Madras High Court
K.Natarajan vs The Presiding Officer/ on 24 July, 2014
Author: T.Raja
Bench: T.Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 24.07.2014
CORAM
THE HONOURABLE MR.JUSTICE T.RAJA
W.P.No.25767 of 2009
01. K.Natarajan
02. K.Devaraj
03. K.Lakshmi
04. S.Muniammal
05. K.Veerasamy
06. V.Kanaga
07. K.Pounammal
08. M.Ramadoss
09. R.Saraswathi
10. D.Loganayaki .. Petitioners
-vs-
1. The Presiding Officer/
Cooperative Tribunal
Principal District Court
Villupuram
2. The Deputy Registrar of
Cooperative Societies
Tindivanam Circle
Tindivanam
Villupuram District
3. The Special Officer
CL.SPL.154 Brammadesam Primary
Agricultural Cooperative Bank
Brammadesam and Post
Tindivanam Taluk
Villupuram District .. Respondents
Petition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, calling for the entire records relating to the impugned order passed by the second respondent in his proceedings Na.Ka.3330/2005/Ku.Na dated 21.07.2008 confirmed by the District Court, Villupuram in C.M.A.No.25/2008 dated 26.10.2009 and quash the same.
For Petitioners :: Mr.C.Prakasam
For Respondents :: R1-Tribunal
Mr.L.P.Shanmugasundaram
Special Government Pleader
for R2
Mr.R.Neelakandan for Ms.N.Santhi for R3
ORDER
Ten petitioners have jointly filed the present writ petition challenging the impugned order passed by the Deputy Registrar of Cooperative Societies, Tindivanam Circle, the second respondent in his proceedings Na.Ka.3330/2005/Ku.Na dated 21.07.2008, confirmed by the Cooperative Tribunal/Principal District Court, Villupuram in C.M.A.No.25 of 2008 dated 26.10.2009, to quash the same.
2. The claim of all the petitioners, as submitted by the learned counsel, shows that they had not signed in the loan applications nor borrowed any loan from the third respondent-Brammadesam Primary Agricultural Cooperative Bank. While so, the Deputy Registrar of Cooperative Societies ordered for an enquiry under Section 81 of the Tamil Nadu Cooperative Societies Act, 1983 (for short, ''the Act'') in regard to the issuance of crop loan to the members of the third respondent-Bank, as if they had submitted loan applications and received the loan. Further, although the alleged loans were sanctioned in the name of the petitioners prior to seven years from the date of initiation of surcharge proceedings under Section 87 of the Act, the first respondent-Tribunal failed to consider this aspect. Moreover, when the petitioners never made any application and also never received any amount, the petitioners should not have been held responsible. Again finding fault with the impugned order, it was argued that when the Government of Tamil Nadu waived the entire agricultural loan by a Government Order, the Deputy Registrar of Cooperative Societies, Tindivanam circle, the second respondent herein, without considering the same, wrongly passed the surcharge order, whereby the petitioners were directed to repay the entire loan amount to the third respondent-Bank.
3. Continuing his arguments, the learned counsel submitted that when the enquiry report has not been passed under Section 81(4) of the Act read with Rule 104 and Section 87 of the Act, the said report cannot be legally valid as per Section 81(4), for the simple reason that the report was not submitted within the stipulated time. Moreover, when there are no materials to prove that the petitioners had received the loan amount from the third respondent-Bank and when the petitioners had specifically denied the receipt of the alleged loan, both the Tribunal and the Deputy Registrar of Cooperative Societies, Tindivanam circle have wrongly come to the conclusion that the petitioners are also responsible for the irregularities. That apart, when there was no endorsement in the records in regard to the sanction of loan and bank fund as per Section 84 of the Act, the petitioners cannot be held liable. On this basis, he prayed for setting aside the impugned orders passed by both the second respondent and the first respondent.
