Madras High Court
M.Prabakar vs The Director Of Rural Development And on 19 October, 2022
Author: C.Saravanan
Bench: C.Saravanan
W.P.No.12542 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved On 08.08.2022
Pronounced On 19.10.2022
CORAM
THE HON'BLE MR.JUSTICE C.SARAVANAN
W.P.No.12542 of 2020
and
W.M.P.Nos.15459 & 15462 of 2020
M.Prabakar ... Petitioner
vs.
1. The Director of Rural Development and
Panchayat Raj Department,
Panagal Building,
Saidapet, Chennai 15.
2.The Director of Mil and Dairy Development,
3A, Pasumpon Muthuramalinganar Salai,
Nandanam, Chennai 600 035.
3.The Project Director,
Madurai District Mahalir Thittam Office,
Madurai.
4.The Deputy Registrar of Co-operative Society(Dairy)
(Full Additional Charge),
Vellore.
______________
https://www.mhc.tn.gov.in/judis
Page No 1 of 26
W.P.No.12542 of 2020
5. The General Manager,
Vellore-Tiruvannamalai District Co-operative
Milk Producers Union, Sathuvachari,
Vellore 632 009
( R5 impleaded vide order dated 12.10.2022
made in WMP.No.17388 of 2020) ... Respondents
Prayer:- Writ Petition filed under Article 226 of the Constitution of India,
for issuance of a Writ of Certiorari calling for the records on the file of the
First respondent in proceeding Na.Ka.No.56695/2019/TPC/1.1 dated
06.07.2020 along with order issued by the 4th respondent in Thanda
Theervai No.07/2019-2020-c dated 21.11.2019 quash the same .
For Petitioner : Mr.M.Ravi
For Respondents : Mr.M.Shahjahan
Spl.Govt.Pleader.
ORDER
This Writ Petition has been filed to quash the impugned proceeding bearing reference e/f/vz;/56695/2019/ogprp/1/1 of the first respondent dated 06.07.2020 and impugned order dated 21.11.2019 bearing reference j/jP/vz;/07/2019-2020/c under Section 87 of the Tamil Nadu Co-operative Societies Act, 1983 of the fourth respondent. ______________ https://www.mhc.tn.gov.in/judis Page No 2 of 26 W.P.No.12542 of 2020
2. By the first impugned order dated 06.07.2020, the first respondent has directed the third respondent to recover surcharge amount as was ordered by the fourth respondent under Section 87 of the Tamil Nadu Co-operative Societies Act, 1983 vide order dated 21.11.2019.
3. The aforesaid surcharge proceedings under Section 87 against the petitioner pertains to the alleged loss caused by the petitioner to the fifth respondent, Vellore-Tiruvannamalai District Milk Producers Co- operative Union (hereinafter referred to as the Union) when the petitioner was serving as its General Manager. The petitioner is presently working as the Additional Director of Rural Development and Panchayats and is on the verge of his retirement.
4. Acting in his capacity as the General Manager of the aforesaid Union, the petitioner had placed procurement orders for purchase of 40 Reverse Osmosis Plants (hereinafter referred to as RO Plants). ______________ https://www.mhc.tn.gov.in/judis Page No 3 of 26 W.P.No.12542 of 2020
5. Out of the 40 ROs, 4 RO Plants of 1000 litre capacity were purchased for being installed in 4 Chilling Centres and 36 RO Plants of 500 litre capacity for being installed in 36 Bulk Milk Coolers (BMC).
6. The RO Plants were meant for being utilized in converting hard water into soft water for cleaning Milk Cans, Milk Weighbridge and the Pipelines connecting the Milk Silos and Milk Tankers in the Chilling Centres and BMC to upgrade the quality of milk.
7. The second respondent had by letter dated 14.12.2018, instructed the fourth respondent to initiate enquiry under Section 81 to investigate into the alleged financial irregularities committed during the procurement of RO Plants as was reported by the Director of Audit for Milk Co-operative Societies in his Special report relating to the Union for the year 2017-2018.
8. It was estimated that an estimated amount of Rs.1,69,17,720/- was the loss caused to the fifth respondent Union in the purchase of 40 RO Plants under the petitioner.
______________ https://www.mhc.tn.gov.in/judis Page No 4 of 26 W.P.No.12542 of 2020
9. The fourth respondent thus ordered enquiry under Section 81 vide Proc.No.2054/E/2018 dated 21.02.2019 and appointed the Co- operative Sub Registrar (Statutory) as the Inquiry Officer.
10.Thereafter, the Co-operative Sub Registrar (Statutory) as the Inquiry Officer issued summons to the petitioner on 22.03.2019 and 15.04.2019. These summons were served on the petitioner through the second respondent.
11. Subsequently, the fourth respondent vide order dated 29.04.2019 appointed the Senior Inspector/D Section as the Inquiry Officer in place of the Co-operative Sub Registrar (Statutory). The petitioner appeared for the inquiry and deposed on 10.05.2019 and 15.05.2019.
12.The Inquiry Officer submitted his report on 08.08.2019 and recommended to initiation surcharge proceedings against ten persons including the petitioner.
______________ https://www.mhc.tn.gov.in/judis Page No 5 of 26 W.P.No.12542 of 2020
13. All these persons were part of the Purchasing Committee of the RO Plants and were identified to be responsible for the loss caused to the fifth respondent Union.
14.The fourth respondent thus issued show cause notice dated 22.08.2019 under Section 87 to the petitioner and 9 others. Summons were issued to the petitioner for a hearing to be held on 26.09.2019, 08.10.2019 and 18.10.2019.
