officer, Ambur Co-opeartive Sugar Mills, Vadapudupet, Vellore District, in W.A. No.1213 of 2008, dated 05.08.2016;

(vi) P.Elias Vs. The Special Officer, Kumari District Tailoring Women Development Cottage Co-operative Society Limited, in W.P. Nos.23530 & 33127 of 2023, dated 26.07.2013;

(vi) V.Sundararajan Vs. The Deputy Registrar of Cooperative Societies, Trichy, in W.P.(MD). No.20216 of 2025, dated 28.07.2025;

(vii) Deccan Merchants Co-operative Bank Vs. Dalichand Jugraj Jain and Others, reported in AIR 1969 SC 1320; and

(viii) A.P.Subramanian and others Vs. The Inspector General of Registration, Registration Departments and others, in W.P. No.32108 of 2026, dated 17.08.2026.

5. Per contra, Mr.Sricharan Rangarajan, learned Senior Counsel appearing for the contesting third respondent, besides contending that the award was an exparte award, pursuant to which, an order of attachment was passed by the learned Arbitrator on 29.11.2017, the very assumption of jurisdiction under Section 90 of the Act, itself was fallacious and erroneous. He would further state that the proper course of action would have to initiate proceedings under Sections 81 and 87 before slapping any order of attachment and proceed against

the third respondent. Pointing out to the language of Section 90, it is his submission that the third respondent is admittedly an employee of the Society and therefore, resort could not have been had to Section 90 in the first place. In any event, it is his contention that in respect of transaction that took place during the financial years 2007-2008, 2008-2009, the Authorities cannot fall back on an audit undertaken in the year 2017, to take proceedings against the third respondent. In support of his submissions, he relied on the following decisions:-

(i) P.Sundaram Vs. The Registrar of Co-operative Societies, Office of the Registrar of Co-opeartive Societies, in W.P. No.14633 of 2024, dated 05.08.2024; and

(ii) The Kattabettu Industrial Co-opeartive Tea Factory Limited Vs. V. Radhakrishnan and others, reported in (1999) 1 MLJ 262.

6. I have carefully considered the submissions advanced by the learned counsel for the parties and I have gone through the order of the learned Arbitrator as well as the judgment passed by the Appellate Tribunal, reversing the Arbitrator’s decision and thereby, raising the order of attachment.

7. The revision petitioner has alleged that third respondent is liable to be proceeded against for the deficit in stock and manipulation of accounts during 2007-2008 and 2008-2009, after a period of lapse of 7 years. In fact, even

before the Appellate Tribunal, the issue of limitation was raised and it was contended that limitation cannot begin from the date of audit report, but has to be reckoned from the date of actual commission or omission of the act complained of. Admittedly, in the present case, in respect of the third respondent, the only ground on which, the revision petitioner sustains the complaint is that they came to know about the fudging of accounts in 2017, when an audit was undertaken and report was filed. The learned Arbitrator has proceeded to attach the properties of the third respondent, based on the audit report of the vigilance and anti-corruption police alone, which has been filed only the in the year 2017. Additionally, CMA C.S. No.6 of 2018, was filed to set aside the award in ARC No.2 of 2017-2018 dated 02.02.2018 and CMA C.S. No.6 of 2019, was filed to set aside the order in CEP. No.2/2018-2019 dated 14.02.2019.

8. The contention of the learned counsel for the petitioner is that it is permissible for action to be initiated from the date of knowledge and therefore, the rule of limitation cannot be construed as being mandatory, but only directory.

9. Section 90 (1) and 90(9) of the Tamil Nadu Cooperative Societies Act, 1983, is usefully extracted hereunder:-

"90. Disputes.__(1) If any dispute touching the constitution of the board or the management or the business of a registered society (other than a dispute regarding disciplinary action taken by the competent authority constituted under sub-section (3) of section 75 or the Registrar or the society, or its board against a paid servant of the society) arises__

(a) among members, past members and persons claiming through members, past members and deceased members ; or (b) between a member, past member or person claiming through a member , past member or deceased member and the society, its board or any officer, agent or servant of the society, or

(c) between the society or its board and any past board, any officer, agent or servant, or any past officer, past agent or past servant, or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased servant of the society, or (d) between the society and any other registered society, 1[or between the society and the liquidator of another registered society or between the liquidator of the registered society and the liquidator of another registered society] such dispute shall be referred to the Registrar for decision. Explanation.__ For the purposes of this section, a dispute shall include --

(i) a claim by a registered society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member whether such debt or demand be admitted or not .