4. A detailed counter affidavit has been filed by the third respondent-Bank. Mr.R.Neelakandan, learned counsel appearing for the Bank submitted that the first contention taken by the petitioners that they are not coming under Section 87 of the Act is not legally tenable, since they are all members of the Bank and attended the general body meeting by specifically signing the resolution book in favour of the resolutions passed in the general body meeting. Moreover, when the bye-laws of the Bank specifically states that one member can get one loan only, in the present case, the petitioners had borrowed more than one loan without adequate land, which is absolutely contrary to the bye-laws of the Bank. Therefore, they were rightly subjected to the proceedings under Section 87 of the Act. The learned counsel further stated that when the enquiry was properly conducted, on the basis of the enquiry and the records, it was found that benami loans were received by the petitioners, who are the family members of the Secretary of the Bank. Moreover, 29 loans were issued to the family members of the Secretary Mr.K.Sagadevan to the tune of Rs.11,21,239/- and they are matters on record. Again he placed on record the letter dated 9.6.2008 in which the Secretary Mr.K.Sagadevan himself has made an admission that the above loans were issued to the family members. It was further contended that the second respondent, only after looking into the records, rightly ordered for an enquiry under Section 81 of the Act in his proceedings Rc.No.3636/2005 dated 3.1.2005. Adding further, he has stated that the enquiry officer, after starting his enquiry on 6.1.2005, submitted his enquiry report on 1.4.2005 specifically pointing out the items of fraud and misappropriation of the bank's fund to the tune of Rs.3,69,85,691 in 1467 loans vide 15 items, accordingly, he has recommended to initiate surcharge action under Section 87 of the Act. Only after receiving the enquiry report, the petitioners filed W.P.No.18214 of 2008 and got interim injunction restraining the respondents from proceeding further on the enquiry report. Following the above writ petition, several other writ petitions were filed. Subsequently, this Court, finding no merit in the above batch of writ petitions, dismissed all the writ petitions on 7.12.2007.
5. Again justifying the impugned order, the learned counsel for the third respondent submitted that the second respondent issued the surcharge notice under Section 87(1) on 15.2.2008 only after getting the interim order of injunction vacated in the above writ petition and again the second respondent gave opportunity to the petitioners for perusal of the records. Only thereafter, he conducted the personal hearing and also recorded the deposition. Therefore, complying with the procedure prescribed under Section 87(1) of the Act read with Rules 111 and 112 of the Rules, the second respondent passed the surcharge order on 21.7.2008. When the second respondent had acted in accordance with law and passed the surcharge order on the basis of the records, deposition, Act and Rules, aggrieved by the same, the petitioners preferred a statutory appeal under Section 152 of the Act before the first respondent-Tribunal, but the same was also dismissed on merits. When the detailed enquiry report has specifically pointed out the items of fraud and misappropriation of the bank's fund to the tune of Rs.3,69,85,691/- in 1467 loans under 15 items, some of the items of fraud and misappropriation clearly show that 27 loans were issued to dead persons to the tune of Rs.6,95,400/-, an alarming 371 bogus loans to the tune of Rs.1,21,91,920/- were issued, 29 benami loans were issued to the family members of Mr.K.Sadagopan, Secretary without land to the tune of Rs.11,21,239/- and disturbingly, 229 Government interest waivers to the tune of Rs.18,85,100/- were misappropriated. In view of the above serious irregularities noticed by the higher officers, the second respondent has rightly initiated surcharge proceedings under Section 87 of the Act, hence, no interference was made by the Tribunal. Therefore, the petitioners liability to pay the loan amount cannot be interfered with by this Court.
6. Concluding his arguments, it was stated that the second respondent issued the surcharge proceedings against all those persons who were involved in the misappropriation that led to the loss of the Bank and a criminal case was also filed in F.I.R.No.3 of 2005 dated 22.4.2005 by the Commercial Crime Investigation Wing of Police, Villupuram against 30 persons including the petitioners, since they have also committed irregularities, malpractices and misappropriation. Hence, if the impugned order is interfered with, this will have a direct effect on the pending criminal case, although the Tribunal has upheld the order passed by the second respondent. On this basis, the learned counsel for the third respondent submitted that since huge loss has been caused to the Bank to the tune of Rs.3,69,85,691/-, the Bank will suffer heavy loss and damage if the writ petition is allowed.
