Madras High Court
M.Krishnasamy vs The Deputy Registrar Of Co-Operative ... on 17 June, 2021
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
CRP (NPD) No.1222 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 17.06.2021
CORAM:
THE HON'BLE MR.JUSTICE G.K.ILANTHIRAIYAN
C.R.P (NPD) No.1222 of 2018
and
CMP.No.6247 of 2018
M.Krishnasamy ... Petitioner
Vs.
1. The Deputy Registrar of Co-operative Societies (No Credit),
Chennai – 108.
2. Tamil Nadu Co-operative Marketing Federation,
Chennai. ... Respondents
Prayer : Civil Revision Petition is filed under Article 227 of the
rd
Constitution of India, to set aside the order of the 3 respondent dated
st
04.08.2017 made in C.M.A.No.22 of 2004 confirming the order of the 1
respondent dated 19.01.2004 made in Na.Ka.2735/01/Sa.Pa.1.
For Petitioner : Mr.K.Premkumar
For Respondents : Mr.L.P.Shanmugasundaram
1/22
CRP (NPD) No.1222 of 2018
ORDER
This Civil Revision Petition is directed against Judgment passed in C.M.A.No.22 of 2004 dated 04.08.2017 on the file of the learned Chief Judge, Small Causes Court, Chennai, confirming the order passed in Na.Ka.2735/01/Sa.Pa.1 dated 19.01.2004 on the file of the first respondent, thereby ordering surcharge proceedings to the tune of Rs.24,56,370/-.
2. The learned counsel for the petitioner submitted that the petitioner was working as Special Officer in the Tamil Nadu Co-operative Marketing Federation Limited from 07.08.1992 to nd 30.09.1994. During the petitioner's tenure as Special Officer of the 2 nd respondent, the 2 respondent procured fertilizers to the tune of 305.500 metric tonnes and 810 litres for sale to the farmers to the tune of Rs.1,95,08,452/-. Thereafter, from the date of his superannuation, there were other Special Officers and they also procured fertilizers for the purpose of selling the same to the farmers. Out of the said tune of fertilizers, till the superannuation of the petitioner herein as Special 2/22 CRP (NPD) No.1222 of 2018 Officer, 111 metric tonnes of fertilizers were sold out and subsequently, 115 metric tonnes of fertilizers were sold within a period of four months. When the other person was holding additional charge till 31.01.1995, 79 metric tonnes of fertilizers were available, which was alleged to have been purchased by the petitioner without sale. On account of the same, the Registrar of Co-operative Societies ordered enquiry under Section 81 of the Tamil Nadu Co-operative Societies Act (hereinafter referred to as 'the Act' for short). In the enquiry conducted, several Officials were found responsible for causing loss of goods/fertilizers to the value of Rs.73,50,204/-. Therefore, the petitioner was served with show cause notice for which the petitioner submitted his explanation. However, without considering the same, the first respondent passed surcharge order under Section 87 of the Act.
3. The learned counsel for the petitioner further submitted that as per the charges, the petitioner has not obtained any prior permission of the Government for purchase over Rs.1 Crore as per the G.O.Ms.No.436 dated 15.04.1997 and also based on the Circular in Na.Ka.43310/95 dated 17.03.1995. Therefore, the petitioner challenged the surcharge order in C.M.A.No.22 of 2004 on the file of the Special Tribunal for Co-operative 3/22 CRP (NPD) No.1222 of 2018 Cases, Chennai (In the Court of Small Causes, Chennai). The surcharge order was set aside on the ground that the surcharge proceeding itself was barred by limitation, since it was initiated after six months from the date of its commencement. The enquiry officer, who conducted enquiry under Section 81 of the Act, had not recommended for any disciplinary action or to initiate any surcharge proceedings against the petitioner. Further, the Tribunal held that the explanation submitted by the petitioner dated 26.03.2003 was not considered properly. Aggrieved by the same, the second respondent herein challenged that order before this Court by way of Writ Petition in W.P.No.20207 of 2008. It was allowed by this Court by an order dated 21.02.2012 and remanded back the matter to the Tribunal for fresh disposal. By an order dated 04.08.2017, the Tribunal dismissed the appeal filed by the petitioner and confirmed the surcharge order passed by the first respondent.
