Madras High Court
J. Selvaretnam vs The Additional Commissioner Of ... on 25 January, 2008
Author: S. Manikumar
Bench: S. Manikumar
ORDER S. Manikumar, J.
1. The petitioner has sought a Writ of Certiorari to quash the order of the first respondent in R.C. No. 28059/ICBI/2005, dated 09.05.2005 and order of the third respondent in Lr. No. Section 82 Inspection/2005-06, dated 20.10.2005, in appointing the third respondent as the Inspection officer and for further orders.
2. Brief facts leading to the Writ Petition are as follows:
The petitioner is working as a Deputy Director in the Department of Industry and Commerce and presently working as a General Manager, Indcoserve, Coonor, Nilgiris District. Earlier, he was working as Branch Manager, Madurai Branch of the second respondent bank. During his tenure, he was discharging his duties strictly in accordance with the rules and regulations of the bank without any blemish. The petitioner has further submitted that the second respondent Bank was established with a view to accelerate the growth of Industrial Co-operatives in the State of Tamil nadu. The main object of the bank is to prove a comprehensive range of financial assistance to the Industrial Co-operative Societies. The said Bank is managed by a Special officer, who is in the cadre of Joint Director of Industries and Commerce. Below him, there is a post of Official Liquidator at the Head Office and a Branch Manager for Madurai Branch in the cadre of Assistant Director of the Industries and Commerce.
3. The petitioner has further submitted that after his transfer to some other place, the second respondent-bank had requested the first respondent to order for an inspection under Section 82 of the Tamil Nadu Co-operative Societies Act (hereinafter after referred to as "the TNCS Act") and on that basis, the first respondent has appointed the third respondent, P. Subramanian, as an Inspection Officer. He is presently working as Official Liquidator of the second respondent-bank. Earlier to this, between 11.05.2005 to 31.08.2005, he was a General Manager of the second respondent-bank. The third respondent is a part of regular establishment of the second respondent-Bank. Being a staff of the second respondent-bank, the third respondent is a person interested in the affairs of the Bank.
4. The petitioner has further submitted that any report to be submitted by the Inspection Officer under Section 82 of the Act would be the foundation for further action, which includes surcharge proceedings under Section 87 of the Act. Further, under Rule 104 of the Tamil Nadu Co-operatives Society Rules, 1988, the Inspection Officer along with his Inspection report, shall also submit a separate report, pointing out the lapses on the part of any officer and also suggest suitable action against that officer. Thus, the inspection to be conducted by the third respondent will have a larger implication and it may greatly prejudice the petitioner's service and life as well, if it is not conducted in a fair and proper manner.
5. The petitioner has further submitted that when the petitioner was served with a summon dated 17.09.2005 from the third respondent, directing him to appear for an inspection to be held on 08.10.2005, he had submitted a detailed representation dated 08.10.2005, requesting the third respondent not to proceed with the inspection, as he was a regular staff of the second respondent-Bank, who is the complainant. In the said representation, the petitioner has further stated that as the inspection was ordered on the basis of the complaint submitted by the second respondent, the third respondent being a regular staff of the second respondent-Bank cannot be expected to act impartially without any bias. The petitioner has further stated that he has a reasonable apprehension that if the third respondent, being an officer of the second respondent-bank, is allowed to continue the inspection, there is every possibility that he may force the staff of the second respondent-Bank and the loanees to obtain statements from them to suit their case. In the said representation, the petitioner has further stated that since the entire records and documents were already in the custody of the third respondent, there is every possibility to alter or tamper the records to suit the complainant's case. The petitioner has further submitted that being an Officer of the second respondent-Bank, the third respondent would have pre-determined the entire issue.
6. The petitioner has further submitted that the third respondent having received the representation, by letter dated 20.10.2005, rejected the petitioner's request, which exhibits bias. Aggrieved by the order of the third respondent, dated 09.05.2005 in appointing the third respondent as Inspection Officer as well as the consequential order of the third respondent, dated 20.10.2005, the petitioner has filed the present Writ Petition.
7. The second respondent in his counter affidavit has submitted that the Bank is a registered Co-operative Society and is functioning under the Department of Industries and Commerce, Government of Tamil Nadu. The Bank has introduced personal Loan Scheme to the Government Employees and the Employees working in Government undertakings, for which, the second respondent-bank has prescribed certain guidelines and procedures to be followed while sanctioning. The Branch Managers have been authorised to sanction personal loans to the employees working in Government and Government undertakings. It is further submitted that when the petitioner was working as a Branch Manager, Tamil Nadu Industrial Co-operative Bank (hereinafter referred to as "the TAICO Bank"), Madurai, from 01.06.2001 to 28.05.2004, he has sanctioned personal loans to the employees working in various departments and regular overdraft facilities without following the guidelines and procedures prescribed by the second Respondent-bank for the sanction of personal loans. Out of 930 cases sanctioned by him during the above period, as on 30.09.2005, 592 cases are pending recovery and a sum of Rs. 252.28 Lakhs is pending for recovery. There is overdue principal of Rs. 224.28 Lakhs and overdue interest of Rs. 40.38 Lakhs. During his tenure, the petitioner has not taken any steps for collection of overdue amount. Some of the serious lapses, irregularities and criminal conspiracies have been committed while sanctioning personal loans are as follows:
Sanction of Personal Loans:
i. Employees of the Southern Railways: The petitioner has sanctioned Personal Loan of Rs. 62.43 Lakhs to 78 employees of Southern Railway, Madurai Division, Madurai. As on 30.09.2005, there is an outstanding of Rs. 37.75 Lakhs with them. There is overdue principal of Rs. 36.04 Lakhs and overdue interest of Rs. 5.88 Lakhs. The officers authorized to issue Pay Certificates and undertakings for the salary deductions are the Divisional Personnel Officer, Superintendent Engineer (Construction) and the Divisional Finance Managers. But these Officials have not at all issued pay certificates and Salary Deduction undertakings to anybody. Their signatures are forged, Sanction of personal loans have been made based on forged records by the petitioner. The petitioner has colluded and conspired with the loanees prepared counterfeit seal of Pay drawing Officer and also has forged his signature.
ii. Employees of Tamil Nadu State Transport Corporation: The petitioner has sanctioned Personal Loan of Rs. 4.90 Lakhs to 8 employees of the Tamil nadu State Transport Corporation, Madurai division II, Madurai. As on 30.09.2005, a sum of Rs. 2.89 lakhs is pending recovery from them. The entire amount has become overdue. There is also an overdue interest of Rs. 0.47 Lakhs. The person authorized to issue pay certificate and salary deduction undertaking to the staff of the Tamil Nadu State Transport Corporation Ltd., is the Branch Manager of Tamil Nadu State Transport Corporation, Madurai Division-II, Madurai. The pay certificates and the undertakings are not signed by the Branch manager, Tamil Nadu State Transport Corporation Ltd., Madurai Divison II, Madurai. The petitioner has colluded and conspired with the loanees, prepared counterfeit seal of pay drawing officer and also has forged his signature. Based on the forged records, the petitioner has sanctioned personal loans to the said 8 employees of the Tamil Nadu State Transport Corporation Ltd., Madurai.
