Madras High Court
K.Govindasamy vs Ms.A.Rajamani on 24 June, 2013
Author: K.Ravichandrabaabu
Bench: K.Ravichandrabaabu
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.06.2013 Coram The Hon'ble Mr. Justice K.RAVICHANDRABAABU C.R.P.(NPD) No. 1276 of 2009 and C.R.P.(NPD) No. 940 of 2010 and M.P.Nos 1 of 2009 and 1 of 2010 C.R.P.(NPD) No. 1276 of 2009 ---------------------------- K.Govindasamy .. Petitioner Vs 1. Ms.A.Rajamani 2. Ms.A.Kalamani 3. P.Thirumoorthy Samy 4. P.Thangamuthu 5. Coimbatore District Central Co-op. Bank Rep. By its Manager Annur Branch, Coimbatore District 6. The Deputy Registrar of Co-operative Societies Coimbatore Circle Coimbatore 641 018. .. Respondents C.R.P.(NPD) No. 940 of 2010 --------------------------- 1. A. Melkies 2. Ms.Mighty Priscilla .. Petitioners Vs 1. Ms.A.Rajamani 2. Ms.A.Kalamani 3. P.Thirumoorthy Samy 4. P.Thangamuthu 5. Coimbatore District Central Co-op. Bank Rep. By its Manager Annur Branch, Coimbatore District 6. The Deputy Registrar of Co-operative Societies Coimbatore Circle Coimbatore 641 018. 7. K.Govindasamy .. Respondents Civil Revision Petitions filed against the decree and order dated 18.12.2008 made in C.M.A No.84 of 2002 on the file of the Principal District Judge-cum-Cooperative Tribunal, Coimbatore against the order of surcharge passed by the Deputy Registrar of Co-operative Societies, Coimbatore dated 21.3.2002 made in Tha.Thi.No.2/98 Sa.Pa.1 . For Petitioners :- Mr.R.Krishnamurthy in C.R.P.(NPD).No. 1276 of 2009 Mr.M.Krishnan in C.R.P.(NPD).No. 940 of 2010 For Respondents :- No appearance for R1 to R4 Mr. S.Saravanan for R5 Mr.S.Pattabiraman, Govt. Advocate for R6 Mr.M.Krishnan for R7 & R8 ORDER
In both these Civil Revision Petitions, the petitioners are aggrieved against the surcharge proceedings initiated under Section 87 of the Tamil Nadu Co-operative Societies Act ,1993.
2. By an order dated 21.3.2002, the 6th respondent herein passed the surcharge order thereby directing the petitioner in C.R.P.No.1276 of 2009, one S.Annathurai since deceased (whose legal representatives (LRs) were brought on record and they are the petitioners in C.R.P.No. 940 of 2010) and the respondents 1 and 2 herein to pay jointly and severally a sum of Rs.6,20,000/- with interest. The said surcharge proceedings were initiated on the ground that the respondents 1 and 2 herein have fabricated and forged the withdrawal slips in respect of inoperative S.B. Accounts and thereby caused loss to the Society to the tune of Rs. 6.20 lakhs. The allegation made against the petitioner in C.R.P.(NPD) No. 1276 of 2009 herein and the said Annathurai, who were working as Manager and Assistant Manager, respectively, was that they were negligent in their part in not preventing the said commissioning of the offence. Therefore, for their act of negligence, they were also held responsible for the loss sustained by the Society and consequently the surcharge proceedings were initiated and ultimately an order of recovery was made on 21.3.2002 as stated supra. Aggrieved against the same, an appeal preferred by them before the Tribunal also ended against them. During the pendency of the appeal, the said Annathurai died and the petitioners in C.R.P. No.940 of 2010 were brought on record as his LRs. Aggrieved against the said order of the Tribunal, the present Civil Revision Petitions are filed. Though in C.R.P.No. 940 of 2010 the petitioners are only the LRs of the deceased employee, who challenged the surcharge proceedings before the Tribunal, for the sake of convenience, I shall address the said Annadurai as the petitioner in C.R.P. (NPD) No.940 of 2010.
