Madras High Court
The Special Officer vs R.Prabhakaran .. 1St on 24 July, 2014
Author: T.Raja
Bench: T.Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.07.2014 CORAM THE HONOURABLE MR.JUSTICE T.RAJA W.P.Nos.27168 to 27172 of 2009, 2029 and 2030 of 2010 The Special Officer CL.SPL.154 Brammadesam Primary Agricultural Cooperative Bank Brammadesam and Post Tindivanam Taluk Villupuram District .. Petitioner in all the writ petitions -vs- R.Prabhakaran .. 1st Respondent in W.P.No.27168 of 2009 P.Dhandapani .. 1st Respondent in W.P.No.27169 of 2009 V.Sampath .. 1st Respondent in W.P.No.27170 of 2009 B.Dhanasekaran .. 1st Respondent in W.P.No.27171 of 2009 A.Kannan .. 1st Respondent in W.P.No.27172 of 2009 S.Venkatasamy .. 1st Respondent in W.P.No.2029 of 2010 G.Manoharan .. 1st Respondent in W.P.No.2030 of 2010 The Deputy Registrar of Cooperative Societies Tindivanam .. 2nd respondent in all the writ petitions The Presiding Officer Cooperative Tribunal (Principal District Court) Villupuram .. 3rd respondent in all the writ petitions Petitions under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, calling for the records relating to the judgements and decrees dated 26.10.2009, 19.10.2009 and 18.9.2009 passed in CMA Nos.27/2008, 23/2008, 15/2008, 24/2008, 31/2008, 13/2008 and 12/2008 respectively on the file of the Cooperative Tribunal, Villupuram viz., the 3rd Respondent herein and quash the same. For Petitioner :: Mr.R.Neelakandan for Ms.N.Santhi For Respondents :: Mr.C.Prakasam for R1 in W.P.Nos.27168 & 27170/09 Mr.K.Rajasekaran for R1 in W.P.No.27169 of 2009 Mr.R.Arumugam for R1 in W.P.No.27171 of 2009 Mr.R.Balakrishnan for R1 in W.P.Nos.2029 & 2030/10 Ms.T.P.Savitha Government Advocate for R2 in W.P.Nos.27168 to 27172 of 2009 Mr.E.M.S.Natrajan Government Advocate for R2 in W.P.Nos.2039 & 2030/10 R3-Tribunal ORDER
The Special Officer of Brammadesam Primary Agricultural Cooperative Bank Limited, aggrieved by the impugned orders passed by the Cooperative Tribunal (Principal District Court), Villupuram in C.M.A.Nos.27, 23, 15, 24, 31, 13 and 12 of 2008 dated 26.10.2009, 19.10.2009 and 18.09.2009 respectively, has filed the present writ petitions, challenging the correctness of the same on the ground that the Cooperative Tribunal failed to see that the contesting respondent in each of the writ petitions, namely, Mr.R.Prabhakaran, the first respondent in W.P.No.27168 of 2009 being the Circle Supervisor of Villupuram District Central Cooperative Bank, Mr.P.Dhandapani, the first respondent in W.P.No.27169 of 2009 being the Branch Manager of Marakkanam branch of District Central Cooperative Bank, Mr.V.Sampath, the first respondent in W.P.No.27170 of 2009 being the Taluk Field Manager in Tindivanam Taluk area, Mr.B.Dhanasekaran, the first respondent in W.P.No.27171 of 2009 being the Assistant General Manager/General Manager (incharge) of Villupuram District Central Cooperative Bank, Mr.A.Kannan, the first respondent in W.P.No.27172 of 2009 being the Circle Supervisor of Villupuram District Central Cooperative Bank, Mr.S.Venkatasamy, the first respondent in W.P.No.2029 of 2010 being the Taluk Field Manager of Villupuram District Central Cooperative Bank and Mr.G.Manoharan, the first respondent in W.P.No.2030 of 2010 being the General Manager of Villupuram District Central Cooperative Bank had deliberately sanctioned the loans to the defaulted debtors and caused loss to the tune of Rs.1,05,505/-, Rs.1,45,503/-, Rs.13,64,717/-, Rs.1,29,24,770/-, Rs.3,47,01,385/-, Rs.1,45,503/- and Rs.1,04,000/- respectively. That apart, the Tribunal has once again failed to see that they were instrumental in the sanction of loans to the defaulted debtors, hence, they are liable for the loss mentioned in the respective item numbers of the surcharge order. When the contesting respondents were responsible for the grant of loans to fictitious persons as if they were the members of the petitioner-Bank, the Tribunal ought to have seen that the findings of the Deputy Registrar were rendered on proper enquiry. Besides, the Tribunal has committed one another error in not properly seeing that because of the gross negligence on the part of the contesting respondents, the monetary status of the bank has been very badly affected and the affairs of the bank gradually deteriorated. In fact when the bank has come to a dormant stage due to the sanction of loans wrongly in collusion with the co-employees and the staff of Brammadesam Primary Agricultural Cooperative Bank, the Tribunal ought not to have come to the conclusion that the contesting respondents were not liable, for the simple reason that they were not the employees of the petitioner-Bank. One another vital fact the Tribunal failed to see is that the enquiry report against the contesting respondents under Section 81 has become final and not been set aside, therefore, the appeals challenging the proceedings under Section 87 only, should have been dismissed. Again interfering with the surcharge order passed by the second respondent-Deputy Registrar of Cooperative Societies, Tindivanam by the Tribunal, the criminal case filed against the contesting respondents by the Inspector of Police, Commercial Crime Investigation Wing, Villupuram in Crime No.3 of 2005 for the offence under Sections 408, 409, 420, 468, 471, 477(A) of IPC would suffer a setback. For all these reasons, he prayed for setting aside the impugned orders by allowing the writ petitions.
