Madras High Court
Rajkumar vs The Deputy Registrar Of Cooperatives 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.28475 of 2010
Rajkumar
S/o Sampath .. Petitioner
-vs-
1. The Deputy Registrar of Cooperatives
Tindivanam
Villupuram District
2. The Special Officer
Brahmadesam Primary Agricultural
Co-operative Bank Ltd.,
Brahmadesam
Villupuram District
3. The Presiding Officer
Co-operative Tribunal/Principal District Court
Villupuram .. Respondents
Petition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, calling for the records relating to order dated 26.07.2010 in CMA No.33/2008 passed by the third respondent and in Pro.Na.Ka.No.3350/2005 dated 21.7.2008 passed by the first respondent, quash the said orders.
For Petitioner :: Mr.K.Govindaraj
For Respondents :: Mr.L.P.Shanmugasundaram
Special Government Pleader (Co-op.)
for R1
Mr.M.Dhandapani for R2
R3-Tribunal
ORDER
Mr.Rajkumar, S/o Sampath has filed this writ petition challenging the correctness of the impugned order passed in C.M.A.No.33 of 2008 dated 26.7.2010 by the third respondent-Cooperative Tribunal/Principal District Court, Villupuram and another order passed by the first respondent-Deputy Registrar of Cooperatives, Tindivanam, Villupuram District in proceedings Na.Ka.No.3330/2005/Ku.Na. Dated 21.7.2008 under Section 87(1) of the Tamil Nadu Cooperative Societies Act, 1983, to quash both the orders on the ground that as per the provisions contained in Section 87(1) of the Tamil Nadu Cooperative Societies Act, 1983 (for short, the Act), surcharge action based on the findings of the enquiry under Section 81 or an inspection or investigation under Section 82 relating to Primary Agricultural Cooperative Bank cannot be legally taken against the employees of the District Central Cooperative Bank, though may be responsible for the irregular sanction. As per the duties and responsibilities prescribed by the District Central Cooperative Bank, the Supervisors and Field Managers are responsible for the recommendations and sanction of loans to Primary Agricultural Cooperative Banks under their charge and as such, when the enquiry under Section 81 into the affairs of the Primary Agricultural Cooperative Banks revealed that there were serious irregularities in the sanction and disbursement of loans by the Primary Agricultural Cooperative Banks for which the Supervisors and the Field Managers of the Central Cooperative Bank were also responsible, the enquiry officer should have recommended for, or the Circle Deputy Registrar or Regional Joint Registrar should have ordered for an enquiry under Section 81 or inspection or investigation under Section 82 for the Central Cooperative Bank also. If that procedure is complied with, then the surcharge action under Section 87 could be legally initiated against the Supervisors and Field Managers of the Central Cooperative Bank also for the loss/deficiency caused to the Central Cooperative Bank. But without independently ordering any enquiry or inspection against the employees of the Central Cooperative Bank to find out the alleged breach of trust or wilful negligence in relation to the Central Cooperative Bank, simply on the basis of the enquiry conducted under Section 81 or an inspection under Section 82 of the Act relating to the Primary Agricultural Cooperative Bank, it is not open to say that the Supervisory staff of Central Cooperative Bank are also responsible for the alleged irregularities in the sanction and disbursement of loans in the Primary Agricultural Cooperative Bank. As this vital inspection has not been done against the employees of the Central Cooperative Bank, the impugned surcharge order dated 21.7.2008 passed by the first respondent, as confirmed by the third respondent-Tribunal, is wholly unsustainable and non est in the eye of law. Since the petitioner is a member of the Central Cooperative Bank, the respondents have failed to consider that as per the provisions contained under Section 87 of the Act, surcharge action based on the findings of the enquiry under Section 81 or investigation under Section 82 relating to Primary Agricultural Cooperative Bank cannot be legally taken against the employees of Central Cooperative Bank, even if they were also responsible for the irregular sanction of loan.
2. The main thrust of the argument advanced by the learned counsel for the petitioner shows that when there was a specific enquiry ordered under Seciton 81 to find out the lapses and irregularities and loss sustained by the Primary Agricultural Cooperative Bank, in order to fix the duties and responsibilities of the members of the Primary Agricultural Cooperative Bank, without recommending a similar enquiry to find out the duties and responsibilities of the members of the Central Cooperative Bank, by keeping the surcharge proceedings initiated under Section 81 with regard to the members of the Primary Agricultural Cooperative Bank, surcharge action under Section 87 cannot be legally initiated against the Supervisors and Field Managers of Central Cooperative Bank for the loss or deficiency caused to the Central Cooperative Bank. Therefore, the entire proceedings initiated against the petitioner resulting in the impugned order dated 21.7.2008 passed by the first respondent and confirmed by the third respondent are liable to be quashed.
