Madras High Court
Karunamurthi vs The Deputy Registrar Of Cooperatives 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.No.29749 of 2010
Karunamurthi
S/o Ponnunaicker .. Petitioner
-vs-
1. The Deputy Registrar of Cooperatives
Tindivanam
Villupuram District
2. The Special Officer
Brahamadesam Primary Agricultural
Co-operative Bank Ltd.,
Tindivanam Taluk
Villupuram District
3. The Presiding Officer
Co-operative Tribunal/Principal District Court
Villupuram .. Respondents
Petition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, calling for the records relating to order dated 26.07.2010 in CMA No.34/2008 passed by the third respondent and in Pro.Na.Ka.No.3330/2005/Ku.Na. dated 21.7.2008 passed by the first respondent, quash the same in so far as it related to the petitioner.
For Petitioner :: Mr.K.Govindaraj
For Respondents :: Mr.L.P.Shanmugasundaram
Special Government Pleader (Co-op.)
for R1
Mr.M.Dhandapani for R2
R3-Tribunal
ORDER
The writ petitioner-Mr.Karunamurthi, aggrieved by the impugned order passed by the third respondent-Cooperative Tribunal/Principal District Court, Villupuram in C.M.A.No.34 of 2008, confirming the order passed by the first respondent-Deputy Registrar of Cooperatives, Tindivanam, Villupuram District in proceedings Na.Ka.No.3330/2005/Ku.Na. Dated 21.7.2008, has filed the present writ petition, to quash the same insofar as it related to the petitioner alone.
2. Learned counsel for the petitioner submitted that when the petitioner was serving as Field Manager of Cooperative Societies in the Department of Cooperatives in Villupuram District under the control of the Deputy Registrar of Cooperatives, Tindivanam, he was posted as Special Officer of Brammadesam Primary Agricultural Cooperative Bank Limited. While so, based on the enquiry report submitted under Section 81 of the Tamil Nadu Cooperative Societies Act, 1983 (for short, the Act), surcharge proceedings were initiated against him under Section 87 of the Act and thereafter an order of surcharge came to be passed against him in proceedings Na.Ka.No.3330/2005/Ku.Na. dated 21.7.2008 by the first respondent relating to certain alleged financial irregularities that took place from 28.3.88 to 31.3.2005, contrary to Section 87(1) of the Act, which says that no action shall be commenced after the expiry of seven years from the date of any act or omission referred to in Section 87(1), inasmuch as when the alleged commissions and omissions were said to have taken place from 28.3.88 to 31.3.2005, the proceedings themselves had commenced only on 15.2.2008 after the expiry of seven years period on 28.3.95 itself. This has not been considered at all by the third respondent. However, when the first respondent initiated surcharge proceedings and passed an order of surcharge dated 21.7.2008, aggrieved by the same, the petitioner preferred an appeal under Section 152 of the Act before the third respondent-Tribunal on the ground that the petitioner was wrongly implicated in the surcharge proceedings. But the third respondent, without appreciating the facts of the case that the first respondent had wrongly passed the surcharge order, has dismissed the appeal. Moreover, the third respondent has also failed to note that the petitioner was working as Special Officer in Brammadesam Primary Agricultural Cooperative Bank and the period covering the surcharge proceedings was between 28.3.88 and 31.3.2005. During that period, the petitioner was a subordinate official in the bank and he was only discharging the duties relating to loan recommendations as directed by the Secretary then and there, but he has not done any other duty in connection with the charges foisted against him as alleged in the surcharge order to which the petitioner was not even aware of.