3. Though notice was served on the respondents, the respondents 1 and 2 have chosen not to appear before this court either in person or through counsel. Their names have been printed in the cause list. The only contesting respondent is the 6th respondent, who is represented by the learned Government Advocate. Heard the learned counsel appearing for the petitioners as well as the sixth respondent.
4. The learned counsel appearing for the petitioner in C.R.P.No. 1276 of 2009 submitted that a reading of the surcharge proceedings would show that only the respondents 1 and 2 herein have committed the offence and the petitioner who was working as the Manager was held responsible by stating that he was negligent as he had not prevented the same. The learned counsel submitted that the conduct of the petitioner at the best be treated only a dereliction of duty and there was no wilful negligence either pleaded or proved against the petitioner as required under Section 87 of the Tamil Nadu Co-operative Societies Act. In the absence of wilful negligence on the part of the petitioner, no surcharge proceedings could be initiated. In support of his submissions the learned counsel relied on the decisions reported in 1999 (3) MLJ 310 (M.SAMBANDAM VS. THE DEPUTY REGISTRAR (CREDIT) CO-OPERATIVE SOCIETIES) ;2009 (4) MLJ 992 ( K.AJAY KUMAR GOSH AND OTHERS VS. TRIBUNAL FOR CO-OPERATIVE CASES); R.GANAPATHY VS. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES (HOUSING) TIRUNELVELI AND ANOTHER ( 2009 (6) MLJ 1066) and contended that mere negligence is not sufficient to attract proceedings under Section 87 unless such negligence was also wilful. He further submitted that a criminal case filed against the petitioner though originally ended in conviction before the trial Court, ended in acquittal before the appellate Court in C.A.No. 485 of 2004 and hence the surcharge order passed against the petitioner cannot be sustained any more.
5. The learned counsel appearing in C.R.P. (NPD) No. 940 of 2010 also contended that the petitioner was functioning as Assistant Manager and he being the supervisory authority cannot be held liable under Section 87(1) of the Tamil Nadu Co-operative Societies Act and there is no finding that the negligence on the part of the said person was wilful. This petitioner died during the pendency of the Criminal Appeal and therefore it got abated. In all other aspects, he adopted the arguments of the learned counsel appearing for the petitioner in C.R.P.No.1276 of 2009.
6. Per contra, the learned Government Advocate appearing for the sixth respondent submitted that no wilful negligence is necessary to attract proceedings under Section 87 (1) of the said Act when both of them were permanent and responsible officers working in the 5th respondent Bank and are bound to see that their subordinates are discharging their functions properly and if any mischief is committed by any one, the petitioners being the supervisory authorities are also equally liable for penal action. The respondents 1 and 2 were appointed only as temporary employees and therefore the petitioners should have been more careful and vigilant in passing the pay in slips dealt with by the said respondents 1 and 2. The learned Government Advocate, however, submitted that the findings rendered by the authorities below would show that the negligence committed by the petitioners are wilful. The surcharge officer found that the petitioners permitted the payment of money without verifying the details of the accounts. In support of his submission the learned Government Advocate relied on the decisions reported in 2010 (4) MLJ 1027 (R.Nanjundan Vs. District Judge cum Tribunal) and 2002 (3) L.W. 185 (S.Subramanian, Deputy Registrar of Co-operative Societies (Housing), Cuddalore and Others) .
7. Heard the learned counsels appearing on either side.
8. The learned counsel for the petitioners drew my attention to the findings rendered by the 6th respondent in his proceedings dated 21.3.2002 and submitted that there is no specific finding by the said authority that the act of the petitioners amount to wilful negligence. The relevant portion of the finding rendered by the 6th respondent is extracted hereunder:
VERNACULAR (TAMIL) PORTION DELETED
9. Likewise the learned counsel for the petitioners also invited my attention to the finding rendered by the appellate authority to contend that no specific finding is rendered to say that the petitioners have committed wilful negligence. The relevant portion is extracted hereunder:
VERNACULAR (TAMIL) PORTION DELETED
10. He also invited my attention to the memorandum of grounds of appeal raised before the appellate authority, more particularly, ground Nos. 5 &6 to contend that the petitioners herein as the appellants have specifically raised the issue before the appellate authority with regard to the absence of any finding of wilful negligence.
