WA/3513/2023 of The Government of Tamil Nadu Vs Poongothai Subramaniam on 21 September 2026

JUDGMENT

(Judgment of the Court was delivered by S.M.Subramaniam J.) Under assail is the writ order dated 11.04.2022 passed in W.P.No.20180 of 2013.

2. The State, Tamil Nadu Co-operative Milk Producer's Federation Limited, Coimbatore District Milk Producer Union Limited are the appellants before this Court. The respondent herein filed a writ of Mandamus seeking a direction to settle the retirement benefits due to her deceased husband, i.e., Gratuity, Pension and arrears of pension and other terminal benefits with interest of 24 per cent per annum as per the several representations submitted by her. I. BRIEF FACTS:

3. The respondent's husband served as Managing Director and died in harness on 17.12.2004. However, the terminal benefits due to him had not been settled. Thus, respondent directly approached this Court by instituting a writ of Mandamus seeking a direction to settle the terminal benefits due to her husband. The Writ Court allowed the writ petition citing the judgment of this Court reported in K. Anbarayan and Another Vs. The Joint Registrar of Co-operative Societies, Namakkal and Others1.

II. CONTENTION OF THE APPELLANT:

4. Mr. A.R Suresh, learned Special Government Pleader appearing on behalf of the first appellant and Mr. S. Arun Kumar, Standing Counsel for 2nd and 3rd appellants would submit that the writ petition is not maintainable in view of the judgment of the larger Bench of this Court in the case of K. Marappan v. The Deputy Registrar of Co-operative Societies, Namakkal2. Pertinently, a direction was issued by the Writ Court to pay terminal benefits. As far as the appellants are concerned, the husband of the respondent had not rendered flawless service, as surcharge awards and numerous audit objection have been passed against him for the lapses committed by him during his tenure as the Managing Director. The writ court erred in finding that, the surcharge proceedings had not concluded before the death of the employee and the proceedings itself has become redundant, as the surcharge award was passed on 12.10.2004 and the husband of the respondent expired only on 17.12.2004. Hence, the surcharge award was passed prior to 1 W.P. Nos. 27398 & 27399 of 2014 2 (2006) 4 CTC 689

the death of the husband of the respondent, and the Society is empowered to recover from the legal representatives of the deceased employee against whom the surcharge award has been passed. Thus the direction issued is not in consonance with the provisions of the Act. He further contend that the Society employees are governed under the Byelaws of the Society and therefore the settlement of terminal benefits are to be made in accordance with the procedures with the Act and Rules. The Writ Court, merely relying on the Division Bench judgment in the K. Anbarayan’s case cited supra allowed the writ petition and thus the present appeal has been instituted.

III. CONTENTION OF RESPONDENT:

5. Mr. N Kulanthaivel, learned counsel appearing for the respondent would mainly contend that non-settlement of terminal benefits including Gratuity, Provident Fund, Earned Leave Salary, Security Deposit and other monetary benefits are to be construed as violative of Article 21 of the Constitution of India and therefore the writ petition is entertainable. In this context, he would rely on Sections 78 and 79 of the Tamil Nadu Cooperative Societies Act (hereinafter referred to as ‘the Act’), which speak about gratuity and provident fund. He would further submit that the surcharge award and the audit objections abated on account of the death of the deceased employee and hence the Society cannot withhold the terminal benefits to be settled in favour of the respondent. Thus, the respondent filed this writ petition. Learned Single Judge has allowed the writ petition relying upon K. Anbarayan’s case and thus the writ appeal is to be rejected. Learned counsel relied on the judgment of a Division Bench of this Court dated 12.10.2020 in W.A.No.234 of 2020 (The Registrar of Cooperative Societies and Others -vs- N.Ravichandran). IV.DISCUSSIONS

:

6. This Court has considered the rival submissions made between the parties to the lis.

(a) . Scope/Validity of the surcharge award:

7. The Division Bench of this Court in The General Manager (i/c), Vellore/Thirruvannamalai District Co-opertive Milk Producers Union Limited vs P.S. Santhanam and Others3, dated 04.08.2026 has elaborately dealt with the scope of surcharge proceedings. The relevant paragraphs are extracted below. “4. This Court is of the considered view that, when the surcharge proceedings are pending before the High Court and when the appellant Society is in the process of recovering the financial loss caused to the Society by the first respondent, they 3 W.A No. 2457 of 2023

are empowered to attach the property including the terminal benefits. Once surcharge proceedings are initiated and final order is passed, recovery proceedings can be initiated by the competent authority and pending recovery, the properties belonging to the person concerned may be attached.