iii. Personal Loans sanctioned to various Schools in Madurai:
(1) Corporation Middle School, Pandiavellalar St, Madurai: The petitioner has sanctioned Personal Loan of Rs. 2.70 lakhs to 3 Teachers, viz., Tmt. P. Pandiammal, Thiru. N. Palanichamy and J. Peter the staff of the Corporation Middle School, Pandiavellalar Street, Madurai. As on 30.09.2005, there is an outstanding of Rs. 1.37 lakhs. The entire amount become overdue and there is overdue interest of Rs. 0.25 lakhs. The Pay certificate and the undertaking of the employer should be signed by the Assistant Corporation Educational officer, Madurai Corporation. But the headmistress of the school who is not authoised to issue pay certificate and undertaking of the employer has issued the same. Based on the pay certificates and undertaking issued by the unauthorised person, the petitioner has colluded and conspired with the loanees and sanctioned personal loans. Further, Tmt. P. Pandiammal is the Headmistress of the School and she has issued the pay certificate and employers undertaking to avail the personal loan. At the time of sanction of personal loan, one loanee Thiru. N. Palanichamy was not at all working in that school and another person by name Thiru. J. Peter was not at all in service.
(2) Manimegalai Corporation Girls High School, kamarajar Salai, Madurai: The petitioner has sanctioned 3 personal loans amounting to Rs. 2.10 lakhs to Tmt. Durga, Thiru. K. Dhavamani and Thiru. Chokappan staff of manimegalai Corporation Girls High School, Madurai. As on 30.09.2005 there is an overdue principal of Rs. 1.17 lakhs and overdue interest of Rs. 1.25 lakhs. The pay certificate and the employers undertaking for the sanction personal loan should be issued by the Head Mistress of the school. But the Head Mistress has not at all issued the same. The pay certificates and the employers undertakings are forged. The petitioner has colluded and conspired with the loanees, prepared counterfeit seal of pay drawing officer and also has forged his signature.
(3) N.M.S.M. Corporation Elementary School, Madurai: The petitioner has sanctioned 5 personal loans amounting to Rs. 4.50 lakhs to Tmt. V. Saratha, Tmt. K. Balanagammal, Thiru. K. Balakrishnan, Tmt. S. Dhanalakshmi and Thiru. S. Sriram at Rs. 90,000/- each. Of the 5 loanees Tmt. K. Balanagammal and Tmt. Dhanalakshmi alone have worked as teachers at time of sanction of personal loan. That too Tmt. Balangammal has been working in some other school. Tmt. Dhanalakshmi alone is working in that school. Thiru. S. Sriram has been working as staff in BSNL, Madurai. Tmt. V. Saratha is a House Wife and she is the wife of Thiru. S. Sriram. Thiru. R. Balakrishanan is a businessman. The Asst. Elementary Education officer, Madurai is the person authorized to issue pay certificates and the undertakings for the salary deductions of the loanees. But the Head Mistress of the school has issued the pay certificate and salary deduction undertakings. The petitioner has sanctioned personal loans to the above said persons as if all the 5 persons are working in the NMSM Corporation Elementary School, Madurai and signed by the proper drawing officers. The petitioner has colluded with the loanee and has sanctioned the loans which involve criminal conspiracy.
(4) Iyanar Middle School, Madurai: The petitioner has sanctioned 11 Personal Loans amounting to Rs. 9.58 lakhs to 11 staff of the Iyanar Middle School, Madurai. The authorized drawing officer of the said teachers is the Assistant Elementary Education Officer, Madurai. But the headmaster of the School has issued pay certificates and employers undertakings. As on 30.09.2005, there is an outstanding of Rs. 4.13 lakhs pending recovery from them. The entire amount has become overdue. There is overdue interest of Rs. 0.29 lakhs. The petitioner has colluded with the loanees and has sanctioned the loans.
(5) Balarengapuram Middle School: The petitioner has sanctioned personal loans amounting to Rs. 7.85 lakhs to 9 teachers of the Balarengapuram Middle School. The authorised pay drawing officer and the employer of the above teachers is the Assistant Educational Officer, Madurai. But the Correspondent of the said school has issued pay certificate and undertaking of the employer. As on 30.09.2005, there is an outstanding of Rs. 2.97 lakhs. The entire amount has become overdue. There is interest overdue of Rs. 0.06 lakhs. The petitioner has colluded with the loanee and has sanctioned the loans.
(6) Dhanam Middle School, Madurai: The petitioner has sanctioned 5 personal loans amounting to Rs. 4.40 lakhs to 5 staff of the Dhanam Middle School, Madurai. The authorized pay drawing officer is the Assistant Educational Officer, Madurai. But the Corespondent of the said school has signed in the personal loan applications as Pay Drawing Officer and furnished the Employers undertaking. As on 30.09.2005, there is an outstanding of Rs. 2.02 lakhs. The entire amount has become overdue. There is interest overdue of Rs. 0.20 lakshs. The petitioner has colluded with the loanees and has sanctioned the loans.
(7) Arulmigu Aandavar Subramaniaswamy Girls Hr. Section School: The petitioner has sanctioned personal loan of Rs. 90,000/- each to 3 teachers viz., Tmt. M. Selvarani, Tmt. Amirdavalli and Tmt. S. Umarani the staff of the Arulmigu Aandavar Subramania Swamy Girls Hr. Section School. The person authorised to issue pay certificates and undertaking for the salary deduction is the Deputy Commissioner/Executive Officer, Arulmigu Aandavar Subramania Swamy Girls Hr. Section School. He has not issued any authorization or undertaking. The signature of the Deputy Commissioner/Executive officer has been forged, the petitioner has colluded and conspired with the loanees, prepared counterfeit seal of Pay Drawing officer and also has forged his signature, for the forgery committed by the said loanees, the Education Department has initiated departmental action and the loanees were removed from their services.
(8) R.C. Fathima Matriculation School: The petitioner has sanctioned personal loan of Rs. 90,000/- each to Tmt. Christi Selvarani, Tmt. S. Alphonse, S. Mallikadevi, P. Josephin and R. Lilly. There is an outstanding of Rs. 1.38 lakhs and entire amount become overdue. The overdue interest is Rs. 0.16 lakhs. The person authorized to issue pay certificate and undertaking for the salary deduction is the corespondent of the said school. The signature of the correspondent has been forged. The petitioner has colluded and conspired with the loanees, prepared counterfeit seal of pay drawing Officer and also has forged his signature. Further, the correspondent of the school has informed that Tmt. R. Lilly, P. Josephin were never in their employment and the school had no connection with them.