4. He further submitted that the Tribunal failed to see that the petitioner was working only till 30.09.1994 and the fertilizers purchased by him is not against the Government order or Circular as stated by the Tribunal, since no Government Order and Circular was passed by the Government at that juncture. The subsequent Government Order in 4/22 CRP (NPD) No.1222 of 2018 G.O.Ms.No.436 dated 15.04.1997 and the Circular in Na.Ka.43310/95 dated 17.03.1995 could not have retrospective effect. Therefore, the petitioner is not all liable for any violation as stated by the second respondent. Admittedly, on the part of the petitioner, no wilful negligence in the procurement, no misappropriation, no fraudulent retention of any money or other property and no breach of trust in relation to the society are caused by the petitioner. When that being so, no surcharge proceeding is sustainable as against the petitioner. Even assuming that the petitioner committed any negligence, the mere negligence is not sufficient to pass any surcharge order under Section 87 of the Act. During the relevant period, as alleged by the second respondent, there was no Government Order or the Circular privileged and only after his retirement, the aforesaid Government Order and the Circular were issued. Therefore, nothing is proved and even then, the second respondent passed surcharge order as against the petitioner. In support of his contentions, the learned counsel for the petitioner relied upon the judgment reported in (2016) 6 MLJ 485 (S.Ramadevi -vs- Special Officer) and 2014 (1) CWC-835 (P.Elango -vs- The Administrator, M.R.K. Co-operative Sugar Mills). 5/22 CRP (NPD) No.1222 of 2018
5. Per contra, the learned counsel appearing for the respondents submitted that the second respondent filed a counter stating that based on the findings of the enquiry under Section 81 of the Act into the affairs of the Tamil Nadu Co-operative Marketing Federation Limited relating to the loss to the assets of the Federation by the indiscriminate purchase and sales of micro nutrients/fertilizers by the Special Officers of the Federation as received by the Special Investigation Squad in the office of the Registrar of Co-operative Societies, notice was issued under Section 87(1) of the Act to the Special Officer of the Federation and other Officers and staff of the Federation who are found responsible for the indiscriminate purchase of various micro nutrients/fertilizers to the extent of 723.500 metric tonnes and 810 litres to the value of Rs.4,66,95,452 during the period from the year 1994 to 1996. The value of unsold damaged micro nutrients/fertilizers upto 31.12.1999 was to the value of Rs.73,50,204/- and to that extent, loss was caused to the assets of the Federation. These micro nutrients/fertilizers were initially purchased on consignment basis and stocked in the various regional godowns situated throughout the state. Since the Special Officers purchased the micro nutrients/fertilizers from the cash credit availed from the Central Co- 6/22 CRP (NPD) No.1222 of 2018 operative Bank, there was unnecessary locking of funds increasing the loss incurred by the Federation. He further stated that though as per Government Order 325 Co-operative Food & Consumer Protection Department dated 15.04.1995, prior permission has to be obtained from the Government for the purchase over and above Rs.1 Crore, no such Government permission was obtained. Further, as per the Registrar Circular Rc.43310/95 IP3 dated 17.03.1995, the purchase of goods above Rs.10 lakhs have to be purchased by the purchase committee constituted by the Registrar. Though the value of micro nutrients/fertilizers purchase exceeded Rs.4.67 Crores, Government Orders have not been obtained and purchase of the micro nutrients/fertilizers have not been made by the purchase committee.
6. The learned counsel for the respondents further submitted that the purchase of the nutrients/fertilizers were made during the tenure of the following Special Officers on their orders issued from the head office:
K.Krishnasamy (SO) From 305.500 MT Rs.1,95,08.452/-
07.08.1992 to 30.09.1995 810 litre G.Gandhidoss (AR/SO) From 10.000 MT Rs.5,10,000/- 01.10.1995 to 31.01.1995 S.Damodaran (AR/SO) From 398.00 MT Rs.2,61,28,000/- 01.02.1995 to 04.03.1996 M.M.B.Sivaprakasam (SO) 10.000 MT Rs.5,49,000/-
7/22 CRP (NPD) No.1222 of 2018 From 05.03.1996 to 31.12.1996 Total 723.500 MT Rs.4,66,95,452/- 810 Litre
7. The learned counsel for the respondents also submitted that all the above purchases were made from the Head Office without obtaining indents from the regional offices as well as from Primary Co-operative Credit Societies and though there was adequate stock in the godown, the purchases were made. By such indiscriminate purchases, stocks were piled in the godown exceeding the expiry date and stocks were damaged. The Federation incurred loss to the tune of Rs.73,50,204/- and for the said loss only the former special officers are liable and surcharge notice was issued to them by the Deputy Registrar (Non Credit) Ms in Rc.3879/200/Nu Ku2 dated 25.04.2000. The petitioner and others gave reply and considering their reply, the Deputy Registration (Non Credit) Ms has passed surcharge order in Re.2737/01SF dated 19.01.2004 holding the petitioner M.Krishnasamy liable for Rs.24,56,370/- and Lakshmikanda wife and other heirs of S.Damodaran were made liable for Rs.48,93,630/- on behalf of S.Damodaran, Additional Registrar. 8/22 CRP (NPD) No.1222 of 2018