5. The scope of Section 87 of the Tamil Nadu Cooperative Societies Act is exhaustive and reads as under: “87. Surcharge

(1) Where in the course of an audit under section 80 or an inquiry under section 81 or an inspection or investigation under section 82 or inspection of books under section 83 or the winding-up of a society, it appears that, any person who is or was entrusted with the organisation or management of the society or any past or present officer or servant of the society, [either on his own or in connivance with any other person], has misappropriated or fraudulently retained [or transferred any money ]or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or [***]negligence or has made any payment which is not in accordance with this Act, rules or by-laws, the Registrar himself or any person specially authorised by him in this behalf, of his own motion or on the application of the Board, liquidator or any creditor or contributory, may frame charges against such person or officer or servant [or such other person] and after giving a reasonable opportunity to the person concerned and in the case of his demise, to his representative who inherits his estate [or a person who holds his estate], to answer the charges, make an order requiring him to repay or restore the money or property, or any part thereof with interest at such rate as the Registrar or the person authorised as aforesaid thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, misapplication of funds, fraudulent retention or [transfer of money or other property,] breach of trust or negligence or payments which are not in accordance with this Act, rules or by-laws as the Registrar or the person authorised as aforesaid thinks just: Provided that no action shall be commenced under this sub-section after the expiry of seven years from the date of detection of any act or omission referred to in this sub- section: [Provided further that the action commenced under this sub~section shall be completed within a period of three months from the date of such commencement or such further period or periods not exceeding one month at a time as the next higher authority may permit but such extended periods shall not exceed three months in the aggregate.]

(2) Without prejudice to any other mode of recovery which is being taken or may be taken under this Act or any other law for the time being in force, any sum ordered under this section to be repaid to a registered society or recovered as a contribution to its assets may be recovered as if it were an arrear of land revenue and for the purpose of such recovery, the Registrar shall have the powers of a Collector under the Tamil Nadu Revenue Recovery Act,

1864 (Tamil Nadu Act II of 1864).

(3) This section shall apply notwithstanding that such person or officer or servant may have incurred criminal liability by his act.

(4) The Registrar or the person authorised by him shall, when acting under this section, have all the powers of a Civil Court while trying a suit under the Code of Civil Procedure, 1908 (Central Act V of 1908) in respect of the following matters, namely:__

(a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of any documents; (c) reception of evidence on affidavits; (d) requisitioning any public record from any court or office, (e) issuing commission for examining of witnesses.

6. Section 87 of the Tamil Nadu Cooperative Societies Act contemplates the procedure for conduct of surcharge proceedings. On receipt of an enquiry under Section 81 or an inspection under Section 82, if any illegalities or irregularities are identified, surcharge proceedings may be initiated by issuing a notice under Section 87(1) of the Act. Thereafter, the competent authority has to conduct an enquiry by affording opportunity to the parties and final surcharge order is to be passed. Final order is appealable under Section 152 of the Act before the Special Tribunal for Cooperative cases. Therefore, during the pendency of the surcharge proceedings, writ of mandamus seeking settlement of terminal benefits, if

entertained, would cause prejudice to the cooperative society for recovery of the financial loss caused to the society.

7. Section 87 (2) contemplates the mode of recovery of the decree amount. The Registrar or the authority authorised by him shall have all the powers of the Civil Court to recover the decree amount based on the final surcharge order. When the Act contemplates exhaustive procedure for recovery of financial loss caused to the Society by following the procedures, the writ of Mandamus filed by the first respondent for settlement of terminal benefits is not entertainable. The first respondent has made an attempt to file a writ of Mandamus to get the terminal benefits in an indirect manner, which cannot be permitted. Beyond the amounts due to the first respondent, the authorities are empowered to attach his property in order to recover the financial loss under the provisions under the Act. This being the scope of surcharge proceedings, the writ petition filed seeking settlement of terminal benefits at this juncture is not entertainable.