7. This Court finds some force in the submissions made by the learned counsel for the third respondent. First of all, when the surcharge proceedings initiated against the petitioners by the second respondent-Deputy Registrar of Cooperative Societies, Tindivanam Circle under Section 87(1) of the Act in Rc.No.3330/2005 dated 21.7.2008 were challenged before the Cooperative Tribunal, Villupuram under Section 152 of the Act in C.M.A.No.25 of 2008, the Tribunal also, finding large-scale irregularities in handling the bank's money, dismissed the appeal. As against that, surprisingly, ten persons have collectively filed one single writ petition, without even explaining before this Court as to how the final surcharge order dated 21.7.2008, upheld by the Tribunal in the civil miscellaneous appeal, was wrong. Secondly, all the petitioners are members of the bank, therefore, they had attended the general body meeting and signed the resolution book in favour of the resolution passed in the said general body meeting. When the bye-laws of the bank specifically states that one member can get one loan only, admittedly, the petitioners had borrowed more than one loan without adequate land, which is forbidden by the bye-laws of the bank. Therefore, they are admittedly coming under the provisions of Section 87 of the Act. Thirdly, on the basis of the report of the enquiry officer and records, it was found that the following benami loans were received by the petitioners, who are the family members of the Secretary of the bank Mr.K.Sadagopan:-
Sl.No. M. No. Name of the petitioner Details of relationship with the Secretary Loan No. Date of Loan Loan Amount 1 659 K.Natarajan Own brother 365 716 29.06.200419.02.2002 Total 65,000 35,000
-------------- 1,00,000 2 800 K.Devaraj Own brother 36 506 618 31.03.200428.05.2004 29.11.2008 Total 64,000 64,000 24,000
-------------- 1,52,000 3 2177 T.Lakshmi W/o Devaraj Brother's wife 901 31.03.2004 54,000 4 1603 S.Muniyammal W/o Sarangabani Brother's wife 707 24.06.2003 33,000 5 837 K.Veerasamy Own brother 16 574 293 10.06.200429.10.2001 10.08.2004 Total 55,000 21,000 59,600
-------------- 1,35,000 6 1789 V.Kanga W/o Veerasamy Brother's wife 79 548 11.06.200401.11.2003 Total 55,000 66,000
-------------- 1,15,000 7 546 K.Pavunammal Mother 279 468 27.05.200401.08.2001 Total 50,500 34,000
-------------- 84,500 8 789 M.Ramadoss Uncle (Husband of own sister Saraswathi) 3533 477 572 294 04.07.200003.08.2001 29.10.2001 10.08.2004 Total 35,000 35,000 24,500 41,800
-------------- 1,36,300 9 978 R.Saraswathi Own sister W/o Ramadoss 17 207 619 322 10.06.200428.02.2001 20.02.2002 14.08.2004 Total 20,000 14,000 14,000 52,500
-------------- 1,00,500 10 91 D.Loganayagi Sister 369 422 325 31.03.200118.06.2003 16.08.2004 Total 11,639 26,000 34,700
-------------- 72,339 The report further gives an alarming revelation that the following persons who are not alive have got benami loans:-
Sl.No. M. No. Name of the deceased member Details of relationship with the Secretary Loan No. Date of Loan Loan Amount 1 941 N.Alamelu (late) W/o K.Natarajan Brother's wife 2466 738 01.07.199831.12.2003 Total 21,000 60,000
-------------- 81,000 2 896 K.Sarangapani (late) Own brother 26 710 22.11.200019.02.2000 Total 26,000 31,000
-------------- 57,000
8. When the above 29 loans to the tune of Rs.11,21,239/- issued to the family members of the Secretary Mr.K.Sagadevan were proved in the records like admission register, loan ledger, loan files etc., the petitioners also signed in the loan ledger, admission register and loan files. That apart, the Secretary Mr.K.Sagadevan also admitted in his letter dated 9.6.2008 that the above loans were issued to the family members. Therefore, the report has rightly held that the loans received by the petitioners were not in accordance with law and totally running contrary to the rules of the bank. Besides the family members viz., the petitioners apparently colluded with the Secretary by creating forged documents to get the false loan. That apart, when the enquiry officer pointed out the items of fraud and misappropriation of the bank's fund to the tune of Rs.3,69,85,691/- in 1467 loans under 15 items, after his recommendation to initiate surcharge action under Section 87 of the Act, when the report was filed, W.P.No.18214 of 2008 was filed by the petitioners against the enquiry report seeking an injunction restraining from proceeding further on the enquiry report dated 1.4.2005. On the basis of the same, the following writ petitions were also filed:-