(ii) a claim by a registered society against a member, past member or the nominee, heir or legal representative of a deceased member for the delivery of possession to the society of land or other immovable property resumed by it for breach of the conditions of

assignment or allotment of such land or other immovable property; and

(iii) a decision by the board under sub-section (3) of section 34 : Provided that no dispute relating to, or in connections with, any election shall be referred under this sub - section till the date of the declaration of the result of such election. ..................

(9) (a) The period of limitation for referring a dispute under this section shall be regulated by the provisions of the Limitation Act, 1963 (Central Act 36 of 1963) as if the dispute were a suit and the Registrar, a Civil Court, subject to the following modifications, namely:__

(i) when the dispute relates to a society in respect of which a 2[ an administrator] has been appointed under section 88 or to a society which has been ordered to be wound up under section 137, the period of limitation shall be six years from the date of the order issued under section 88 or section 137, as the case may be;

(ii) save as otherwise provided in clause (i), when the dispute relates to any act or omission on the part of any of the parties referred to in clause (b) or clause (c) of sub- section (1), the period of limitation shall be six years from the date on which the act or omission with reference to which the dispute arose, took place;

(iii) when the dispute is in respect of, or in connection with, any election, the period of limitation shall be two months from the date of declaration of the result of the election.

(b) Notwithstanding anything contained in clause (a), the Registrar may admit a dispute after the expiry of the period of limitation if the applicant satisfies the Registrar that he had sufficient cause for not referring the dispute within such period and the dispute so admitted shall be a dispute which shall not be barred on the ground that the period of limitation has expired."

10. As can be noticed from Sub Clause (9)(a) of Section 90, the period of limitation that is fixed for referring a dispute under Section 90, are to be

regulated by the provisions of the Limitation Act 1963, subject to specific modifications set out in (i), (ii) and (iii) of Sub Section (9)(a). Thus from the reading of the relevant provision, when the disputes relates to the Society to which a Special Officer has been appointed under Section 88 or to a Society which has been ordered to be wound up under Section 137, the period of limitation is six years from the date of the order, issued either under Section 88 or Section 137, as the case may be. In cases not covered by Clause (i), when the disputes relates to any act of omission on the part of any of the parties referred in Clause (b) and (c) in Sub Section (1), the period of limitation is again six years from the date on which the act of omission with reference to which the dispute arose, took place. We are not concerned with Sub Clause (iii), which pertains to dispute with regard to an election.

11. Coming for Section 90(9)(b), it permits the Registrar to admit a dispute after the expiry of the period of limitation, if the Applicant is able to satisfy the Registrar that he had sufficient cause for not referring the dispute within such period provided and then such dispute shall not be barred on the ground of limitation period having expired. It is therefore, the contention of Mrs.Nasrine, learned counsel for the petitioner that when Section 90(9)(b), provides for the Registrar to admit a dispute, even after the prescribed period of limitation, then the period of six years mentioned in the relevant sub sections, pales into insignificance. According to her, in the present case, the willful and

deliberate omission with a view to defraud the Society of huge monies, came to light only when the audit report was filed in the ear 2017 and therefore, the first respondent was well within his right to have entertained the disputes and pass the award in the ARC proceedings.

12. In this context, it is relevant to decide whether the dispute pertaining to the third respondent can even be entertained under Section 90, in the first place. Section 90 would apply specifically to disputes touching the constitution of the board or the management or business of a registered Society among members, past members or persons claiming through members, past members and deceased members, or between a member, past member or persons claiming through a member, past members or deceased members and the society or its board and any past board etc., or between the society or any other registered society. In fact, Section 90(1) specifically excludes a dispute regarding a disciplinary action taken by the permanent authority constituted under sub section 3 of Section 75 or the Registrar or the Society or its Board against the paid servant of the Society.