(9) Capron Hall Girls Hr. Section School: The petitioner has sanctioned personal loan of Rs. 90,000/- each to 7 staff and teachers of the said school, viz., Jansi Nirmala Chellathai, Tmt. Indira Charles, Thiru. R. Ilango, Thiru. P. Isac, Tmt. A. Muthulakshmi, Tmt. Baby Saroja and Tmt. Pushpam. The person authorised to issue pay certificates and undertaking for the salary deduction is the Correspondent of the said School. The Correspondent of the School has reported that he has not at all issued the Pay certificate and salary deduction undertakings to the said loanees. But the said records are forged. The petitioner has colluded and conspired with the loanees, prepared counterfeit seal of pay drawing officer and also has forged his signature and the petitioner has sanctioned the above said personal loans without proper verification based on the forged records (10) Kambar Corporation High School, Madurai: The petitioner has sanctioned personal loan of Rs. 90,000/- to Thiru. V. Soundarapandian. He himself has issued pay certificate and salary deduction undertaking. Thiru. V. Soundarapandian has furnished false date of birth and date of retirement in the personal loan application. Some salary deductions have not been furnished in his pay certificate based on the false and invalid documents, the petitioner has sanctioned the personal loan to the said loanee, the petitioner has colluded with the loanees and has sanctioned the loans.
(11) Sundarambal Elementary School, Madurai: The petitioner has sanctioned personal loan of Rs. 90,000/- each to Thiru. Gnanaprakasam to Tmt. A. Chellathai, the staff of the Sundarambal Elementary School, Madurai. As on 30.09.2005, there is an outstanding of Rs. 1.50 lakhs and the entire amount become overdue and there is and overdue interest of Rs. 0.33 lakhs. The person authorised to sign the pay certificate and issue salary undertaking is Asst. Elementary Educational officer, Madurai. But Thiru. M. Gnanaprakasam who is also the Secretary of the School has issued the pay certificate and drawing officers undertaking for himself and for Tmt. A. Chellathai. He has furnished false date of birth and retirement in his personal loan application. Tmt. A. Chellathai is not at all in service at the time of sanction of personal loan by the petitioner. The petitioner has colluded with the loanees and has sanctioned the loans which involves criminal conspiracy.
iv. Sanction of Personal Loan to the staff of the Revenue Department:
As on 30.09.2005, 24 personal loan are pending from them. A sum of Rs. 13.07 lakhs has been sanctioned to them. As on 30.09.2005 a sum of Rs. 6.24 lakhs pending recovery. This includes overdue principal of Rs. 5.87 lakhs. There is overdue interest of Rs. 0.76 lakhs. As per letter dated 12.09.2001 of the second respondent Bank no personal loan should be sanctioned to the Revenue officials without adhering the Head Officer Instructions. As per the said letter dated 12.09.2001 of the management of the second respondent-Bank, staff of the Co-operative institutions should not be sanctioned personal loan. But the petitioner has sanctioned 2 personal loans amounting to Rs. 1.5 lakhs to Thiru. K. Radhakrishnan, Assistant Secretary, Sithalankudi Primary Agricultural Co-operative bank and Thiru. S. Venkatachalam, Secretary, Tirumangalam Housing Society. The petitioner has sanctioned the loans to the above persons without adhering the instruction of the second respondent bank. The petitioner has colluded with the loanees and has sanctioned the loans.
v) Sanction of Regular Overdraft:
Likewise the petitioner has sanctioned regular overdraft facilitates to M/s. Ravi Industries, Tmt. R. Sheela Vasanthy, Thiru. K. Moorthys and Tmt. Vasantha. The Lapses committed by the petitioner while sanctioning the Regular Over draft to the said petitioner loanees are furnished below.
1) R. Sheela Vasanthy: A sum of Rs. 1.00 lakhs has been sanctioned as ROD to her on 23.12.2002 before the sanction, the petitioner has obtained guideline value from the joint sub-registrar, Madurai to ascertain the value of the property to be mortgaged by the loanee to the Bank for the sanction of ROD. The Sub registrar has noted the guideline value of the property as Rs. 2.30 per sq.ft. The petitioner has altered the amount as Rs. 26.30 per sq.ft for sanctioning the higher amount. Thereby the petitioner himself committed tampering of the Government Record, i.e., Guideline Value furnished by the Joint Sub Registrar, Madurai. The petitioner has colluded with the loanees and has sanctioned the loans to the higher limit for which the loanee is not eligible which involve criminal conspiracy.
2) M/s. Ravi Industry: For the sanction of ROD facilitates necessary guidelines have been issued by the second respondent bank to be followed by the petitioner for the sanction of ROD. One among such guidelines is that to get adequate collateral security for sanctioning the ROD. In this case, the petitioner has sanctioned a sum of Rs. 50,000/- as ROD without getting any collateral security and any documents prescribed by the respondent bank. The petitioner has colluded with the loanees and has sanctioned the loans.
3) Thiru. K. Moorthy's: Necessary guidelines have been issued by the second respondent Bank that before sanctioning the regular overdraft facilities guidelines value of the property proposed to be mortgaged should be obtained to ascertain the value and also obtain the original documents at the time of releasing the funds. The petitioner while sanctioning the ROD to the above person has not obtained the guideline value to ascertain the value of the property and failed to get the original document and sanctioned Rs. 1.00 lakhs as ROD Loan without adhering the norms prescribed by the second respondent bank. The petitioner has colluded with the loanees and has sanctioned the loan without adhering the norms prescribed.
4) Tmt. Vasantha: The petitioner has submitted the proposal to the second respondent bank for the sanction of House Mortgage Loan in earlier occasion to Tmt. Vasantha on the Mortgage of the particular house property. The second respondent bank rejected the proposal citing the reason that the age of the building was not within the age limit prescribed by the second respondent bank, the petitioner has sanctioned regular overdraft facilitates of Rs. 0.90 lakh on the mortgage of the same property to the same loanee without the knowledge of the second respondent bank. The petitioner has colluded with the loanees and has sanctioned the loan. Because of the personal loans and regular overdraft facilities have been sanctioned on forged records and without proper drawing officers undertakings, forgery of Government records and without adhering the instructions of the second respondent bank, the above outstanding amount and the overdue interest have become bad debt to the second respondent bank.
8. In the counter affidavit, the second respondent has further submitted that the petitioner has sanctioned personal loans and regular overdraft facilitates, ignoring the instructions issued by the second respondent bank and therefore, the second respondent-bank has suffered a heavy financial loss, amounting to Rs. 292.66 Lakhs. The bank is dealing with public money and the above acts of the petitioner has resulted in misuse of public money. Therefore, the second respondent was constrained to bring it to the notice of the first respondent, who has appointed the third respondent as an Inspection Officer to enquire into the affairs of the bank and submit a report for further action.