3. A detailed counter affidavit has been filed by the second respondent. Mr.M.Dhandapani, learned counsel appearing for the second respondent-Special Officer of Brammadesam Primary Agricultural Cooperative Bank, vehemently opposing the prayer of the petitioner, contended that the petitioner joined the respondent-Bank as Taluk Field Manager and worked from 8.11.96 to 7.4.97 and from 19.12.2002 to 31.12.2004. As there were irregularities found in the sanction of loans, which resulted in more loss to the Primary Agricultural Cooperative Bank and also to the Central Cooperative Bank, the first respondent-Deputy Registrar of Cooperative Societies, Tindivanam circle ordered for an enquiry under Section 81 of the Act in his proceedings Rc.No.3636/05/Vesesa dated 3.1.2005 on the basis of the special report of the 100% crop verification report submitted on 17.12.2004. When it is an undisputed fact that the first respondent is the competent authority for ordering enquiry under Section 81 of the Act, the enquiry officer appointed in this connection started his enquiry on 6.1.2005 and submitted his report on 1.4.2005 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 under 15 items, he recommended for initiation of surcharge action under Section 87 of the Act. Adding further, Mr.M.Dhandapani submitted that the petitioner, immediately after the enquiry report dated 1.4.2005 was filed recommending initiation of surcharge proceedings under Section 87 of the Act, filed Writ Petition No.38816 of 2005 before this Court and got interim injunction restraining the first respondent from proceeding further. Similarly, 14 other persons filed writ petitions and subsequently all the writ petitions were dismissed. Only thereafter, the first respondent issued surcharge notice under Section 87(1) of the Act in Rc.No.3330/05/Ku.Na. Dated 15.2.2008. The petitioner also submitted his explanation dated 28.4.2008 to the surcharge notice issued under Section 87(1) and thereafter, having enjoyed the opportunity to peruse the records, he participated in the enquiry and deposition was also recorded on 28.4.2008 by the first respondent. Therefore, the surcharge proceedings initiated by the first respondent under Section 87(1) of the Act to recover the deficiency caused by the petitioner and other similarly placed persons is well founded.
4. Adding further, the learned counsel stated that the principles of natural justice also have not been violated. Moreover, the orders have been passed by the first respondent based on the records, deposition, rules and the Act. Thereafter the petitioner, having received the surcharge order dated 7.8.2008, preferred a statutory appeal under Section 152 of the Act before the third respondent-Cooperative Tribunal in C.M.A.No.33 of 2008 without taking a stand that the enquiry report was not furnished to him. Even during the arguments in C.M.A., before the Cooperative Tribunal, the petitioner has not pleaded any such argument. Finally, the Cooperative Tribunal has confirmed the surcharge proceedings issued by the first respondent. Therefore, when the first respondent issued the surcharge notice in Rc.No.3330/2005/Ku.Na., dated 15.2.2008 on the basis of the enquiry report and finally the surcharge proceedings under Section 87 was also rightly passed, the Cooperative Tribunal, after going into the crop verification report dated 17.12.2004 and the enquiry report dated 1.4.2005 containing the items of fraud and misappropriation of the bank's fund to the tune of Rs.3,69,85,691/-, has given its findings that the petitioner was also responsible for the loss of the bank's money being the Field Manager on duty from 8.11.96 to 7.4.97 and from 19.12.2002 to 31.12.2004.
5. While replying to the argument that there was no enquiry under Section 81 with regard to the duties and responsibilities of the members of the District Central Cooperative Bank, Mr.M.Dhandapani submitted that as per the central bank's circular, the petitioner has the duties and responsibilities to check the share qualification of members, overdue positions of borrowers and surety, share qualification of societies to the Central Cooperative Bank, loan outstanding as on date, stock cover for borrowing in cash credit account, checking of drawal application with annual cash credit limit in respect of all items, quantum of finance, checking the duties and liabilities of society's staff etc. Since the above duties and responsibilities are also related to the petitioner, the Cooperative Tribunal has specifically held that the petitioner had not taken any action and not checked any of the loan files during his duty period, hence, it was held that the petitioner was also liable during his duty period as noted in the surcharge order in item nos.1,2,3,4,5,6,7 and 8. Again one another finding was recorded by the Cooperative Tribunal that the petitioner and others committed various malpractices and irregularities in the issue of loans to members in collusion with other employees of the bank by violating the rules for sanction of loans and also the instructions issued by the Registrar of Cooperative Societies and Central Cooperative Bank. In view of the loss caused by various persons including the petitioner, the financial stability of the bank came to a dormant stage. Therefore, the surcharge order passed against the petitioner is legally valid and proper, he pleaded.