''1. W.P.25859/05 dated 12.08.2005 2. W.P.27222/05 dated 24.08.2005 3. W.P.27885/05 dated 31.08.2005 4. W.P.35708/05 dated 08.11.2005 5. W.P.38260/05 dated 25.11.2005 6. W.P.38261/05 dated 01.12.2005 7. W.P.38262/05 dated 25.11.2005 8. W.P.38814/05 dated 01.12.2005 9. W.P.38815/05 dated 01.12.2005 10. W.P.34938/05 dated 28.10.2005 11.W.P.38816/05 dated 01.12.2005 12. W.P.38817/05 dated 01.12.2005 13.W.P.38812/05 dated 01.12.2005 14. W.P.40775/05 dated 21.12.2005''
However, all the writ petitions were closed on 14.2.2008 and the petitioners writ petition was also dismissed on 7.12.2007. Only after the interim injunction granted by this Court was vacated, the second respondent, after giving a reasonable opportunity to the petitioners to peruse the records, conducted personal hearing and finally passed the surcharge order dated 21.7.2008 in Rc.No.3330/2005 Ku.Na. As against that, a statutory appeal was filed under Section 152 of the Act before the Tribunal in C.M.A.No.25 of 2008. The Tribunal, after finding that a sum of Rs.1,21,91,920/- based on bogus loans was misappropriated, further held that 27 loans were issued to dead persons to the tune of Rs.6,95,400/-. Again taking note of one another startling revelation that 29 benami loans were issued in the name of family members of Mr.K.Sagadevan, Secretary without land to the tune of Rs.11,21,239/- further undergoing a similar shocking revelation that even the Government interest waiver to the tune of Rs.18,85,100/- under 229 loans were misappropriated, finally, for all these reasons, dismissed the appeal.
9. This Court also is able to see that the petitioners are the family members of the Secretary Mr.K.Sagadevan. Moreover, they are all the members of the bank and clearly coming under the provisions of Section 87 of the Act. That apart, when all the petitioners signed in the share capital register, the record further shows that the petitioners had signed in the loan ledger and received benami loans. When 371 bogus loans were sanctioned to the tune of Rs.1,21,91,920/-, sadly, 27 loans were issued to dead persons, misappropriating a sum of Rs.6,95,400/-. As a matter of fact, the Government interest waiver to 229 loanees to the tune of Rs.18,85,100/- were misappropriated by the petitioners, therefore, the contention of the petitioners that they are not liable to pay the above said amount is absolutely untenable and unacceptable. The second respondent also, after issuing the surcharge order in proceedings Rc.No.3330/2005/Ku.Na., dated 21.7.2008 against all those who were involved in the misappropriation that led to the loss of the bank, filed a criminal case in F.I.R.No.3 of 2005 on 22.4.2005 by giving a complaint to the Commercial Crime Investigation Wing of Police, Villupuram against 30 persons including the petitioners herein. That F.I.R., includes the president of the bank, the special officer of the bank, officers of District Central Cooperative Bank, Auditors and bank's staff alleging that they have committed irregularities, malpractices and misappropriation during their duty periods. For all these reasons, this Court does not find any merits in the writ petition. Accordingly, the writ petition fails and it is dismissed. Consequently, interim order stands vacated and M.P.Nos.2 of 2009 and 1 of 2010 are also dismissed. No costs.
Index : yes 24.07.2014
Issue copy on 23.9.2014
ss
To
1. The Presiding Officer
Cooperative Tribunal
Principal District Court
Villupuram
2. The Deputy Registrar of
Cooperative Societies
Tindivanam Circle
Tindivanam
Villupuram District
3. The Special Officer
CL.SPL.154 Brammadesam Primary
Agricultural Cooperative Bank
Brammadesam and Post
Tindivanam Taluk
Villupuram District
T.RAJA, J.
ss
order in
W.P.No.25767 of 2009
24.07.2014