13. In the present case, admittedly, the third respondent is an employee of the Society against whom disciplinary action is sought to be initiated. Therefore, when the statute clearly exempts the operation of Section 90, to such an employee of the Society, I am unable to countenance the arguments of

Mrs.Nasrine, learned counsel for the petitioner that though the period of limitation is prescribed under Section 90(9)(a), in view of the leverage given under Section 90(9)(b), it is always open to the petitioner to initiate action against the third respondent. Under Section 81, the Registrar of the Cooperative Society is empowered to even take suo motu action or act on the application of majority of the Board of not less than 1/3 of members, to conduct an enquiry pertaining to allegations of misappropriation, fraudulent retention of money or property, breach of trust, corrupt practice or mismanagement in relation to that society or any particular aspect of working of that society. Section 81 deals with the powers available to the Registrar to hold such enquiry. Section 87, permits action to be taken, pursuant to audit under Section 80 or enquiry under Section 81, against any person who was entrusted with the organization or management of the society, including a past or present officer, or a servant of the society, when allegations of misappropriation or fraudulent retention of money or property or breach of trust, or willful negligence are made out, then the Registrar or the authorised persons can initiate surcharge proceedings. The first proviso to Section 87, clearly sets out that no action shall be commenced under Section 87(1) viz., surcharge proceedings after the expiry of 7 years from the date of any act or omission referred to in Sub Section (1). The second proviso contemplates completion of action taken under Sub Section 1 of the Section 87, within a period of six months subject to extensions provided by the next higher authority, which shall not exceed six months in the aggregate.

There is no similar provisions like Section 90(9)(b) incorporated in Section 87, which enables extension of period of limitation beyond 7 years. Therefore, having found that request could not have been taken to under Section 90, since the exception to Section 90 clearly excludes action initiated against the employee outside its purview, then the petitioner is not entitled to take shelter under Section 90(9)(b). Action could have been only initiated under Section 81 and thereafter, surcharge proceedings being initiated under Section 87, for which the period of limitation is prescribed from the actual act or omission being complained of. Thus, I do not see any error committed by the Tribunal in holding that the action initiated by the third respondent is hopelessly barred by limitation.

14. Coming to the decisions that have been relied on either side, in B.Chennamoorthi’s case (referred herein supra), this Court, on going through the facts of the said case, the dispute being with regard to a purchase of a property by the writ petitioner from the wife of the Secretary who was under suspension, found that before initiation of proceedings under Section 90, the Deputy Registrar Cooperative Society has conducted an enquiry under Section 81 and a report was also filed by the Cooperative Sub Registrar concerned, who was appointed as the enquiry officer. On facts, this Court found that the dispute was well within the ambit of Section 90. Therefore, I am unable to place reliance on the said decision.

15. In S.Ramadevi’s case, (referred herein supra), the Hon’ble Division Bench of this Court was dealing with facts of a case that arose pursuant to an enquiry conducted under Section 81 Tamil Nadu Cooperative Societies Act and consequently, Section 87 of the surcharge proceedings. Admittedly, in the present case, no such enquiry under Section 81 or surcharge proceedings under Section 87 have been initiated against the third respondent. However, the Hon’ble Division Bench only dealt with the time limit for completion of the enquiry to be directory and not mandatory. Therefore, this decision can also not be applied to the facts of the present case.

16. In S.V.K.Sahasramam's case, (referred herein supra), the Division Bench was again dealing with the period of completion of enquiry alone and not with the first proviso to Section 87. My order in V.Srinivasan’s case, referred herein above, was also a case where, on facts, I applied Section 90 being the appropriate Section. Here, I have already found that Section 90 itself could not have been invoked in the first place. In Kurudampalayam Co-operative House Building Society's case, (referred herein supra), this Court was again dealing only with the applicability of Section 90 and therefore, this decision again, is of no relevance since Section 90 provides for the Registrar admitting a claim beyond the period of limitation.

17. In P.Elias's case, (referred herein supra), on facts, an enquiry was conducted under Section 81 and thereafter, proceedings under Section 87 for surcharge were initiated and after due enquiry, an award was passed. In fact, this Court discussed the difference between proceedings under Section 87 and a dispute under Section 90 and held that Section 87 and Section 90 are overlapping and to initiate a proceeding under Section 87, it is necessary that it should be preceded by an audit under Section 80 or an enquiry under Section 81 or investigation/inspection under Section 82 or inspection of books under Section 83 or winding-up of Society itself. In order to initiate proceedings under Section 90, no such audit report under Section 80 or enquiry report under Section 81, or an inspection or investigation under Section 82 or inspection of books under Section 83 or winding-up of the society would be condition precedent and that a claim arising out of a transaction may fall within both the ambits of Sections 87 and 90 of the Tamil Nadu Cooperative Societies Act. However, this decision will not come to the rescue of the petitioner for the simple reason that the categories of persons in respect of whose disputes alone fall within the ambit of Section 90, was not the point of discussion in the said decision. Equally, the question of limitation was also not an issue before the Court in the said case.