11. The learned counsel, thus by relying on these observations and findings rendered by the authorities below submitted that those findings rendered are only to the effect that the petitioners were negligent in discharging their duties and however, such negligence was not found to be either wilful or deliberate or wanton. Therefore, the learned counsel submitted that the petitioners are not liable to be proceeded under Section 87 of the Co-operative Societies Act.
12. Per contra, the learned Government Advocate appearing for the contesting respondent could not point out any finding by the authorities below to show that the act committed by these petitioners was a wilful negligence. On the other hand, his contention is that for initiation of proceedings against the petitioners under Section 87, the act of negligence need not be shown or proved as wilful in view of the fact that they were also parties to the huge loss sustained by the society.
13. In this case, the 6th respondent has found that the respondents 1 and 2 have caused loss to the Bank to the tune of Rs.6.20 lakhs by dealing with inoperative S.B. Accounts. Insofar as the petitioners are concerned, the finding of the 6th respondent is that they have not discharged their duties and made themselves liable for the monetary loss caused to the Bank as they have not verified the accounts before granting permission for making the payment. Thus, they are negligent in their duties. This finding of the 6th respondent was confirmed by the Tribunal by observing that the petitioners herein were negligent in discharging their duty. Thus, the only question to be decided in these Civil Revision Petitions is as to whether the act of negligence committed by the petitioners would attract surcharge proceedings under Section 87(1) of the Tamil Nadu Co-operative Societies Act or not.
14. A bare perusal of the said provision would show that mere negligence is not enough unless such negligence is also wilful. This issue has, in fact, already been dealt with by this Court on very many occasions. In a decision reported in 1999 (3) MLJ 310 (M.SAMBANDAM VS. THE DEPUTY REGISTRAR (CREDIT) CO-OPERATIVE SOCIETIES), this Court has categorically found that the act of failure to discharge the duties enjoined upon the petitioner therein with regard to direct scrutiny of accounts, examination of vouchers and passing of statement before he signed the minutes book cannot come within the expression "wilful negligence". This Court had in fact considered the scope of Section 71 of the Tamil Nadu Co-operative Societies Act, , 1961 which is analogous to Section 87 of the present Act and after following various decisions, this Court has held at paragraph 14 as follows:-
"14. In the light of the above mentioned legal position, after considering the charges made against the petitioner, I am unable to accept the conclusion arrived by the respondent 1 and 3. It may be true that the petitioner failed to discharge the duties enjoined upon him with regard to direct scrutiny of accounts, examination of vouchers and passing of statement before he signed the minutes book but this failure cannot come within the expression "wilful negligence" which has been constructed as either by commission or omission, in a deliberate and reprehensible manner, with reckless callousness and with a supine indifference, without taking due care and precaution ordinarily expected from a reasonable and prudent man under those existing circumstances."
15. Similarly in another decision reported in 2009 (4) MLJ 992 ( K.AJAY KUMAR GOSH AND OTHERS VS. TRIBUNAL FOR CO-OPERATIVE CASES), the Hon'ble Division Bench of this Court considered the scope of Section 87 surcharge proceedings and found that to pass a surcharge order under Section 87 of the Tamil Nadu Co-operative Societies Act , the employees of the Co-operative Society 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 the existing circumstances. It is further observed therein that in the absence of such categorical finding, it is not possible to hold the employees liable with the loss caused to the Society. The Hon'ble Division Bench has passed the said order after considering various earlier decisions. The relevant portions at paragraph 19 and 20 are extracted as follows:-
"19. A detailed discussion has been made by making reference to various judgements on this aspect in another judgment reported in Sathyamangalam Co-operative Urban Bank Ltd.,Vs. 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 Cooperative Societies Act is not mere negligence, but wilful negligence. The word 'wilful' has not been defined in the Act. 'Wilfulness' or 'wantonness' import pre-mediation 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 aid 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 the 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.
16. In another decision made in the case of R.GANAPATHY VS. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES (HOUSING) TIRUNELVELI AND ANOTHER ( 2009 (6) MLJ 1066) a learned single Judge of this Court has held at paragraph 11 as follows:-
11. The learned counsel for the petitioner is also right in contending that the allegations levelled against the petitioner is mere omission and not wilful omission. Section 87(1) clearly states that there shall be wilful negligence/omission and if the same is proved, surcharge proceedings can be initiated. The said issue was considered in series of decisions of this Court.