3. Learned counsel would further submit that when the petitioner was serving as Special Officer, he was not given any written order by the bank specifically assigning any duties and responsibilities. But the third respondent has failed to take note of this vital aspect and also has equally failed to see that he has been made as scapegoat by including his name in the surcharge proceedings by the first respondent. In any event, the order passed by the first respondent in the surcharge proceedings is vitiated and erroneous, since no action shall be commenced under sub-section (1) of Section 87 of the Act after the expiry of seven years from the date of any act or omission referred to in that sub-section. Emphasising again on the period of alleged commissions and omissions, the learned counsel further stated that the surcharge order covers the period from 28.3.88 to 31.3.2005, whereas the first respondent had commenced the proceedings to issue surcharge order only on 15.2.2008. In the meanwhile, seven years statutory period of limitation got expired on 28.3.95 itself. These legal aspects have been completely overlooked by both the first respondent/Deputy Registrar and the third respondent/Cooperative Tribunal. That apart, the petitioner, being a subordinate official working under the control of the Secretary, had no power either to sanction or disburse the loans. In fact, in view of the control exercised by the Secretary, the petitioner-Special Officer had no role in any of the transactions that took place in the bank. Therefore, the impugned order of surcharge making him jointly as well as severally liable along with others to the tune of Rs.44,96,684/- covering the period from 28.3.88 to 31.3.2005, since the said loss had been sustained by the Brammadesam Primay Agricultural Cooperative Bank, is liable to be set aside. Concluding his arguments, the learned counsel further stated that the Secretary being the Chief Executive Officer of the bank, he and the management alone are responsible for the conduct of the affairs of the bank like sanction and disbursement of loans, etc. But the first and third respondents failed to consider these aspects, when Section 84 of the Act itself holds that the Secretary is the custodian, in-charge and having possession of all the documents of the bank. Besides, the surcharge proceedings are all vague and general and not specific to the point as to how far the petitioner is liable for the alleged financial loss incurred by the bank under various heads during the relevant period. On these facts and legal aspects, he prayed for interference with the impugned order.
4. A detailed counter affidavit has been filed by the second respondent-Special Officer of Brammadesam Primary Agricultural Cooperative Bank. Mr.M.Dhandapani, learned counsel for the second respondent submitted that admittedly the petitioner worked as Special officer in the bank for the period from 25.5.2001 to 10.3.2003. The first respondent being the competent authority, coming across several irregularities leading to fraud and misappropriation of the banks funds to a considerable quantum, ordered for an enquiry under Section 81 of the Act in his proceedings Rc.No.3636/05/Vesesa dated 3.1.2005 on the basis of the 100% crop verification report submitted on 17.12.2004. Accordingly, the enquiry officer started his enquiry on 6.1.2005 and finally submitted his report on 1.4.2005. In the said report, the enquiry officer has pointed out the items of fraud and misappropriation of the banks fund to a sum of Rs.3,69,85,691.00 covering 1467 loans under 15 items and also recommended to initiate surcharge proceedings under Section 87 of the Act. Only after receiving the said enquiry report, the petitioner filed W.P.No.27222 of 2005 behind the back of the first respondent and got an interim injunction restraining the first respondent from proceeding further on the enquiry report dated 1.4.2005 submitted by the enquiry officer. Followed by the petitioners writ petition, several other similarly placed persons also got interim orders in various writ petitions, namely, W.P.Nos.18214 of 2005 dated 17.6.2005, 27888 of 2005 dated 31.8.2005, 38818 of 2005 dated 24.8.2005, 25859 of 2005 dated 12.8.2005, 35708 of 2005 dated 8.11.2005, 38260 of 2005 dated 