6. Concluding his arguments, he has stated that a criminal case was also filed in F.I.R.No.3 of 2005 dated 22.4.2005 by the Commercial Crime Investigation Wing Police, Villupuram against 30 persons and the same is also pending before the Court of Judicial Magistrate No.II, Tindivanam implicating not only the petitioner, but also the president of the society, the special officer of the society, officers of the Central Cooperative Bank, auditor and other staff of the society for the various irregularities, malpractices and misappropriation during their duty periods. Therefore, if the impugned order is interfered with, they will use this order as a trump card to get away from the criminal case, which will go against the interest of the bank on account of the heavy loss.
7. Heard the parties on both sides.
8. The enquiry report dated 1.4.2005 indicates that the second respondent-Bank has suffered huge loss on the items of fraud and misappropriation to the tune of Rs.3,69,85,691/- in 1467 loans under 15 items, for which a recommendation was made to initiate surcharge action under Section 87 of the Act. The record further shows that the petitioner filed Writ Petition No.38816 of 2005 challenging the enquiry report, but the same was dismissed on 21.12.2005. Thereafter, the first respondent proceeded with the surcharge proceedings and passed a surcharge order on 21.7.2008. Before passing the surcharge order dated 21.7.2008, the record shows that the first respondent issued a surcharge notice under Section 87(1) on 15.2.2008 and thereafter the enquiry report was sent on 19.3.2008 to the petitioner, for which he submitted his explanation on 28.4.2008. Subsequently, he has also made his deposition, which was also recorded on 28.4.2008 by the first respondent. These chain of events go to show that the principles of natural justice have not been violated and the first respondent appears to have acted and passed the surcharge order on the basis of the records, deposition and the rules in vogue. The petitioner also, after receiving the surcharge order on 7.8.2008, preferred a statutory appeal under Section 152 of the Act in C.M.A.No.33 of 2008 before the Cooperative Tribunal, Villupuram and the Tribunal found that the petitioner, while serving as Taluk Field Manager in Brammadesam Primary Agricultural Cooperative Bank, during his tenure of service, has committed various irregularities in connivance with the president, special officer and staff of central cooperative bank. One of the interesting parts of the allegation shows that 27 loans were issued to the dead persons to the tune of Rs.6,95,400/-. Another 371 bogus loans were given to the tune of Rs.1,21,91,920/-. Yet another alarming note of the bank shows that 31 members of the primary agricultural cooperative bank in their deposition to the enquiry officer have stated that the loan amount to the tune of Rs.4,29,410/- was not yet received in full (partially not yet paid). Another alarming note shows that 13 members loan amount collected were not shown in the cash book and loan ledger representing Rs.90,539/- and the same were misappropriated by various persons. Further the records show that 29 benami loans were issued to the family members of one Secretary without land to the tune of Rs.11,21,239/- and 229 government interest waiver loans to the tune of Rs.18,85,100/- have been misappropriated.
9. In that view of the matter, the findings recorded by both the first respondent in the surcharge proceedings and the Cooperative Tribunal, Tindivanam in the impugned order holding that the petitioner was also liable during his duty period as noted in the surcharge order in item nos.1,2,3,4,5,6,7 and 8 for commission of various irregularities in the sanction of loans to the members of the society in collusion with the other employees of the bank, which resulted in the closing of the assets of the bank, are perfectly in order and this Court is not able to see any merits in the writ petition.
10. Before parting with, it must be mentioned that when the petitioner worked as Taluk Field Manager in the second respondent-Bank, this Court is at loss to understand as to how he can argue that surcharge action based on the findings of the enquiry under Section 81 relating to Primary Agricultural Cooperative Bank cannot be legally taken against the employees of the Central Cooperative Bank, when he himself was the Field Manager on duty from 8.11.96 to 7.4.97 and from 19.12.2002 to 31.12.2004. In fact, the petitioner worked as Taluk Field Manager in Villupuram District Central Cooperative Bank at Tindivanam Taluk during the year from April, 1997 to June, 1999, enjoying the duties of Taluk Manager, to recommend loan files to the District Central Cooperative Bank for sanctioning the loans. When the petitioner was admittedly having the power to recommend the loans to the District Central Cooperative Bank for sanction of loan, he cannot say that he was not responsible for the irregular sanction of loans. For all these reasons, the writ petition fails and it is dismissed. No costs.
Index : yes 24.07.2014
Issue copy on 23.9.2014
ss
To
1. The Deputy Registrar of Cooperatives
Tindivanam
Villupuram District
2. The Special Officer
Brammadesam Primary Agricultural
Co-operative Bank Ltd.,
Tindivanam Taluk
Villupuram District
3. The Presiding Officer
Co-operative Tribunal/Principal District Court
Villupuram
T.RAJA, J.
ss
Order in
W.P.No.28475 of 2010
24.07.2014