8. The Full Bench of this Court in the case of “P.Muthu Mohanraj -vs- The Deputy Registrar of Co~operative Societies and another” dated 27.04.2026 held that, “Surcharge proceedings against the retired employees are also permissible under Section 87 of the Tamil Nadu Cooperative Societies Act, 1983, provided that the same are initiated within the time limit stipulated under the said provision.'” Surcharge proceedings are independent. In the event of financial irregularity, misappropriation, fraud or any other allegation, three fold actions are permissible against the employees. Based on the statutory enquiry report under Section 81 of the Act, a criminal case can be registered by the Commercial Crime Investigation Wing of the Police Department and departmental disciplinary proceedings may be initiated and surcharge proceedings also can be initiated. Therefore, initiation of surcharge proceedings independent and not connected with any other proceedings. Under proviso to Section 87(1), the limitation contemplated for initiation of surcharge proceedings is seven years and in the present case, actions were initiated within the period of limitation and there is no infirmity as such.”

8. Thus, a surcharge award under Section 87 can be implemented against the legal representatives of the deceased delinquent, who inherits the estate and also order for the repayment of the financial loss suffered by the Society. In the present case, the surcharge award and the audit objections to the tune of Rs. 1,73, 58,028.18/- were passed holding the respondent's husband as jointly and severally liable. The award was passed on 12.10.2004, which is 2 months prior to the death of the respondent's husband. Thus, the surcharge award passed under section 87 does not abate. Hence the Society is empowered to withhold the release of terminal benefits in view of the surcharge award.

(b) . Maintainability of Writ:

9. Though the Division Bench of this Court in the case of The Registrar of Co-operative Societies (Housing) and two others -vs- N.Ravichandran (in W.A.No.234 of 2020) dated 12.10.2020 issued a direction to settle the terminal benefits in the said case by referring the larger Bench judgment in Marappan’s case, this Court has to consider the spirit of the larger Bench judgment and find out whether a writ petition is maintainable under Article 226 or not. It is all about following the judgment of the larger Bench of this Court in the case of Marappan cited supra. The directions issued in Marappan’s case are bound to be adopted in its letter and spirit and further to find out, whether the order passed by the co-equal Bench is consonance with the judgment of the Larger Bench is to be considered.

10. The principle is settled in the case of National Insurance Company Limited -vs- Pranay Sethi (2017 (16) SCC 680, wherein the Constitution Bench of the Hon’ble Supreme Court of India ruled that, when Larger Bench judgment holds the field then the judgment passed by the co-equal Bench need not be followed by another co-equal Bench. Larger Bench judgment is to be followed as precedent.

11. Let us now consider the dictum made by the Five Judges (Larger Bench) of High Court of Madras in the case of K. Marappan v. The Deputy Registrar of Co-operative Societies, Namakkal (2006) 4 CTC 689. For better understanding of the directives issued in the said case, Para 50 of the judgment is extracted hereunder: “ 50. From the above discussion, the following propositions emerge:-

(i) If a particular co-operative society can be characterised as a "State" within the meaning of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be “an authority” within the meaning and for the purpose of Article 226 of the Constitution. In such a situation, an order passed by a society in violation of the bye-laws can be corrected by way of writ petition.

(ii) Applying the tests in Ajay Hasia it is held that the respondent society carrying on banking business cannot be termed as an instrumentality of the State within the meaning of Article 12 of the Constitution.

(iii) Even if a society cannot be characterised as a "State" within the meaning of Article 12 of the Constitution, even so a writ would lie against it to enforce a statutory public duty cast upon the society. In such a case, it is unnecessary to go into the question whether the society is being treated as a “person” or “an authority” within the meaning of Article 226 of the Constitution and what is material is the nature of the statutory duty placed upon it and the Court will enforce such statutory public duty. Although it is not easy to define what a public function or public duty is, it can reasonably said that such functions are similar to or closely related to those performable by the State in its sovereign capacity.