9. According to the second respondent, the Inspection Officer has to discharge his duties independently under Section 139 of the TNCS Act 30 of 1983, in his capacity as Official Liquadator. The second respondent has further submitted that the third respondent was appointed as General Manager (Incharge) of his Bank, only by the Industries Commissioner and Director of Industries and Commerce, Chennai-5, and not by the second respondent. It is further submitted that the inspection to be conducted by the third respondent is based on the recorded evidence available on the sanction of the personal Loan and regular Overdraft facilities and in case, any surcharge orders are to be passed under Section 87 of the TNCS Act, based on the report under Section 82 of the Act, the petitioner can prefer an appeal against any decision or award to the Co-operative Tribunal, as per Section 152 of the TNCS Act. The second respondent has denied the contention that the enquiry will not be conducted in a fair and proper manner.
10. The second respondent has further submitted that the third respondent has to report and correspond only with the Registrar of Industrial Co-operatives, the first respondent, in connection with the duties assigned to him and not to the second respondent. All the records connected with the inspection are in the custody and control of the Branch manager and not with the third respondent as alleged and therefore, there is no possibility of tampering the records and the second respondent has also denied the allegation of threat of the loanees as imaginary. The third respondent is under the direct control of the Registrar of Industrial Co-operative Societies and therefore, he is not coming under the Management of the second respondent-Bank.
11. The second respondent has further submitted that the third respondent is in no way connected with the business of the second respondent-Bank and is sending the proposals for writing off the unrealisable assets and dropping off the undischargeable liabilities and for the final closure of the liquidated societies, directly to the Registrar of the Industrial Co-operative Society and the second respondent cannot interfere in any of the functions of the third respondent. As stated supra, the third respondent is conducting the inspection based on the facts and figures and on the recorded evidences available on the sanction of the personal loans and regular over draft facilitates and the final decision would be taken only by the first respondent and not by the second respondent. For the above said reasons, the second respondent has submitted that there is no element of bias much less reasonable likelihood of bias and therefore, prayed for dismissal of the Writ Petition.
12. Mr. R. Shivakumar, learned Counsel for the petitioner submitted that the impugned order of the first respondent in so far appointment of the third respondent as an Inspection Officer is concerned is illegal and violative of Principles of natural justice for the reason that the third respondent is a regular staff of the second respondent-Bank, who is the complainant in the proceedings. He further submitted that the post of Official Liquidator, in which the third respondent is working, is a regular and sanctioned post in the establishment of the second respondent. In support of the above contention, he brought to the notice of this Court, a proceedings dated 27.03.2004 of the Industries Commissioner and Director of Industries and Commerce, Chepauk, Chennai-5, addressed to the Special Officer, TAICO Bank Ltd., Chennai, in which, the post of Official Liquidator at the Head Office as well as in various branches spread over Tamil nadu, has been sanctioned.
13. Learned Counsel for the petitioner further submitted that since the third respondent is holding the cadre post, forming part of the Management, he ought to have forwarded the representation of the petitioner, dated 08.10.2005, objecting to his appointment as Inspection Officer to the first respondent. By making a false statement that he is appointed as Official Liquidator as per Section 139 of the TNCS Act, he has exhibited bias and therefore, the reasonable apprehension of the petitioner is confirmed. By rejecting the request of the petitioner, the third respondent has shown keen interest in continuing with the inspection and the attitude of the officer categorically proves that the third respondent is biased and he had already pre-determined the issue.
14. Learned Counsel for the petitioner further submitted that the third respondent, being a regular staff of the second respondent-Bank, is likely to threaten the staffs of the Bank and loanees to give statements against the petitioner to suit the convenience of the Bank and when the entire documents are in the custody of the second respondent-Bank, there is every possibility to tamper with the records and under such circumstances, if the third respondent is permitted to proceed further with the inspection, the interest of the petitioner would be greatly prejudiced.
15. Mr. A. Arumugam, learned Additional Government Pleader appearing for the first respondent submitted that irregularities relating to sanction and disbursement of the personal loan and in regular overdrafts, were noticed in the second respondent-Bank and on the request made by the Special Officer, TAICO Bank, Chennai, the first respondent, being the Registrar and Director of Industries and Commerce, Chennai, has appointed the third respondent to conduct inspection and submit a report. Referring to Section 82 of the TNCS Act, he further submitted that the first respondent has got powers to conduct inspection either by himself or authorise any person in this behalf and therefore, the appointment of the third respondent as Inspection Officer is not contrary to law. He further submitted that the third respondent is holding a post of Official Liquidator in the second respondent-Bank and that he is expected to discharge his duties as inspection officer impartially and submit a report to the first respondent. He further submitted that the TNCS Act does not prohibit appointment of a departmental representative to conduct the inspection and in the facts and circumstances of the case, it is not necessary to engage a person, outside the cadre, to conduct the statutory inspection into the affairs of the Registered society.
16. Mr. R. Narendran, learned Counsel appearing for the second respondent-Bank, reiterating the averments made in the affidavit filed in support of the Vacate Stay Petition and bringing it to the notice of this Court the various acts of misdeed said to have been committed by the petitioner and the quantum of misuse of public money, submitted that when the Industries Commissioner and Director of Industries and Commerce was addressed to order for an inspection under Section 82 of the TNCS Act, and to fix the responsibility on the persons for the irregularities, the first respondent has appointed the third respondent as inspection officer under Section 82(1) of the TNCS Act to conduct inspection and submit his report. He further submitted that in the absence of any specific allegation of malafide, the appointment of the third respondent as Inspection Officer is in order and merely because, he is holding the post of an Official Liquidator, there is no ground to infer "bias" or "reasonable likelihood of bias". He further submitted that the Inspection has to be conducted only on the basis of the recorded evidence and not by any other mode and if the petitioner is innocent and not committed any irregularity, misappropriation or forgery or tampering of records, there is no need for him to apprehend that the inspection would be unfair.
17. Learned Counsel for the second respondent further submitted that as an Official Liquidator, the third respondent is directly corresponding with the first respondent and he is in no way connected with the affairs of the second respondent-Bank and therefore, there is absolutely no possibility for the third respondent to coerce and obtain statements from the staffs of the Bank and the loanees for the purpose of inspection. He further submitted that based on the Inspection Report, the decision making authority is only the first respondent and therefore, the allegations made against the third respondent to draw an adverse inference, is liable to be rejected.