25.11.2005, 38261 of 2005 dated 25.11.2005, 38262 of 2005 dated 25.11.2005, 38814 of 2005 dated 1.12.2005, 38815 of 2005 dated 1.12.2005, 34938 of 2005 dated 28.10.2005, 38816 of 2005 dated 1.12.2005, 27885 of 2005 dated 21.8.2005, 40775 of 2005 dated 21.12.2005. However, the petitioners Writ Petition No.27222 of 2005 was dismissed on 7.12.2007. Only thereafter, the first respondent issued surcharge notice under Section 87(1) of the Act in Rc.No.3330/05/Ku.Na. Dated 15.2.2008. Therefore, it is not open to the petitioner to say that a huge delay has occurred, hence, the limitation of seven years should be applied to him for interference with the impugned order, is not correct. In an effort to justify the impugned order, he submitted that after issuance of the surcharge notice under Section 87(1) in proceedings Rc.No.3330/05/Ku.Na. dated 15.2.2008, the same was received and acknowledged by the petitioner on 27.3.2008. Again a xerox copy of the enquiry report was also sent to him on 19.3.2008. Thereafter, the petitioner submitted his explanation on 9.6.2008. Further, the first respondent also gave sufficient opportunity and issued summons in Rc.No.3330/05/Ku.Na. dated 10.4.2008 for personal hearing and thereupon his deposition was also recorded on 9.6.2008 by the first respondent. The above chain of events would show that the first respondent had initiated surcharge proceedings under Section 87(1) of the Act to recover the dues to the bank and the show cause notices were issued not only to the petitioner but also to others following the principles of natural justice. Moreover, the first respondent has followed the procedure prescribed under Section 87(1) of the Act and Rules 111 and 112 of the Tamil Nadu Cooperative Societies Rules and finally issued a surcharge order in Rc.No.3330/05/Ku.Na. dated 21.7.2008. Aggrieved by that order, the petitioner preferred a statutory appeal under Section 152 of the Act before the Cooperative Tribunal/Principal District Court, Villupuram in C.M.A.No.34 of 2008. But the petitioner has not stated that the enquiry report was not furnished to him and even during the arguments before the Cooperative Tribunal, he has never pleaded so. That itself shows that he had been furnished with the copy of the enquiry report.
5.While responding to the second part of the argument of the petitioner that he was not given any written order by specifically assigning the duties and responsibilities and has been ultimately made as a scapegoat by leaving the Secretary, who is the Chief Executive Officer of the bank, the learned counsel stated that the petitioner was also responsible in the day to day affairs of the bank, since he had to sign in the minutes along with the Secretary of the bank. Moreover, he had to sign the day book, vouchers, loan files and cheques of the bank along with the Secretary. Therefore, he has got a joint and collective responsibility in the day to day affairs of the bank. In support of his submissions, he has also stated that both the first respondent and the Registrar of Cooperative Societies had issued various circulars and instructions to the Special Officer and in this line, one of the circulars issued by the first respondent in Rc.No.3040/2001 Vesesa dated 14.6.2001 and another circular issued by the Registrar of Cooperative Societies, Madras in Rc.No.79650/2001/S.E.4 dated 4.6.2001 about the important functions of the special officer in the place of the Board have been detailed and the statutory duties cast upon the special officers clearly show that the special officers are given power (a) to exercise all the functions of the Board; (b) to exercise all or any of the functions of any officer of the society; (c) to take such action as may be required in the interest of the society and (d) to convene the annual general meeting for the purposes specified in Section 32(2); to scrutinize the loan applications received and to ensure that the rules, regulations and the instructions of the Registrar and financing bank are complied with before the sanction and disbursement of loans. The Special officer should not make any upward wages revision or enter into Section 12(3) or Section 18(1) settlement under the Industrial Disputes Act without the prior approval of the Registrar in writing, etc.