8. Heard the learned counsel for the petitioner as well as the learned counsel appearing for the respondents.
9. The petitioner was appointed as Additional Registrar/Special Officer of the second respondent Federation on 07.08.1992. The second respondent was engaged for procuring and selling fertilizers to the Primary Agricultural Property Societies through its District level units. The purchase of the fertilizers is done through the committee constituted by the Registrar of Co-operative Societies, consisting of the Additional Registrar (consumer activities), the first respondent herein and the Special Officer. The committee was headed by the Additional Registrar and functioned under the control of the Registrar and his directions. As per the decision taken in the committee, the purchase was made on special intends of the district level region of the second respondent. While being so, the product viz., micro nutrients/fertilizers was introduced by the Agricultural Department. The rate and terms of supply of micro nutrients/fertilizers were approved by the purchase committee constituted by the Registrar and on receipt of the specific intends from the district level regional officers, the petitioner purchased 305.500 metric tonnes during his tenure from the month of May 1994 to 9/22 CRP (NPD) No.1222 of 2018 September 1994. Out of which, 111 metric tonnes of the micro nutrients/fertilizers were sold out till his superannuation and subsequently, 115 metric tonnes of the micro nutrients/fertilizers were sold out by the subsequent officer till 31.01.1995. The remaining 79 metric tonnes micro nutrients/fertilizers were available to the second respondent.
10. In fact, subsequent to the procurement, the petitioner's successors in the office procured so many tonnes on the intends placed before them. Now, the charge against the petitioner is that the petitioner failed to obtain prior permission from the Government in respect of purchase over Rs.1 Crore as per G.O.Ms.436 dated 15.04.1997. The purchase of nutritious fertilizers is in violation of Circular in Na.Ka.43310/95/EPA3 dated 17.03.1995. The stock of nutritious fertilizers procured by the petitioner is very much available without sale. Therefore, the petitioner and others are held responsible for the total loss of Rs.73,50,000/- and the same is apportioned at the rate of 33.42% and 66.58% viz., as against the petitioner shall pay a sum of Rs.24,56,370/-. Though initially the surcharge proceeding was set aside by the Co-operative Tribunal, the same was set aside by this Court and 10/22 CRP (NPD) No.1222 of 2018 remanded back for fresh disposal. Thereafter, the Tribunal confirmed the order passed by the second respondent and dismissed the appeal.
11. Now, the point for consideration is that whether the act of the petitioner would amount to wilful negligence in procurement, misappropriation, fraudulent retention of any money or other property, any breach of trust in relation to the society and caused any deficiency in the assets of the society by breach of trust or wilful negligence. As stated supra, the entire charges against the petitioner are that he procured micro nutrients/fertilizers over the tune of Rs.1 Crore without getting permission as contemplated under the Government order and it is in violation of the Circular dated 17.03.1995. Further, charged that the stocks of nutritious fertilizers procured by the petitioner are available with the second respondent, without any sale. Therefore, no charges is made out as against the petitioner to pass surcharge order as contemplated under Section 87 of the Act.