18. Learned Counsel for the second respondent further submitted that all the records collected are in the custody of the Branch Manager and that there is no possibility of tampering with the records. He further submitted that the money alleged to have been involved, is public money invested in the second respondent-Bank, in the form of deposits and as the third respondent had already completed 90% of the investigation, the interim stay granted by this Court may be vacated and that he may be permitted to complete the enquiry and submit his report for appropriate action.
Heard the counsel appearing for the parities and perused the materials available on record.
19. Pleadings disclose that the Special Officer, TAICO Bank had noticed certain irregularities in the sanction of personal loans and regular overdraft facilitates, causing heavy financial loss to the Bank and requested the first respondent to order for an inspection and to fix the responsibility on the persons for the irregularities occurred in the sanction and disbursement of loans. Huge public money invested in the second respondent-Bank in the form of deposits, is involved and therefore, the second respondent owes a duty and responsibility to the investors in repayment of the amount invested in the Bank. The creditability and the welfare of the second respondent-Bank are certainly a matter of serious consideration. With the above background, it is necessary to extract the requisition letter of the Joint Director/Special Officer, dated 25.04.2005 addressed to the Industries Commissioner and Director of Industries and Commerce, Chennai, I submit that I have visited TAICO Bank, Madurai Branch on 17.03.2005 for conducting cursory inspection. During the course of visit, it was observed that under Loans and Advances, the overdue level under personal loan was very high and out of the total number of 699 cases, nearly 675 cases were coming under the overdue which was alarming. I have verified some of the files relating to personal loan cases and found that certain norms/guidelines issued by head office were not followed by the branch manager while sanctioning the personal loan and lapses of grave nature noticed. During the short visit, I could not verify all the loan applications, and instructed the Branch Manager, Taico bank, Madurai to submit a detailed report by analysing each Branch Manager in the reference 3rd cited has submitted a detailed report on the points raised by me in respect of sanction and disbursement of loans.
In this connection, I submit that all the personal loans were sanctioned during the tenure of Thiru J. Selvarathinam who worded as Asst. Director of Industries and Commerce/Branch Manager at Taico Bank, Madurai Branch for the period from 01.06.2001 to 28.05.2004 and at present he is working as Deputy Director of Industries and Commerce/General Manager, Indcoserve, Coonoor.
Based on the report received from the Branch manager, I submit to report the irregularities and lapses noticed in the sanction and disbursement of personal loan and ROD in respect of Madurai branch for the Industries Commissioner and Director of Industries and Commerce's kind information.
1. It is reported that irregularities occurred even at the stage of issue of loan application itself. The set procedures were not followed. The Branch manager instead of issuing loan application directly to the loanees, the loan applications were issued in bulk to the individuals who are acting as Mediators/Brokers. Even though the loan application register is available with the Branch, it has not been maintained property.
2. In the personal loan applications, the details of recoveries made in the pay certificates were not verified with the reference to pay bill Registers maintained in the respective institutions were the applicants are working. Similarly, in respect of personal Loan sanctioned to 85 No. of Southern Railway Employees, pay certificates furnished by the looanees were not verified by any of the officials with reference to pay Bill register maintained with Divisional office, Southern Railway, Madurai.
3. It seems that till 6.6.2003, the personal loan applications were verified by Thiru. A. Mariappan, office Assistant of Madurai Branch who is in no way connected with this work and then initialed and recorded as verified by the Branch manager.
4. In most of the cases, the undertakings of Pay drawing Officers have not been obtained in the pay bill. Similarly, in respect of 37 cases, while sanctioning loan to the employees of Southern Railway and Madurai Corporation, undertakings were obtained from the Supervisory Staff who are not competent to issue the same.
5. While arriving at carry home salary which determines the legibility of loan limit, the calculations were not properly done. Based on the false figures furnished by the loanees, loan sanctioned which resulted in sanction of higher loan amount for which they are not entitled.
6. It has been reported that till 05.06.2003, the Branch Manager and Thiru. A. Mariappan, Office Assistant visited the offices where the applicants are working for the purpose of verification of their financial status, but there is no evidence available for their visits and verification.
7. Passport size photos of the loanees have not been obtained in some cases which have been insisted for the purpose of identification. Due to this some of the loanees could not be identified.
8. It has been reported by the Branch manager that no action was taken for the recovery of loan in the initial stage itself, when the loanee has failed to repay initial instalments. They were concentrating more on issue of fresh loan and not bothered about the accumulation of overdues. Percentage wise overdue of defaulters from whom more than 13 instalments due are 57.65% in respect of Railway and 82.33% in respect of Madurai Corporation.
9. The overdues in respect of personal loan sanctioned to the employees of Railways and Madurai Corporation are very high due to the reason that the former branch manger has failed to scrutinize the loan application and to verify the pay drawing officers undertaking properly which caused the way for such irregular sanction of personal loan due to the following:
In respect of Madurai Corporation, the Chief Accounts Officer is empowered to issue pay certificates and undertakings for the deductions of instalment from the salary whereas the Branch Manager has accepted Pay certificates/undertakings issued by the Sanitary Inspector, Health officer, A.E.E., Asst. Commissioner, J.E., Medical Officer and Accounts officer (P& T) who are not the competent authorities.
Similarly in respect of Railways, Divisional Personal Officer is the only authorised official to issue pay certificates/undertakings whereas the certificates issued by supervisory staff were accepted by the Branch Manager while sanctioning personal loan.
10. In some cases, loans were sanctioned based on the forged and fabricated pay certificates/undertakings furnished by the applicants which amounts to criminal action.
Similarly, in the case of sanction of Regular Overdraft Loan also Thiru. J. Selvarathinam as branch manager, has failed to adhere to the norms and procedures/guidelines issued by the head office. In the guidelines, it is stipulated that the ROD should be sanctioned only on the strength of the collateral security offered by the loanee. Whereas the Branch Manager has sanctioned ROD for Rs. 50,000/- to M/s. Ravi Industries on the strength of personal surety of D. Jayamari without obtaining the collateral security.
In the case of ROD of Rs. 1,00,000/- sanctioned to Mrs. R. Sheela Vasanthy, she was sanctioned over and above the eligible limit. While ascertaining the guideline value of the property with the Sub-Registrar, the guideline was only for Rs. 2.30 per Sq.ft at the time of sanction of the above loan facility, and based on the guideline value, the Branch Manager should have sanctioned Loan only for Rs. 13,000/-. Contrary to this the Branch Manager has sanctioned Rs. 1.00 Lakh by manipulating the value of the property which is not proper.
In another case ROD loan sanctioned to Thiru. K. Moorthy for Rs. 1.00 lakh on 05.06.2002, the Branch manager has accepted landed property mortgaged to the Bank by the party n the capacity of Power Agent and he is not the actual owner of the said property. Tmt. Saraswathy Ammal, the actual owner of the said property has sent a legal notice to the Bank objecting the Bank from bringing the property for auction sale for recovery of the overdues. The staff of the Bank have no idea about the sanction of ROD to Thiru. Moorthys and the entire file was dealt by the then Branch manager. Moreover the original documents relate to the said property is not available with the Bank.
