Madras High Court
Francis vs The Deputy Registrar Of Cooperative ... on 25 April, 2023
Author: G.R.Swaminathan
Bench: G.R.Swaminathan
1 W.P.(MD)NO.13231 OF 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 25.04.2023
CORAM
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
W.P.(MD)No.13231 of 2020 and
W.M.P.(MD)No.11074 of 2020
Francis ... Petitioner
Vs.
1. The Deputy Registrar of Cooperative Societies,
O/o.The Deputy Registrar of Cooperative Societies,
C.J.M.Complex, Salai Street,
Ramnad.
2. Poorna Chandra Mathi
3. Sathiyamurthy
4. The Managing Director / Joint Registrar,
Ramanathapuram District Central Cooperative Bank Ltd.,
Vandikkara Street,
Ramanathapuram.
(R-4 is impleaded vide order dated 25.04.2023
in W.M.P.(MD)No.13012 of 2022) ... Respondents
Prayer: Writ petition is filed under Article 226 of the Constitution
of India, to issue a Writ of Certiorari, calling for the records pertaining to
the impugned order issued by the first respondent dated 03.8.2020 in
SC.No.1/2019-20 /saba in so far as the petitioner is concerned and quash
the same.
https://www.mhc.tn.gov.in/judis
1/9
2 W.P.(MD)NO.13231 OF 2020
For Petitioner : Mr.Sricharan Rangarajan,
Senior Advocate,
for Mr.C.Jeganathan.
For R-1 : Mr.M.Senthil Ayyanar,
Government Advocate.
For R-4 : Mr.D.Shanmugaraja Sethupathy
***
ORDER
Heard the learned counsel on either side.
2. The petitioner challenges the impugned surcharge order passed by the first respondent under Section 87(1) of the Tamil Nadu Co-operative Societies Act 1983.
3. The learned Government Advocate appearing for the first respondent raises a primary objection that the writ petition is not maintainable and that the petitioner will have to necessarily exhaust the appeal remedy. He points out that the petitioner can very well move the Cooperative Tribunal under Section 152 of the Act. https://www.mhc.tn.gov.in/judis 2/9 3 W.P.(MD)NO.13231 OF 2020
4. Though in similar circumstances this Court would have insisted on exhaustion of appeal remedy, I do not want to non-suit the petitioner on this ground. The writ petition was filed way back in the year 2020. We are now in 2023. The petitioner is on the verge of retirement. The learned counsel appearing for the petitioner also states that there are no factual aspects involved. I therefore do not want to show the door to the petitioner on the ground of non-exercise of appeal remedy.
5. The writ petitioner is working as General Manager in Ramanathapuram District Central Cooperative Bank. As many as 32 branches come under the jurisdiction of the petitioner. One Poorna Chandra Mathi was working as Branch Manager of Nainarkovil Branch during the year 2013-16. During the said period, she had made it appear as if the loans had been granted to a number of self help groups. But then, the loan amounts had been credited to a single account and siphoned off. The stand of the employer is that the petitioner was also a party to the wrong doing and that therefore the petitioner ought to be made responsible for making good the huge loss caused to the bank. In this regard, notice was issued to the petitioner on 05.08.2018. The https://www.mhc.tn.gov.in/judis 3/9 4 W.P.(MD)NO.13231 OF 2020 authority proposed to proceed against the said Poorna Chandra Mathi and the petitioner herein. Enquiry was conducted and the impugned order came to be passed directing the four persons to pay a sum of Rs. 1,23,02,731/- with interest. Joint and several liability was imposed on them. Questioning the same, all the four persons have filed writ petitions.
6. The respondents have filed a detailed counter affidavit. During the pendency of the surcharge proceedings, one Sundarakaleeswari was also impleaded. Challenging the surcharge order, all the four persons filed writ petitions.