12. In this regard, the learned counsel for the petitioner relied upon the judgment reported in (2016) 6 MLJ 485 (S.Ramadevi -vs- Special Officer), it is held as follows:-
“25. The third and the last plea is actually the most 11/22 CRP (NPD) No.1222 of 2018 crucial as to whether the appellant could be said to have acted with willful negligence. In this behalf, the learned counsel for the appellant has relied upon two judgments of this Court in S.Subramanian v. Deputy Registrar of Co- operative Societies (Housing), Cuddalore and Others 2002- 3-L.W.185 : LNIND 2002 MAD 1671 and K.Ajay Kumar Gosh and Others v. Tribunal for Co-operative Cases, LNIND 2009 MAD 986 : (2009) 4 MLJ 992, to contend that when requirements of Section 87 had not been satisfied, which warrants initiation of surcharge proceedings, the liability cannot be fastened. There has to be willful and wanton premeditation with a view to cause loss to the assets of the Society and “mere negligence cannot be a ground for surcharge and it must be willful negligence or intentional negligence and not mere carelessness or intention or inadvertence or a single lapse by oversight”. We extract the observations in the case of K.Ajay Kumar Gosh and Others v. Tribunal for Co-operative Cases (supra), as hereunder:
“19. A detailed discussion has been made by making reference to various judgments on this aspect in another judgment reported in Sathyamangalam Co- operative Urban Bank Ltd. v. Deputy Registrar of Co- operative Society and Another, (1980) 2 MLJ 17, it is held thus:
The degree of negligence that is contemplated under Section 71 (1) of the Tamil Nadu Co-operative Societies Act is not mere negligence, but wilful 12/22 CRP (NPD) No.1222 of 2018 negligence. The word 'wilful' has not been defined in the Act. 'Wilfulness' or 'wantonness' imports pre- meditation or knowledge and consciousness that an injury or loss is likely to result from the act done or from the omission to act. It imports a constructive intention as to the consequences which, entering into the wilful act, the law imputes to the offender and in this way a charge, which otherwise would be mere negligence, becomes by reason of a reckless disregard of probable consequences, a wilful wrong. The act done or omitted to be done must be intended or must involve such reckless disregard of security and right as to imply bad faith. In examining whether there is wilful negligence, it has to be seen first whether the person concerned is guilty of negligence and if so, whether the said wilful negligence is the proximate cause of the injury or loss sustained.”
20. In the light of the decisions referred to above, it is clear that to pass surcharge order under Section 87 of the Act, appellants should have done an actionable wrong either by commission or omission in a deliberate and reprehensible manner with reckless callousness and with a supine indifference, without taking due care and caution ordinarily expected from a reasonable and prudent man under those existing circumstances. In the absence of such categorical finding by the respondents, it is not possible to mulct 13/22 CRP (NPD) No.1222 of 2018 the appellants with the loss caused to the society.”
13. Further the learned counsel for the petitioner relied upon the judgment reported in 2014 (1) CWC-835 (P.Elango -vs- The Administrator, M.R.K. Co-operative Sugar Mills), it is held as follows:-
"12. Similar issue arose for consideration in the decision rendered by a learned single Judge of this Court (N.Paul Vasanthakumar, J.) reported in (2009) 6 MLJ 1051 [A.Janakiraman and another -vs- Deputy Registrar of Cooperative Societies and another), wherein the learned single Judge has referred to all the earlier decisions on that point and held as follows:-
"In surcharge proceedings, the first respondent is duty bound to prove that there was wilful dereliction of duty like criminal case. The criminal Court having found that the petitioners are not guilty, the said findings are definitely in favour of the petitioners. The words used under Section 87(1) are "wilful negligence". The said issue was considered in series of decisions of this Court 14/22 CRP (NPD) No.1222 of 2018
(a)In Sathyamangalam Co-operative Urban Bank Limited v. Deputy Registrar of Co-operative Society and Another (1980) 2 MLJ 17, this Court considered the scope of earlier Section viz., Section 71 of the Tamil Nadu Co-operative Societies Act, 1961, which is analogous to Section 87 of the Act, 1983 and held that mere negligence is not sufficient to initiate surcharge proceedings.
(b)A Division Bench of this Court in P.Karuppiah v. Deputy Registrar of Co-operative Societies (1989) WLR 272 considered the very same aspect and in paragraph 3 held as follows:
"3.The second aspect canvassed by the learned counsel for the appellant is that, assuming that the petitioner was cast with specific responsibility or obligation or duty with reference to the remittances and withdrawals yet, the alleged acts and omissions with which the appellant was charged could not be said to have been tainted with 'wilful negligence' 15/22 CRP (NPD) No.1222 of 2018 which has been construed by pronouncements of the Court as meaning something done either by commission or omission, in a deliberate and reprehensible manner, with reckless callousness and with a supine indifference, and not by accident or inadvertence without taking due care and precaution ordinarily expected form a reasonable and prudent man under the existing circumstances. Learned counsel for the appellant took the trouble of citing before us pronouncements of a number of single Judges of this Court. Learned counsel for the appellant would submit that even in the field of inference, there is no possibility of characterising the alleged acts and omissions on the part of the appellant as tainted with 'wilful negligence'. We would have gone into this question, but we find that the answer given by us with regard to the first contention in favour of the appellant has served his purpose 16/22 CRP (NPD) No.1222 of 2018 and we are of the view that for the present case we need not trouble ourselves with regard to this aspect. The learned single Judge, we find, has omitted to take note of the crucial aspect with regard to the casting of specific responsibility or duty or obligation on the appellant with regard to remittances and withdrawals. As we have already pointed out, there is no material evidence exposed in this case, showing that position. In the absence of the said position being made out against the appellant it is not possible to sustain the proceedings which culminated in the mulcting of the liability on the appellant. Taking note of this feature, we are obliged to interfere in writ appeal and accordingly, the writ appeal is allowed, the order of the learned single Judge is set aside and the writ petition W.P.No.1955 of 1978 is allowed. We make no order as to costs both in the writ petition and in the writ 17/22 CRP (NPD) No.1222 of 2018 appeal."