Similarly, when the properties brought for auction sale on account of failure to repay loan installments, no bids received on 3 occasions in respect of the following loan accounts.
1. Thiru. Palani Nadar Rs. 2.07 Lakhs
2. Thiru. R. Muthuramalingam Rs. 1.95 Lakhs
3. Thiru. K. Moorthys Rs. 1.45 Lakhs With regard to item No. 3, action has to be initiated for sale only after securing the original documents which are missing.
Under such circumstances stated above, to safeguard the funds of the Bank, action should be initiated against the persons responsible for the irregularities in sanction of personal Loan and Regular Overdraft and the responsibility should be fixed on the errent officials. Hence, I request the Industries Commissioner and Director of Industries and Commerce to order for Section 82 Inspection under the Tamil Nadu Co-operative Societies Act, 1983 to fix the responsibility on the persons for the irregularities occurred in sanction and disbursement of loans.
20. The Special Officer, TAICO Bank, Chennai has brought to the notice of the competent authority, the irregularities in the sanction of personal loans and overdue facilitates and requested the first respondent to order for an inspection under Section 82 of the TNCS Act, to fix the responsibility on the persons for the irregularities committed. On coming to know the of the irregularities occurred in sanctioning and disbursement in the loan and violation of the banking norms and of the circulars issued from the Bank's Head office, resulting in most of such loans turning out to be bad debts or loans doubt of recovery and contributing largely to the huge non-performing assets to the tune of Rs. 289.72 lakhs in the case of Personal Loans and Rs. 9.78 Lakh on Regular Over Drafts as on 31.03.2004, as per the FAM for 2003-04, the Registrar of the Industrial Co-operatives, Chepauk, Chennai, first respondent herein, in his exercise of his powers under Section 82(1) of the TNCS Act, appointed the third respondent for conducting inspection to find out and quantify the loans sanctioned beyond the capacity of the individual loanees (salary eligibility), to find out the loan amount taken to NPA which contributed to the loss of the Bank and to find out and quantify such loans turned bad debts or loans doubtful of recover and to fix responsibility on the officer or officers and staff for such bad and doubtful loans.
21. On receipt of the order dated 09.05.2005 from the first respondent, the third respondent has issued a letter dated 17.09.2005, to the Special Officer, INDCOSERVE, Coonoor, Nilgiris, to cause summons to be served on the petitioner. The petitioner, by letter dated 8.10.2005, has objected to the appointment of the Enquiry officer on the ground that,
(i) The third respondent, being the Management Representative and having Administrative Powers, there every possibilities to threaten the bank staff and obtain statements forcefully.
(ii) Being a Management Representative, there are possibilities to threaten the loanees and obtain statements from them forcefully.
(iii) As the records are under the custody of management, there are every possibilities for alter, tampering of such records according to the Enquiry Officer's wishes.
(iv) Being a management representative and in order to stick on the report/complainant filed by the Bank management, there are every possibilities to act on these lines with indented motive and preconceived thoughts.
22. The third respondent, by way of reply, dated 20.10.2005, has overruled the objections of the petitioner, by stating that being a Liquidator duly appointed under Section 138 of the TNCS Act and having powers under Section 139 of the said Act, exerercisable independently of the Financing Bank's management and though being paid by the Financing bank, he is not coming under the Financing Bank's Management and therefore, discharges functions in his own capacity as liquidator and for that matter, he is free to conduct the inspection in a similar manner, as provided under Section 138 of the TNCS Act. The third respondent has also submitted that inasmuch as the Registrar of the Industrial Co-operatives has duly authorised him to conduct inspection under Section 82 of the TNCS Act, he would be acting on behalf of the Registrar and as such, he has no longer subordinate to or dependent on the Financing Bank's management. The third respondent has also stated that it is only the second respondent representing the bank's management, had earlier complained about the irregularities in the Madurai Branch of the Bank and since the second respondent has not made any representation or complaint to him, he is not adjudicating the issue and therefore, there is no violation of the principles of natural justice. Along with the above reply, a fresh summon has also been issued directing the petitioner to appear before him on 05.10.2005 for enquiry.
The issue to be decided is whether the third respondent by virtue of his employment in the second respondent bank is precluded from conducting an inspection into the affairs of the bank and whether his conduct in overruling the objections of the petitioner has resulted in real danger of bias or reasonable likelihood of bias on the part of the third respondent to pre-determine the involvement of the petitioner in the irregularities, lapses etc, noticed by the special officer of the second respondent bank.
23. Section 82 of the Tamil Nadu Co-operatives Societies Act, deals with inspection and investigation and it is extracted hereunder:
The Registrar may, of his own motion, or on the application of a creditor of a registered society inspect or investigate or direct any person authorised by him in this behalf by general or special order in writing to inspect the affairs of the registered society in general or to investigate into any alleged misappropriation, fraudulent retention of any money or property, breach of trust, corrupt practice or mismanagement in relation to that society or into any particular aspect of the working of that society and the Registrar or the person so authorised shall have all the powers of the Registrar when holding an inquiry under Section 81.
24. Section 138 of the Act provides for an appointment of Official Liquidator and it reads as follows:
(1) Where the Registrar has made an order under Section 137 for the winding-up of a registered society, he may appoint a Liquidator for the purpose and fix his remuneration.
(2) A Liquidator shall on appointment take into his custody or under his control all the property, effects and actionable claims to which the society is or appears to be entitled and shall take such steps as he may deem necessary or expedient to prevent loss or deterioration of or damage to property, effects and claims.
(3) Where an appeal is preferred under Clause (a) of Sub-section (2) of Section 152, an order of winding-up of a registered society made under Sub-section (1) of Section 137 shall not operate thereafter until the order is confirmed in appeal:
Provided that the Liquidator shall continue to have custody or control of the property, effects and actionable claims mentioned in Sub-section (2) and have authority to take the steps referred to in that sub-section.
(4) Where an order of winding-up of a registered society is set aside on appeal, the property, effects and actionable claims of the society shall re-vest in the society.
Section 139 of the Act deals with the powers of the Liquidator appointed under Section 138 of the Act.
25. To decide the main issue of likelihood of bias raised by the petitioner, it is relevant to consider some of the decisions of the Supreme Court dealing with "bias" and "reasonable likelihood of bias". In G.N. Nayak v. Goa University , the Supreme Court explained the meaning of the word "bias". At Paragraph 33, the Apex Court held as follows:
33. Bias may be generally defined as partiality or preference. It is true that any person or authority required to act in a judicial or quasi-judicial matter must act impartially.