6. Again explaining before this Court the basis for initiation of surcharge proceedings and holding the petitioner also as one of the joint responsible officers, he has stated that the petitioner and others have completely swindled the money of the bank in various items of fraud and misappropriation to the tune of Rs.3,69,85,691/- under various heads, namely, 166 loans issued to the landless members when they were not land holders for a sum of Rs.57,08,064/-, 371 bogus loans were created for a sum of Rs.1,21,91,920/-, 21 loans were issued only in one chitta and one survey number for a sum of Rs.8,71,290/-, 27 other loans were issued in the name of dead persons for a sum of Rs.6,95,400/-, 16 other loans were also issued to the persons living outside the area of operation of the bank for a sum of Rs.6,46,000/-, 9 more loans were issued over and above the annual credit loan sanction of the Villupuram District Central Cooperative Bank to a sum of Rs.2,00,400/- in the names of benamis, 29 other loans were given to the family members of one Secretary without land for a sum of Rs.11,21,239/-, 229 Government interest waiver loans to the tune of Rs.18,85,100/- were misappropriated and so on and so forth, resultantly, the bank suffered a total loss of Rs.3,69,85,691/-. Therefore, the surcharge proceedings initiated by the first respondent has not only held the petitioner alone liable for the said loss, but also held the other similarly placed persons liable. In any event, the petitioner having served as Special Officer of the bank for the period from 25.5.2001 to 10.3.2003, he is the chief most responsible officer in the day to day affairs of the bank by signing the minutes along with the Secretary of the bank and indeed he has also signed the day book, loan files, cheques of the bank along with the Secretary, hence, he has got a general and collective responsibility. In view of that, he cannot escape from the surcharge order holding him jointly and severally responsible as held by the Cooperative Tribunal. Concluding his arguments, reiterating the innovative and highly objectionable method of swindling the funds of the poor cooperative bank by sanctioning loans in the names of 27 dead persons by causing huge loss, the learned counsel stated that the petitioner along with other officers were also responsible for misappropriating 371 bogus loans running to Rs.1,21,91,920/- and one another misappropriation of 229 government interest waiver loans to the tune of Rs.18,85,100/-. Further more, when the surcharge proceedings had clearly held that the petitioner and others had committed grave irregularities with regard to falsification of accounts, committing criminal breach of trust and cheating, it is just and necessary to dismiss the writ petition. Otherwise, the respondent-Bank would be put to grave injustice and loss to a huge amount of 3.69 Crores.
7. This Court is unable to disagree with the reasonings given in the impugned order and also the submissions placed by the learned counsel for the second respondent Bank. At the outset, it needs to be found out whether the petitioner, while serving as Special Officer of the bank for the period from 25.5.2001 to 10.3.2003, has discharged his responsibilities in the day to day affairs of the bank. Section 89 of the Act empowers the Registrar of Cooperative Societies to appoint the Special Officer for a specific period to manage the affairs of the registered society pending the constitution of a new board where the term of office of the board of any registered society has expired and a new board cannot be constituted in accordance with the provisions of the Act. The said section further says that where one or more members of the board had tendered resignation and the number of remaining members cannot form the quorum for the meeting of the board, again the Registrar may on his own motion or on an application of any member of the registered society may by an order appoint a Special Officer. In the present case, it is not in dispute that the petitioner was appointed as Special Officer by the Registrar under Section 89 of the Act. Moreover, the Deputy Registrar of Cooperative Societies, Tindivanam circle, the first respondent has also issued a letter in Rc.No.3040/2001 Vesesa dated 14.6.2001 indicating the important functions of the Special Officer in the place of the board. That apart, the Registrar of Cooperative Societies, Madras also by his proceedings in Rc.No.79650/2001/S.E.4 dated 4.6.2001 has specifically mentioned the important functions of the Special Officer in lieu of the board. In addition thereto, since sub-section (3) of section 88 enunciates the power of the Special Officer, the same is reproduced as under:-
''(3) The administrator appointed under sub-section (1) shall, subject to the control of the Registrar and to such directions as he may, from time to time, give, have powers to exercise all or any of the functions of the board or of any officer of the society and to take such action as may be required in the interest of the society.''
8. A reading of the above provision clearly shows that the Special Officer appointed by the Registrar shall have powers to exercise all or any of the functions of the board or of any officer of the society and take such action as may be required in the interest of the society. In this regard, as rightly argued by the learned counsel for the second respondent bank, the petitioner, while discharging his responsibilities in the day to day affairs of the cooperative bank, has signed the minutes of the bank along with the Secretary of the bank and has also signed the day book, vouchers, loan files and cheques of the cooperative bank along with the Secretary. Therefore, the petitioner, who served as Special Officer for the period from 25.5.2001 to 10.3.2003, has got a joint and collective responsibility in the day to day affairs of the bank.