(iv) A society, which is not a "State" would not normally be amenable to the writ jurisdiction under Article 226 of the Constitution, but in certain circumstances, a writ may issue to such private bodies or persons as there may be statutory provisions which need to be complied with by all concerned including societies. If they violate such statutory provisions a writ would be issued for compliance of those provisions.

(v) Where a Special Officer is appointed in respect of a co-operative society which cannot be characterised as a "State" a writ would lie when the case falls under Clauses

(iii) and (iv) above.

(vi) The bye-laws made by a co-operative society registered under the Tamil Nadu Co-operative Societies Act, 1983 do not have the force of law. Hence, where a society cannot be characterised as a "State", the service conditions of its employees governed by its bye-laws cannot be enforced through a writ petition.

(vii) In the absence of special circumstances, the Court will not ordinarily exercise power under Article 226 of the Constitution of India when the Act provides for an alternative remedy.

(viii) The decision in M.Thanikkachalam v. Madhuranthagam Agricultural Co-operative Society, 2000

(4) CTC 556 is no longer good law, in view of the decision of the seven-Judge Bench of the Supreme Court in Pradeep Kumar Biswas case and the other decisions referred to here before.”

12. Clause (i) to Para 50 indicates that if a particular society is wholly owned or the Government possess more than 51% of shares, then such cooperative society can be characterised as “State” within the meaning of Article 12 of the Constitution of India.

13. Clause (ii) to Para 50 emphasises the tests contemplated by the Hon’ble Supreme Court of India in the case of Ajay Hasia Etc vs Khalid Mujib Sehravardi & Ors. (191) 1 SCC 722. The Supreme Court in the said case ruled that a Cooperative Society carrying on banking business cannot be termed as an instrumentality of the “State” within the meaning of Article 12 of the Constitution of India.

14. Clause (iii) to Para 50 carves out an exception by stating that a writ would lie against a cooperative society to enforce a statutory public duty cast upon the society. In respect of this clause, a distinction is to be made. “Statutory public duty” is a duty to be performed towards the public in general by a cooperative society and would not cover the service matters of the employees of a cooperative society which is governed under Rule 149 of the Tamil Nadu Cooperative Societies Rules 1988 and the special bye-laws approved by the Registrar of Cooperative Societies prescribing service conditions. Therefore, the “statutory public duty” cast upon a society cannot be expanded so as to entertain a writ petition filed by the employees for redressal of their grievance relating to their service matters. The service related grievance of the employees of the cooperative society cannot be termed as “statutory public duty” cast upon the society.

15. Clause (iv) to Para 50 reiterates that a society which is not a ‘State’ would clearly not be amenable to writ jurisdiction. Pertinently, a writ may lie against private bodies on certain exceptional circumstances and in this regard, the Hon’ble Supreme Court of India carves out the principles and circumstances under which a writ would lie and directions can be issued against the private bodies. However, service related grievances cannot be fit into ‘public duty’ cast upon a co-operative society.

16. Importantly, in Clause (vi) to Para 50 the Larger Bench ruled that the byelaws made by a registered cooperative society do not have the force of law. Hence, where a society cannot be characterised as a “State”, service conditions of the employees governed by its byelaws cannot be enforced through a writ petition.

17. In the context of the present case, the direction in Clause (vi) to Para 50 of the judgment in Marappan’s case would squarely apply. The larger Bench in unequivocal terms reiterated that the service conditions of the employees of the cooperative society are governed under its byelaws, which are approved by the Registrar of Cooperative Societies under the provisions of the Tamil Nadu Cooperative Societies Act. Once the byelaws relating to the service conditions are approved, then no writ would lie to redress the service related grievance of an employee under Article 226 of the Constitution of India.

18. That apart, the byelaws are approved in exercise of the powers conferred under the Act. Byelaws are framed by virtue of the guidelines issued under Rule 159 of the Tamil Nadu Cooperative Society Rules 1988.