(a) In (1980) 2 MLJ 17 (Sathyamangalam Co-Operative Urban Bank Limited v. The Deputy Registrar of Co-Operative Society and another), 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 1989 WLR 272 (P.Karuppiah v. The Deputy Registrar of Co-Operative Societies) 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', 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 from 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 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.1955 of 1978 is allowed. We make no order as to costs both in the writ petition and in the writ appeal."
(c) The above decision was followed in the decisions reported in (1999) 1 MLJ 587 (Chockappan v. The Special Tribunal for Co-Op. Cases) and (1999) 3 MLJ 310 : 1999 (4) LLN 483 (M. Sambandam v. The Deputy Registrar (Credit) Co-Operative Societies, Mylapore, Madras).
(d) In 2002 WLR 198 (M.Chella Nadar v. The Deputy Registrar of Co-Operative Societies, Thuckalai and post, K.K.District), the very same issue of scope of Section 87 was considered and similar surcharge proceeding was quashed. (e) The above decisions are followed in the decision reported in (2006) 4 MLJ 86 (S.Marimuthu v. Deputy Registrar of Co-Op. Societies (Housing), Madurai Circle).
(f) Recently, a Division Bench of this Court in the decision reported in (2009) 4 MLJ 992 (K.Ajay Kumar Gosh v. Tribunal for Co-Operative Cases, Nagercoil) set aside the order of surcharge and in paragraph 20 held thus:
"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."
17. Going by the decisions referred to above, it is crystal clear that mere negligence is not sufficient to hold a person responsible to initiate surcharge proceedings under Section 87 of the said Act unless such disobedience is also found to be wilful.
18. No doubt, the petitioners have acted without care and performed their duties in a casual and negligent manner. However, such negligence alone is not sufficient to hold them liable under Section 87 of the said Act, unless the same is coupled with wilful or deliberate intention to commit such negligence. As there is no finding given by the authorities below to that effect, then the principle that has been laid in the series of decisions, referred to supra, of this Hon'ble Court has to be applied to this case to hold that the proceedings under Section 87 of the said Act cannot be initiated against the petitioners in the absence of any wilful negligence on their part.
19. The learned Government Advocate appearing for the 6th respondent relied on the decision reported in 2010 (4) MLJ 1027 (R.Nanjundan Vs. District Judge cum Tribunal). In the said decision, the learned single Judge of this Court has observed that if the petitioners therein who are dealing in banking transaction try to pervert any standing instructions that itself is a sufficient proof of wilful negligence . While going through the facts of the said case it is seen that the Tribunal therein found that the accounts were falsified by the petitioners therein and there was wilful intention on the part of the petitioners in causing loss to the Society. Going by the said finding rendered by the Tribunal, the learned single Judge has observed against them as stated supra. Certainly, there is no quarrel about the said proposition. As already found, in this case, there is no such finding rendered by the Tribunal or the authority who has passed the surcharge order to the effect that the petitioners herein have falsified the accounts. Therefore, in the absence of any such finding, learned Government Advocate appearing for the 6th respondent is not justified in relying on the said decision as the same is factually distinguishable.
20. The other decision relied on by the learned Government Advocate is reported in 2002 (3) L.W. 185 (S.Subramanian, Deputy Registrar of Co-operative Societies (Housing), Cuddalore and Others). In fact, it supports the case of the petitioners only as it is specifically found by the Hon'ble Division Bench therein that the finding should be rendered to establish that deficiency is caused wilfully or deliberately or with a view to cause loss to the assets of the Society and absence of finding that the petitioner is guilty of wilful negligence or wantonness would render the impugned order unsustainable. In fact, in the said decision, the Hon'ble Division Bench has quashed the surcharge proceedings therein.
21. Considering all these facts and circumstances of the case, I find that the petitioners are entitled to succeed in these Civil Revision Petitions. Accordingly, both the Civil Revision Petitions are allowed and the impugned orders of the authorities below are set aside. The connected M.Ps. are closed. No costs.
krr To
1. The Principal District Judge-cum-Co-operative Tribunal, Coimbatore.
2. The Deputy Registrar of Co operative Societies Coimbatore