If however, 'bias' and 'partiality' be defined to mean the total absence of preconceptions in the mind of the judge, then no one has ever had a fair trial and no one ever will. The human mind, even at infancy, is no blank piece of paper. We are born with predispositions and the processes of education, formal and informal, create attitudes which precede reasoning in particular instances and which, therefore, by definition, are prejudices.
26. The Supreme Court in Kumaon Mandal Vikas Nigam Ltd. v. Girija Shankar Pant reported in AIR 2001 SC 24, at Paragraphs 10 and 11 held as follows:
10. The word 'Bias' in popular English parlance stands included within the attributes and broader purview of the word 'malice', which in common acceptation mean and imply 'spite' or 'ill-will' (Stroud's Judicial Dictionary (5th Ed.) Volume 3) and it is now well settled that mere general statements will not be sufficient for the purposes of indication of ill-will. There must be cogent evidence available on record so come to the conclusion as to whether in fact there was existing a bias which resulted in the miscarriage of justice.
11. While it is true that legitimate indignation does not fall within the ambit of malicious act, in almost all legal enquires, intention, as distinguished from motive is the all-important factor. In common parlance, a malicious act has been equated with intentional act without just cause or excuse (see in this context Jones Bros. (Hunstanton) v. Steven 1955 (1) Q.B. 275).
Paragraphs 26 and 32 of the reported judgment would also be relevant for the purpose of testing the present case.
26. The concept of 'Bias' however has had a steady refinement with the changing structure of the society: Modernisation of the society, with the passage of time, has its due impact on the concept of Bias as well. Three decades ago this Court in S. Parthasamthi v. State of Andhra Pradesh proceeded on the footing of real likelihood of 'bias' and there was in fact a total unanimity on this score between the English and the Indian Courts.
Mathew, J. In Parthasarthi's case observed:
16. The tests of "real likelihood" and "reasonable suspicion" are really inconsistent with each other. We think that the reviewing authority must make a determination on the basis of the whole evidence before it, whether a reasonable man would in the circumstances infer that there is real likelihood of bias. The Court must look at the impression which other people have. This follows from the principle that justice must not only be done but seen to be done. If right minded persons would think that there is real likelihood of bias on the part of an inquiring officer, he must not conduct the enquiry; nevertheless, there must be a real likelihood of bias. Surmise or conjecture would not be enough. There must exist circumstances from which reasonable men would think it probable or likely that the inquiring officer will be prejudiced against the delinquent. The Court will not inquire whether he was really prejudiced. If a reasonable man would think on the basis of the existing circumstances that he is likely to be prejudiced, that is sufficient to quash the decision (See per Lord Denning, H.R. in Metropolitan Properties Co. (F.G.C.) Ltd. v. Lannon and Ors. etc. (1968) 3 WLR 694 at 707. We should not, however, be understood to deny that the Court might with greater propriety apply the "reasonable suspicion" test in criminal or in proceedings analogous to criminal proceedings.
Lord Thankerton however in Franklin v. Minister of Town and Country Planning, (1948) AC 87 had this to state:
I could wish that the use of the word 'bias' should be confined to it proper sphere. Its proper significance, in my opinion, is to denote a departure from the standard of even-handed justice which the law requires for those who occupy judicial office, or those who are commonly regarded as holding a quasi-judicial office, such as an arbitrator. The reason for this clearly is that, having to adjudicate as between two or more parties, he must come to his adjudication with an independent mind, without any inclination or bias towards one side or other in the dispute.
32. The test, therefore, is as to whether a mere apprehension of bias or there being a real danger of bias and it is on this score that the surrounding circumstances must and ought to be collated and necessary conclusion drawn therefrom. In the event however the conclusion is otherwise inescapable that there is existing a real danger of bias, the administrative action cannot be sustained: If on the other hand, the allegations pertaining to bias is rather fanciful and otherwise to avoid a particular Court, Tribunal or authority, question of declaring them to be unsustainable would not arise. The requirement is availability of positive and cogent evidence and it is in this context that we do record our concurrence with the view expressed by the Court of Appeal in Locabail case (Supra).
27. In State of Punjab v. V.K. Khanna reported in 2001 (2) SCC 330, after elaborately considering the concept of Administrative action and wide impact of the word "bias", the Supreme Court at paragraphs 1, 5, 8, 10, 11 and 37, held as follows:
The concept of fairness in administrative action has been the subject-matter of considerable judicial debate but there is total unanimity on the basic element of the concept to the effect that the same is dependent upon the facts and circumstances of each matter pending scrutiny before the Court and no strait-jacket formula can be evolved therefor. As a matter of fact, fairness is synonymous with reasonableness and on the issue of ascertainment of meaning of reasonableness, common English parlance referred to as what is in contemplation of an ordinary man of prudence similarly placed - it is the appreciation of this common man's perception in its proper perspective which would prompt the Court to determine the situation as to whether the same is otherwise reasonable or not. Similarly, the existence of mala fide intent or biased attitude cannot be put on a strait-jacket formula but depends upon facts and circumstances of each case.
Whereas fairness is synonymous with reasonableness - bias stands included within the attributes and broader purview of the word "malice" which in common acceptation means and implies "spite" or ill will". Mere general statements will not be sufficient for the purposes of indication of ill will. There must be cogent evidence available on record to come to the conclusion as to whether in fact, there was a bias or a mala fide move which resulted in the miscarriage of justice.
In almost all legal inquiries, "intention as distinguished from motive is the all-important factor" and in common parlance a malicious act stands equated with an intentional act without just cause or excuse.
The test of bias is as to whether there is a mere apprehension of bias or there is a real danger of bias and it is on this score that the surrounding circumstances must and ought to be collated and necessary conclusion drawn therefrom. In the event, however, the conclusion is otherwise that there is existing a real danger of bias, administrative action cannot be sustained. If on the other hand allegations pertain to rather fanciful apprehension in administrative action, question of declaring them to be unsustainable on the basis therefor, would not arise.
Bias is included within the attributes and broader purview of the word "malice". Therefore, the factual details are relevant to determine whether there was existing cogent evidence of improper conduct and motive resultantly a mala fide move on the part of the appellants against the respondent.
28. In Common cause v. Union of India , the Supreme Court considered the question as to whether the investigation conducted by an officer, who lodged the F.I.R., could be assailed based on the principle "likelihood of bias". The Apex Court held that it is not proper to lay down a broad and unqualified proposition, in the manner in which it has been done by the High Court, that whenever a police officer proceeds to investigate after registering the FIR on his own, the investigation would necessarily be unfair or baised. The Supreme Court further held that the formality of preparing the FIR in which he records the factum of having received the information about the suspected commission of the offence and then taking up the investigation after registering the crime, does not, by any semblance of reasoning, vitiate the investigation on the ground of bias or like factor.