7. The learned Senior counsel appearing for the writ petitioner took me through the contents set out in the affidavit filed in support of the writ petition and called upon this Court to set aside the impugned surcharge proceedings as far as the petitioner is concerned. The first respondent had filed counter affidavit and the learned Standing counsel took me through its contents. The argument of the learned Standing counsel is that the petitioner cannot wash away his responsibility. It was his duty to have carefully scrutinised the loan applications before recommending the same. He submitted that though the loans were https://www.mhc.tn.gov.in/judis 4/9 5 W.P.(MD)NO.13231 OF 2020 sanctioned for quite a few self help groups, the loan amounts were credited in a single account. This single circumstance is sufficient to arouse suspicion against the petitioner. It is not in dispute that the petitioner also conducted inspection in the concerned branch. But then, the petitioner had not noticed the same. This clearly indicates that the petitioner was also a party to the commission of irregularities. According to the learned Standing counsel, surcharge order had been rightly passed against the petitioner. He reiterated the contention that the petitioner will have to necessarily go before the Tribunal. He pressed for dismissal of the writ petition.
8. I carefully considered the rival contentions and went through the materials on record.
9. The charge set out in the surcharge notice is that the documents had been fabricated and several loan amounts had been sanctioned for the self help groups. Even though the learned Standing counsel insisted that the loan applications submitted by Poorna Chandra Mathi were recommended by the petitioner herein, in the surcharge order, I am unable to come across any such material. The stand of the writ petitioner https://www.mhc.tn.gov.in/judis 5/9 6 W.P.(MD)NO.13231 OF 2020 is that Poorna Chandra Mathi had manipulated the computer system in such a manner that when the inspection was conducted both by the petitioner as well as the audit officials, irregularities could not be initially noticed. The moment they came to the knowledge of the writ petitioner, he immediately took strict action. In view of the same, a sum of Rs. 35,00,000/- was recovered from the said Poorna Chandra Mathi. He also had taken steps to cause issuance of the surcharge proceedings against Poorna Chandra Mathi. Attachment application under Section 167 of the Act was taken out and the properties worth more than Rs.1 Crore belonging to Poorna Chandra Mathi had also been attached.
10. What clinches the case of the petitioner is the issuance of proceedings bearing No.76092/2019/MaVaPa1 dated 30.12.2022 by the Additional Registrar (Finance and Banking) / President, Common cadre authority. The said order had been issued during the pendency of this writ petition. The disciplinary action initiated against the petitioner came to be dropped. Obviously, the said order could not have been referred to in the affidavit filed in support of the writ petition. I am satisfied that I can very well take note of it. If the petitioner had committed any act of misconduct, certainly departmental action initiated against him would not have been dropped.
https://www.mhc.tn.gov.in/judis 6/9 7 W.P.(MD)NO.13231 OF 2020
11. It is seen that the criminal prosecution had been launched against the erring employees. Crime No.6 of 2021 on the file of the Inspector of Police, CCIW, Ramanathapuram, is pending. In the said criminal case, the petitioner is not figuring as an accused.
12. Section 87 of the Tamil Nadu Cooperative Societies Act can be deployed against a person only if the statutory requirements set out therein stand fulfilled. Before fastening surcharge liability on a person, it must be demonstrated that he was guilty of breach of trust or wilful negligence. There is nothing on record to show that the petitioner was ever entrusted with the funds in question. Misappropriation appears to have been done at the branch level by Poorna Chandra Mathi. The petitioner was not a party to those transactions. Merely because the petitioner failed to discover the fraud when he conducted branch inspection, that cannot by itself be sufficient to fasten surcharge liability on him. The authority must demonstrate that the petitioner was wilfully negligent. Mere lapse in conducting inspection or oversight will not be sufficient to attract Section 87 of the Act.
https://www.mhc.tn.gov.in/judis 7/9 8 W.P.(MD)NO.13231 OF 2020
13. Looked at from any angle, I am satisfied that the elementary ingredients of Section 87 of the Act are not fulfilled in this case. The impugned award is set aside insofar as the petitioner is concerned. This writ petition stands allowed. No costs. Consequently, connected miscellaneous petition is closed.
25.04.2023
NCS : Yes / No
Index : Yes / No
Internet : Yes / No
PMU
To:
The Deputy Registrar of Cooperative Societies, O/o.The Deputy Registrar of Cooperative Societies, C.J.M.Complex, Salai Street, Ramnad.
https://www.mhc.tn.gov.in/judis 8/9 9 W.P.(MD)NO.13231 OF 2020 G.R.SWAMINATHAN,J.
PMU W.P.(MD)No.13231 of 2020 25.04.2023 https://www.mhc.tn.gov.in/judis 9/9