9. With this background, when the charges warranting initiation of surcharge proceedings are perused, it could be seen that 27 loans were given in the names of dead persons to the tune of Rs.6,95,400/-. The second charge shows that 371 bogus loans were given to the tune of Rs.1,21,91,920/- and 29 benami loans to the tune of Rs.11,21,239/- were issued to family members of one Secretary without there being any land. Surprisingly, 229 government interest waiver loans to the tune of Rs.18,85,100/- have been misappropriated. Besides, 11 other misappropriations under various heads have also been noticed. Therefore, the first respondent, who is the competent authority, had ordered for an enquiry under section 81 of the Act in his proceeding Rc.No.3636/05/Vesasa dated 3.1.2005 on the basis of the special report of the 100% crop verification report submitted on 17.12.2004 and the enquiry report submitted on 1.4.2005 pointed out the items of fraud and misappropriation of the banks funds to the tune of Rs.3,69,85,691/- covering 1467 loans under 15 items. Therefore, the first respondent had rightly recommended for initiation of surcharge action under section 87 of the Act. This has been rightly considered by the Cooperative Tribunal/Principal District Court, Villupuram, the third respondent herein. Therefore, this Court finds no merit in the writ petition.
10. Before parting with the case, it needs to be mentioned that although the powers of the High Court under Article 226 of the Constitution of India are far and wide and the Court must ever be vigilant to protect the citizens against any arbitrary executive action, nonetheless, courts have a constructive role and therefore on this basis it is settled that there is always a need to use such extensive powers with due circumspection. In this regard, while exercising its equity jurisdiction, this Court can take cognizance of the entire facts and circumstances of the case to pass appropriate orders to give the parties complete and substantial justice keeping in mind the principles of equity. It is also a settled legal position that this Court being a Court of equity, shall ensure that no person is entitled to obtain equitable relief under Article 226 if his conduct is blame worthy. The circumstances in which the High Court could issue appropriate writ under this Article has been delineated by a Constitution Bench of the Apex Court in the case of State of Orissa v. Ram Chandra Devi AIR 1964 SC 685, wherein Gajendra Gadkar, J., speaking for the Bench, observed as follows:-
Under Article 226 of the Constitution, the jurisdiction of the High Court is undoubtedly very wide. Appropriate writs can be issued by the High Court under the said Article even for purposes other than the enforcement of fundamental rights and in that sense, a party who invokes the special jurisdiction of the High Court under Article 226 is not confined to cases of illegal invasion of his fundamental rights alone. But though the jurisdiction of the High Court under Article 226 is wide, in that sense, the concluding words of the article clearly indicate that before a writ or appropriate order can be issued in favour of a party, it must be established that the party has a right and the said right is illegally invaded or threatened. The acceptance of a writ is thus the foundation of a petition under Article 226.
The same view was also reiterated in the case of State of West Bengal v. Calcutta Hardware Stores, (1986) 2 SCC 203.
11. The above ratio vividly speaks that a party must have a right and the said right is illegally invaded or threatened. But, in the present case, as highlighted above, when the petitioner was functioning as Special Officer during the period from 25.5.2001 to 10.3.2003, at the cost of the cooperative bank, had given several loans in the names of dead persons and also in benami names. In view of that, this Court is not impressed with the point of equity, therefore, this Court is not inclined to exercise its equity jurisdiction.
12. For all the above reasons, this Court finds no merits whatsoever to interfere with the impugned order. Accordingly, the writ petition fails and it is dismissed. No costs.
Index : yes 24.07.2014
Issue copy on 23.9.2014
ss
To
1. The Deputy Registrar of Cooperatives
Tindivanam
Villupuram District
2. The Special Officer
Brammadesam Primary Agricultural
Co-operative Bank Ltd.,
Tindivanam Taluk
Villupuram District
3. The Presiding Officer
Co-operative Tribunal/Principal District Court
Villupuram
T.RAJA, J.
ss
Order in
W.P.No.29749 of 2010
24.07.2014