2. Detailed counter affidavits have been filed by the contesting respondents stating that the impugned orders passed by the Tribunal are perfectly in order, for the reason that the contesting respondents were not the employees of Brammadesam Primary Agricultural Cooperative Bank and they will not fall within the purview of Section 81 enquiry. That apart, the disbursement of loan under the respective item numbers was as per the procedure and based on the documents issued by the petitioner-Bank, therefore, the contesting respondents were no way connected with the affairs of the petitioner-Bank or their employees. When the contesting respondents were working in the Central Cooperative Bank, the alleged delinquencies are said to have taken place only in the petitioner-Bank. Therefore, when both the banks are different entities, the surcharge proceedings initiated under Section 87(1) of the Act cannot be made against the contesting respondents, because the above Section 87(1) clearly says that where in the course of an audit under section 80 or an inquiry under section 81 or an inspection or investigation under section 82, it appears that any person who is or was entrusted with the organisation or management of the society has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust, hence, the contesting respondents are not liable for the alleged loss incurred in the petitioner-Bank, for the simple reason that they were not the employees of the petitioner-Bank. Moreover, the management never entrusted any power or authority to the contesting respondents. Therefore, the Cooperative Tribunal had rightly come to the conclusion that the disbursement of loan under the respective item numbers ought not to have been made against the contesting respondents and the further finding that as the contesting respondents were not the employees of Brammadesam Primary Agricultural Cooperative Bank, they will not fall within the purview of Section 81 enquiry, is legally correct. Therefore, no interference is called for with the impugned orders.
3. In conclusion, the sum and substance of the arguments advanced by the respective learned counsel for the contesting respondents is that when an enquiry was held by the Deputy Registrar of Cooperative Societies as ordered under Section 81 of the Act to find out the irregularities that led to heavy monetary loss to the Brammadesam Primary Agricultural Cooperative Bank followed by the surcharge proceedings under Section 87 of the Act, similarly, to hold the employees working in the Central Cooperative Bank who are said to have advanced loan to Brammadesam Primary Agricultural Cooperative Bank, should have also held an enquiry under Section 81 of the Act against the employees of Central Cooperative Bank and thereafter surcharge proceedings should have been initiated to find out the guilty officer in the Central Cooperative Bank. As there was no such Section 81 enquiry followed by the surcharge proceedings under Section 87 in the Central Cooperative Bank, as rightly held by the Cooperative Tribunal, the impugned orders cannot be interfered with.