19. Therefore, the service conditions and service related issues are either contemplated or governed under the Rules or byelaws of a

Cooperative Society, as the case may be. Thus, service related grievance of the employees of the Cooperative Societies cannot be redressed by entertaining a writ petition under Article 226 of the Constitution of India since a cooperative society registered under the Act is not a “State” within the meaning of Article 12 of the Constitution of India. Every violation of Statutes, Rules or Byelaws cannot be termed as violation of statutory public duty cast upon the society under Clause

(ii) to Para 50 of the larger Bench judgment. Thus, the employees of the cooperative societies are bound to redress their grievances at the first instance by exhausting the alternative remedy contemplated under the byelaws or under Section 153 of the Tamil Nadu Cooperative Societies Act and thereafter approach the Court of law.

20. In Clause (vii) to Para 50, the Larger Bench reiterated that the Court will not ordinarily exercise the powers under Article 226 of the Constitution of India when the Act provides for alternative remedy. In respect of service matters, there are no special circumstances warranting exercise of powers under Article 226 of the Constitution of India by the High Court. Therefore, service related grievance of the employees are to be redressed by exhausting the alternative remedy contemplated under the Statute at the first instance and no writ is maintainable before the High Court under Article 226 of the Constitution of India.

21. The Larger Bench of this Court in Marappan’s case held that the decision in M.Thanikachalam vs. Maduranthakam Agricultural Producers Co-operative Society (2000) 4 CTC 556 is no longer good law in view of the decision of the seven-Judge Bench of the Supreme Court in Pradeep Kumar Biswas’s case (2002) 5 SCC 111.

22. Regarding exhausting of alternative remedy contemplated under the Statute, the Apex Court emphasises that entertaining a writ petition and adjudication of disputed facts are not desirable, which may result in causing prejudice to either of the parties. The disputed facts are to be adjudicated based on the documents in original and evidences to be produced. The High Court in exercise of the powers of judicial review under Article 226 of the Constitution of India cannot conduct a roving enquiry, merely based on the affidavit or selected copies of documents. Such disputed facts cannot be adjudicated, as there is likelihood of causing miscarriage of justice in the event of undertaking any such adjudication. This exactly is the reason why the Constitutional Courts have time and again reiterated that an aggrieved person, at the first instance, has to exhaust the alternative remedy contemplated under the Statute. The factual finding made by the original authority and the appellate / revisional authority under the Statute are of greater assistance to the High Court for the purpose of exercise of judicial review in an effective manner.

23. As far as the Cooperative Society employees are concerned, there are various mechanisms to deal with service matters as well as disciplinary matters. But High Court may not be in a position to adjudicate those issues since there is a possibility of several reasons for a cooperative society for settling or not settling the terminal benefits, as the case may be. Such reasons are to be considered by the competent authority under the Act and only after passing a speaking order by such authorities under the Act, the High Court will be in a position to entertain the writ petition. This being the legal safeguards provided not only to the employees but also to the management of the Cooperative Society, entertaining a writ petition without exhausting the alternative remedy is not desirable.

24. In the present case, the writ order has been passed relying on the judgment in the case of K. Anbarayan and Another Vs. The Joint Registrar of Co-operative Societies, Namakkal and Others4. cited supra. However, the spirit of the Larger Bench judgment of this Court as 4 W.P. Nos. 27398 & 27399 of 2014

well as the seven-judge Bench judgment of the Hon’ble Supreme Court have not been considered by the writ Court. Therefore, this Court is of the considered view that the said judgment relied on by the Writ Court cannot be construed as a precedent to be followed in view of the judgment of the Larger Bench of this Court in Marappan’s case cited supra. V.CONCLUSION:

25. In view of the above discussions, the writ order impugned dated 11.04.2022 made in W.P.No. 20180 of 2013 is set aside. However, the respondent is at liberty to prefer a revision petition under Section 153 of the Tamil Nadu Cooperative Societies Act to redress her grievance, if any exists. In the event of filing any such review petition, the competent authority under the Act shall entertain the same without reference to the delay and decide the issues on merits and in accordance with law as expeditiously as possible.

26. The writ appeal is allowed accordingly. No costs. Consequently, connected miscellaneous petition, if any, is closed. (S.M.S.,J.) (K.G.R.,J.) 21-09-2026 Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No GD

S.M.SUBRAMANIAM, J. AND KRISHNASWAMY GOVINDARAJAN, J. GD WA No. 3513 of 2023 21-09-2026