29. In Secretary to Govt. Transport Deptt. v. Munuswamy Mudaliar reported in 1988 (Supp.) SCC 651, a Superintending Engineer was appointed as an Arbitrator. His appointment was challenged by the Contractor on the ground of reasonable likelihood of bias. The Supreme Court, at Paragraphs 11, 12 and 13 held as follows:
Unless there is allegation against the named arbitrator either against his honesty or capacity or mala fide or interest in the subject matter or reasonable apprehension of the bias, a named and agreed arbitrator cannot and should not be removed in exercise of a discretion vested in the Court under Section 5 of the Act.
12. Reasonable apprehension of bias in the mind of a reasonable man can be a ground for removal of the arbitrator. A predisposition to decide for or against one party, without proper regard to the true merits of the dispute is bias. There must be reasonable apprehension of that predisposition. The reasonable apprehension must be based on cogent materials. See the observations of Mustill and Boyd, Commercial Arbitration, 1982 Edition, page 214. Halsbury's Laws of England, Fourth Edition, Volume 2, para 551, page 282 describe that the test for bias is whether a reasonable intelligent man, fully appraised of all the circumstances, would feel a serious apprehension of bias.
13. This Court in International Authority of India v. K.D. Bali and Anr. Reported in , held that there must be reasonable evidence to satisfy that there was a real likelihood of bias. Vague suspicions of whimsical, capricious and unreasonable people should not be made the standard to regulate normal human conduct. In this country in numerous contracts with the Government, clauses requiring the Superintending Engineer or some official of the Govt. to be the arbitrator are there. It cannot be said that the Superintending Engineer, as such, cannot be entrusted with the work of arbitration and that an apprehension, simpliciter in the mind of the contractor without any tangible ground, would be a justification for removal. No other ground for the alleged apprehension was indicated in the pleadings before the learned Judge or the decision of the learned Judge. There was, in our opinion, no ground for removal of the arbitrator. Mere imagination of a ground cannot be an excuse for apprehending bias in the mind of the chosen arbitrator.
30. Though the third respondent has been appointed as an Official Liquidator in the cadre post in the establishment of the second respondent-Bank, he has only expressed that in the capacity of an Official Liquidator, his duty is to act independently notwithstanding the fact that he has been paid from the Financing Bank. By expressing in the affirmative that the third respondent has no obligation to report to the second respondent-Bank, viz., the complainant, that he is not subordinate to him and that he would act independently and discharge the functions under Section 82 of the TNCS Act, he has only reiterated that he has no personal interest in the outcome of the action taken against the petitioner. The third respondent has also categorically informed the petitioner that it was the Special Officer, TAICO Bank, representing the Bank Management, had complained about the irregularities committed and therefore, he is free to conduct inspection in a manner, which is provided under Section 138 of the Act, which only proves the outwardness of the Officer concerned.
31. The materials furnished by the petitioner do not throw any semblance of evidence to come to the conclusion that the third respondent is likely to decide the matter only in a particular way against the interest of the petitioner. On evaluation of pleadings and the materials, it is evident that the inspection is conducted only on the basis of the available recorded materials and there is no possibility of extorting statements from the loanees or staffs of the bank. No material is produced by the petitioner to support this contention nor there is any complaint from others who are involved in the commission of the irregularities. The petitioner has not controverted the fact that 90% of the investigation has already been completed by the Inspection Officer, viz., third respondent.
32. By making such a statement, the third respondent has only emphasised that under the TNCS Act, he can act independently, unbiased and therefore, there is no room to suspect the fidelity of the officer concerned. The general statement made by the third respondent mentioning his official capacity does not in any manner indicate his ill will or motive against the petitioner. Excepting this statement, no other substantial evidence is produced before this Court. There is no cogent evidence available on record to come to the conclusion that there is an intention to find fault with the petitioner and thereby, there would be miscarriage of justice, if the third respondent is allowed to continue the inspection. There is no personal grudge or motive, alleged or proved, except the bald allegation that the third respondent, being a part of the Management, would lean towards the Management in the report to be submitted by him. Therefore, on analysis of the pleadings and the materials in entirety, I am of the view that the third respondent has not exhibited any improper conduct of ill will against the petitioner and what is evident is only a whimsical suspicion in the mind or the petitioner and there is no "likelihood of bias". The Principle, "No man can be a judge of his own case" is not applicable to the facts of this case, as the third respondent is not the complainant and that, he merely forwards the report under Section 82(1) of the TNCS Act, to the first respondent for appropriate action.
33. The purpose of inspection as per the order of appointment order, is to find out and quantify the loan sanctioned beyond the capacity of the individual loanees (salary eligibility), to find out the loan amount taken to NPA which contributed to the loss of the Bank, to find out and quantify such loans turned bad debts or loans doubtful of recover and to fix responsibility on the officer or officers and staff for such bad and doubtful loans. As rightly pointed out by the respondents that if the petitioner is innocent and has not committed any serious lapses, irregularities or forgery in the sanction and disbursement of huge loans and consequential loss to the Bank, there is no need for him to apprehend that the inspection would be unfair or biased. After the inspection, the officer or officers or staff of the Bank, who are involved in the commission of lapses, irregularities, etc., would be issued with a copy of the materials to defend the case effectively.
34. Section 82(1) makes it clear that it is a discretion of the Registrar of the Co-operative Societies to conduct an inspection by himself or authorise any person in that behalf. Submission of the learned Counsel for the petitioner that in the usual practice, the department would appoint persons from outside the cadre to conduct an inspection into the affairs of the society, is not supported by any material and this Court, is not inclined to accept such a general preposition. When the Section clearly mandates inspection by the Registrar of the Co-operative Societies or any other authorised officer, there must be some extraordinary circumstances to deviate. As I have already determined that there is no bias or likelihood of bias on the part of the third respondent in continuing the inspection, there is no need to elaborate.
35. The decision relied on by the learned Counsel for the second respondent in Appeal (Civil) No. 7358 of 2003, dated 24.02.2006, deals with a case, where the Supreme Court upheld the action of the disciplinary authority, who himself was a witness in the complaint. Such a contingency does not arise in the present case and therefore, the above case is not applicable.
36. In view of the interim orders granted by this Court, the submission of the report by the third respondent is protracted and the authorities have been restrained from proceeding against errant officers/staffs for the misuse of huge public money. The second respondent-Bank is certainly accountable to the investors. Therefore, in order to take appropriate action, it is just and necessary that the inspection report has to be submitted containing all the details which are called for, as per the request of the first respondent. Therefore, while dismissing the Writ Petition, this Court directs the third respondent to complete the investigation and submit the report forthwith. Taking into consideration, the pendency of the Writ Petition and in order to effectuate the orders of this Court, time for completion of inspection is extended by three months.
37. In the result, the Writ Petition is dismissed. No costs.