4. The contesting respondents have been the employees of Central Cooperative Bank, but not the employees of Brammadesam Primary Agricultural Cooperative Bank. Therefore, the question is whether they would fall within the purview of Section 81 enquiry and if so, whether they can be held responsible for the negligence on the part of the petitioner-Bank while sanctioning loans to its customers. When some irregularities were noticed in Brammadesam Primary Agricultural Cooperative Bank, the Deputy Registrar of Cooperative Societies, who is the competent authority, ordered an enquiry under Section 81 of the Act by order dated 3.1.2005 passed in his proceedings Rc.No.3636/2005/Vesesa based on the 100% crop verification report submitted on 17.12.2004. As a result of the enquiry under Section 81, many employees were found guilty for having caused loss to the petitioner-Bank to the tune of Rs.3,69,85,691/- in total and accordingly a report was also submitted on 1.4.2005 by the enquiry officer. Again based on the said enquiry report, surcharge proceedings were initiated under Section 87 of the Act and finally an order has been passed in Rc.No.3330/2005/Ku.Na., dated 21.7.2008, both against the Special Officer and other employees of the bank holding that they were all liable for the loss. The said surcharge order passed by the Deputy Registrar of Cooperative Societies, Tindivanam was challenged by way of appeals under Section 152 of the Act before the Cooperative Tribunal, Villupuram and the Cooperative Tribunal allowed the appeals by setting aside the surcharge proceedings by the impugned orders. The Tribunal also came to the conclusion that the contesting respondents were not liable for surcharge proceedings on the sole ground that they were not working in the petitioner-Bank. When the Brammadesam Primary Agricultural Cooperative Bank provides loan to agriculturists by identifying them as per its norms after proper verification and scrutiny of the entire records produced by the concerned applicant and after completion of the field inspection, based on the recommendations with necessary documents submitted by the petitioner bank, the Central Cooperative Bank would disburse the loan, the procedure for disbursement of the loan by the Branch Manager of Central Cooperative Bank should be in accordance with the Head Office circular dated 19.9.2000. Indeed, when the Deputy Registrar of Cooperative Societies initiated surcharge enquiry under Section 87, that was initiated only against the employees of Brammadesam Primary Agricultural Cooperative Bank, unnecessarily the names of the contesting respondents were included without perusing the circular issued by the Central Cooperative Bank. In this connection, it is relevant to extract Section 87(1) of the Act as follows:-
''87.Surcharge.--(1) Where in the course of an audit under section 80 or an inquiry under section 81 or an inspection or investigation under section 82 or inspection of books under section 83 or the winding-up of a society, it appears that any person who is or was entrusted with the organisation or management of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made any payment which is not in accordance with this Act, the Rules or the bye-laws, the Registrar himself or any person specially authorised by him in this behalf, of his own motion or on the application of the board, Liquidator or any creditor or contributory may frame charges against such person or officer or servant and after giving a reasonable opportunity to the person concerned and in the case of a deceased person, to the representative who inherits his estate, to answer the charges, make an order requiring him to repay or restore the money or property or any part thereof with interest at such rate as the Registrar or the person authorised as aforesaid thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, mis-application of funds, fraudulent retainer, breach of trust or wilful negligence or payments which are not in accordance with this Act, the Rules or the bye-laws as the Registrar or the person authorised as aforesaid thinks just:
Provided that no action shall be commenced under this sub-section after the expiry of seven years from the date of any act or omission referred to in this sub-section:
Provided further that the action commenced under this sub-section shall be completed within a period of six months from the date of such commencement or such further period or periods as the next higher authority may permit, but such extended period or periods shall not exceed six months in the aggregate.''
5. A close reading of the above provision goes to show that only a person who is entrusted with the management of the society, if found to have misappropriated or fraudulently retained any money or other property or has caused any deficiency in the assets of the society by breach of trust, such person shall be held liable for the alleged loss. In the present cases, the contesting respondents had not disbursed the loan to defaulters nor had disbursed the loan over and above the prescribed limit. Whereas the allegation in respect of the first respondent in W.P.No.27169 of 2009 shows that he had disbursed the loan to nine persons to the tune of Rs.2,00,400/- mentioned in item no.6 along with 11 other persons and a sum of Rs.13,48,358/- to 52 persons mentioned in item no.7 along with 17 persons. Similar acts of delinquencies have been attributed against the other contesting respondents as well. When the record shows that the Section 81 enquiry ordered by the Deputy Registrar of Cooperative Societies with regard to various irregularities causing heavy monetary loss to the petitioner bank followed by the surcharge proceedings under Section 87 of the Act also do not show that the contesting respondents at any point of time had disbursed the loans to defaulters, as they were not involved in any delinquent activities as alleged by the petitioner Bank, the findings of the Cooperative Tribunal that the contesting respondents cannot be held responsible for the negligence of the petitioner Bank, are perfectly in order. Moreover, one another finding of the Tribunal that the contesting respondents are also not the employees of Brammadesam Primary Agricultural Cooperative Bank and they cannot be fastened with any liability for the negligence of the petitioner-Bank cannot be faulted. In that view of the matter, no interference is called for with the impugned orders of the Cooperative Tribunal. Accordingly, the writ petitions fail and they are dismissed. No costs.
Index : yes 24.07.2014
Issue copy on 23.9.2014
ss
To
1. The Special Officer
CL.SPL.154 Brammadesam Primary
Agricultural Cooperative Bank
Brammadesam and Post
Tindivanam Taluk
Villupuram District
2. The Deputy Registrar of
Cooperative Societies
Tindivanam
3. The Presiding Officer
Cooperative Tribunal
(Principal District Court)
Villupuram
T.RAJA, J.
ss
Order in
W.P.Nos.27168 to 27172 of 2009,
2029 and 2030 of 2010
24.07.2014