18. In V.Sundarrajan’s case, (referred herein supra), again proceedings

had been initiated under Section 81, followed by surcharge proceedings under Section 87 and Section 90 and this Court followed the ratio laid down in P.Elias's case (referred herein supra) and held that depending on the nature of business of the society, misappropriation of fraudulent, retention of money or property or loss caused to the society, would also constitute a dispute touching the business of society and in terms of Section 90 of the Act, provided there is nexus between the business of society and the act of the individual which resulted in the loss. However, on the facts of the said case, this Court had found that pursuant to the enquiry under Section 81, surcharge proceedings under Section 87 as well as Section 90, dispute could be validly initiated. This decision also does not deal with the question of limitation. Further, admittedly in the present case, there has been no enquiry under Section 81 in the first place.

19. The Hon’ble Supreme Court in Deccan Merchants Co-operative Bank's case, (referred herein supra), was dealing with the scope of the word ‘dispute’, the expression touching the business of society and the person claiming through a member and held that it would depend on the nature of the society and the rules and by-laws governing it. Para 15 of the said decision is usefully extracted herein below, which provides more clarity, with regard to the interpretation of the phrase "touching the business of a society". "15. The question arises whether the dispute touching the assets of a society would be a dispute touching the business of a society.

This would depend on the nature of the society and the rules and bye-laws governing it. Ordinarily, if a society owns buildings and lets out parts of buildings which it does not require for its own purpose it cannot be said that letting out of those parts is a part of the business of the society. But it may be that it is the business of a society to construct and buy houses and let them out to its members. In that case letting out property may be part of its business. In this case, the society is a co-operative bank and ordinarily a co-operative bank cannot be said to be engaged in business when it lets out properties owned by it. There fore, it seems to us that the present dispute between a tenant of a member of the bank in a building, which has subsequently been acquired by the bank, cannot be said to be a dispute touching the business of the bank, and the appeal should fail on this short ground." Therefore, even applying the above ratio laid down by the Hon’ble Supreme Court, it is clear that the dispute referred to under Section 90, cannot be extended to the third respondent who is an employee and merely because provisions under Sections 81, 87 and 90 overlapped, it does not clothe the society with the power to proceed against an employee under Section 90, especially when such employee is excluded from the ambit of Section 90 and that too, beyond the limitation prescribed under Section 90.

20. Coming to the decisions, which have been relied on by the learned Senior Counsel for the third respondent, this Court in the Kattabettu Industrial Co-opeartive Tea Factory Limited's case (referred herein supra), specifically dealt with an identical issue that arises for consideration in the present revisions

and held that mere fact that the deficiency was found by the authorities at a later date, would not extend the period of limitation and action will have to be taken from the date of the act or omission and not from the date of the audit report being filed.

21. Similarly, in P.Sundaresan’s case as well, (referred herein supra), this Court held that, without resort to surcharge proceedings under Section 87, for recovery of alleged amounts misappropriated, action cannot be taken under Section 90 of the Act.

22. In view of the above, the very invocation of proceedings by referring a dispute under Section 90, was clearly without jurisdiction and the initiation of action is clearly belated and beyond the prescribed statutory period of limitation. The petitioner cannot fall back on the decisions that have been rendered in different factual matrix, where it has been held that provisions under Section 87 and 90 overlap and therefore, the directory Rule of limitation available under Section 90(9)(b) should be given benefit of even to cases where belated action, is taken against a delinquent employee of the society under Section 87, especially when Section 87 does not provide for relaxation of the period of limitation in the first proviso. I have already dealt with the decisions relied on by the learned counsel for the petitioner which all relate to only the second proviso pertaining to extension of period of time for completion of the

enquiry/action. Therefore, I am unable to see any merit in the revision petitions, warranting interference.

23. In fine, both the Civil Revision Petitions are dismissed. Consequently, connected Miscellaneous Petition is dismissed. No costs. 16-10-2026 Index: Yes Speaking order Neutral Citation: Yes RKP To

1. The Assistant Director of Handlooms, Erode Circle, Erode.

2. The Handloom Inspector/Sale Officer, EH-113, Chennimalai Kongu Primary Handloom Weavers Co-opeartive Production and Sale Society Limited, Chennimalai.

3. A.P.Subramaniam, S/o.Ponnusami, D.No.203, Thirunagar, Chennimalai, Currently residing at D.No.48/A2, Cavery City, Paravalasu Pirivu, Perundurai Via Erode District.

P.B.BALAJI, J. RKP Pre-delivery order in CRP. Nos.4903 & 4912 of 2026 and CMP. No.21439 of 2026 16-10-2026