(c)The above decision was followed in the decisions Chockappan v. Special Tribunal for Co-operative Cases (1999) 1 MLJ 587 and M.Sambandam v. Deputy Registrar (Credit) Co-opeartive Societies, Mylapore, Madras.
(d)In M.Chella Nadar v. Deputy Registrar of Cooperative Societies, Thuckalai and post, K.K.District (2002) WLR 198, the very same issue of scope of Section 87 (1) was considered and similar surcharge proceedings was quashed.
(e)The above decisions are followed in the decision in S.Marimuthu v. Deputy Registrar of Co- operative Societies (Housing), Madurai Circle (2006) 4 MLJ 86.
(f)Recently, a Division Bench of this Court in the decision in K.Ajay Kumar Gosh v. Tribunal for Cooperative Cases, Nagercoil (2009) 4 MLJ 992, set aside the order of surcharge and in paragraph 20 held thus at p.996 of MLJ:
18/22 CRP (NPD) No.1222 of 2018
"20.In the light of the decisions referred to above, it is clear that, to pass surcharge order under Section 87 of the Act, appellants should have done an actionable wrong either by commission or omission in a deliberate and reprehensible manner with reckless callousness and with a supine indifference, without taking due care and caution ordinarily expected from a reasonable and prudent man under those existing circumstances. In the absence of such categorical finding by the respondents, it is not possible to mulct the appellants with the loss caused to the society".
14. The Hon'ble Division Bench of this Court repeatedly held that to pass surcharge order, the first respondent is duty bound to prove that there was wilful dereliction of duty like criminal case and mere negligence is not sufficient to initiate surcharge proceedings. It is further held that the wilful negligence which has been construed by pronouncements of the Court as meaning something done either by 19/22 CRP (NPD) No.1222 of 2018 commission or omission in a deliberate and reprehensible manner with reckless callousness and with a supine indifference and not by accident or inadvertence without taking due care and precaution ordinarily expected form a reasonable and prudent man under the existing circumstances.
15. In the light of the decisions referred to above, it is clear that, to pass surcharge order under Section 87 of the Act, the petitioner should have done an actionable wrong either by commission or omission in a deliberate and reprehensible manner with reckless callousness and with a supine indifference, without taking due care and caution ordinarily expected from a reasonable and prudent man under those existing circumstances. In the absence of such categorical finding by the respondents, it is not possible to mulct the petitioner with the loss caused to the society. That apart, there is no findings in respect of wilful dereliction of duty on the part of the petitioner and mere alleged violation of Government Order and Circular are not sufficient to issue surcharge order under Section 87 of the Act.
16. In view of the above discussion, this Civil Revision Petition is allowed and the judgment passed in C.M.A.No.22 of 2004 dated 20/22 CRP (NPD) No.1222 of 2018 04.08.2017 is hereby set aside. Consequently, the connected Miscellaneous Petition is closed. No costs.
17.06.2021 kv Index :Yes/No Internet : Yes/No To
1. The Chief Judge, Small Causes Court, Chennai.
2. The Deputy Registrar of Co-operative Societies, (No Credit), Chennai – 108.
3. Tamil Nadu Co-operative Marketing Federation, Chennai.
4. The Section Officer, V.R. Section, High Court of Madras.
G.K.ILANTHIRAIYAN.J., kv 21/22 CRP (NPD) No.1222 of 2018 C.R.P (NPD) No.1222 of 2018 17.06.2021 22/22