15. The petitioner and K.S.Murali Prasad, the Assistant General Manager alone however did not appear. Therefore, summons were again issued for the hearing to be held on 07.11.2019. The petitioner thereafter appeared for the hearing on 07.11.2019 and submitted a detailed explanation to distance himself from the allegations.
1. The fourth respondent passed the impugned final award on 21.11.2019 against the petitioner and K.S. Murali Prasad for the alleged loss caused to the fifth respondent Union to the tune of Rs.17,17,820/- while the other 8 persons were exonerated. ______________ https://www.mhc.tn.gov.in/judis Page No 6 of 26 W.P.No.12542 of 2020
17. Before proceedings were initiated under the relevant provisions of the Tamil Nadu Co-operative Societies Act, 1983, the petitioner and the above named K.S. Murali Prasad were subjected to a prior inquiry by the Deputy Superintendent of Police/AGM (Vigilance) on an anonymous complaint with pseudo names in the name of All District Aavin Employees Union made to the Tamil Nadu Co-operative Milk Producers' Federation Limited (TCMPF Ltd) regarding irregularities in the purchase of 40 RO Plants.
18. The allegations were found to be baseless and untrue. In the Enquiry Report dated 18.01.2019 it was found that the petitioner had sought relevant approval of the Board before placing the procurement order. Hence, the petitioner was exonerated of all the allegations pertaining to irregularities in the procurement.
19. The specific case of the petitioner is that the entire proceedings under Section 87 initiated by the fourth respondent, Deputy Registrar, was arbitrary. It is submitted that the fourth respondent Deputy Registrar ______________ https://www.mhc.tn.gov.in/judis Page No 7 of 26 W.P.No.12542 of 2020 was part of the Board which approved the purchase of RO Plants. It was further submitted that the Enquiry Officer was a subordinate officer who has given a biased finding holding the petitioner guilty.
20. It is further submitted that the Board which approved the purchase consist of 23 members and thereafter, the Chairman of the Board also accorded his approval. It is submitted that it is only thereafter, 40 different purchasing orders were placed for procurement of 40 RO Plants. Thus, there is no scope for inferring any loss to the fifth respondent Union.
21. The learned counsel for the petitioner submits that the other eight persons of the Purchasing Committee who gave their approval for the procurement orders were examined by the Enquiry Officer behind his back and thus the enquiry conducted was in violation of principles of natural justice.
22. On merits it is submitted that the procurements were in consonance with the provisions of the Tamil Nadu Transparency in ______________ https://www.mhc.tn.gov.in/judis Page No 8 of 26 W.P.No.12542 of 2020 Tenders Act, 1998 as each units were considered as independent units when the purchase order was issued with the approval of the Board.
23. The procurements were considered as low procurement orders when compared with the prices of RO Plants purchased in three other districts namely Erode, Sivagangai, and Dindigul.
24. It is further submitted that the purchase of 40 RO Plants was also enquired by the Vigilance Wing of TCMPF Ltd. which ultimately exonerated the petitioner of any irregularities in the procurement. A reference was made to the detailed Enquiry Report dated 18.01.2019 wherein it has been categorically stated that there has been no irregularity in the purchase of 40 RO Plants.
25. It further submitted that no case was made out for receipt of any illegal gratification/bribe. It is submitted that there are about ten allegations which were threadbare examined by the Deputy Superintendent of Police / AGM (Vigilance). ______________ https://www.mhc.tn.gov.in/judis Page No 9 of 26 W.P.No.12542 of 2020
26. In respect of all ten allegations, a report was filed by Deputy Superintendent of Police / AGM (Vigilance) where in both the petitioner, who was then the General Manager of the fifth respondent and the said K.S.Murali Prasad, the then Assistant General Manager were exonerated.
27. It is further submitted that the eight persons who were exonerated by the fourth respondent gave false statements stating that the petitioner and the said K.S.Murali Prasad exercised threat on them and placed the purchase orders for purchase of 40 ROs.
28. That apart, the impugned proceedings has concluded that the petitioner and the said K.S.Murali Prasad have caused loss to the tune of Rs.17,17,820/- by comparing the prices quoted during the previous procurements during 2017 from Biotech Engineering & Technologies Associates, Chennai – 600 107.
29. The learned counsel for the petitioner submits that the difference in the price of procurement of RO Plants between the previous ______________ https://www.mhc.tn.gov.in/judis Page No 10 of 26 W.P.No.12542 of 2020 purchase orders and the present purchase orders was on account of 18% GST.
30. It is submitted that when previous procurement orders were placed, "Value Added Tax (VAT) at 5%" was added on the base price. It is submitted that the alleged loss on account of 18% cannot be countenanced.
31. It is submitted that there was no irregularity or submission of inflated bills in the purchase made and the difference in price purely arises on account of GST at 18% with effect from 01.07.2017.
32. It is further submitted that the procurements by the petitioner and the other nine members of the purchase committee were approved by three committees, i.e. Justification Committee, Technical Committee and the Quotation Committee. Therefore, the proceeding and the punishment imposed under Section 87 was unwarranted.
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33. It is the specific case of the petitioner that the difference in the price for procurement of 500 LPH RO Plants on the previous occasion from Biotech Engineering & Technologies Associates has been compared with the price for procurement of 4000 LPH RO Plants (4 x 1000) and therefore, the impugned order is unsustainable.
34. Finally, the learned counsel for the petitioner submitted that the petitioner has not been issued with the enquiry report dated 08.08.2019 under Section 81 of the Act and therefore, there is a manifest violation of the principles of natural justice.
35. That apart, though 10 persons were charged, the fourth respondent has wrongly concluded that only the petitioner and the said K.S.Murali Prasad alone were responsible for the alleged loss vide order dated 21.11.2019 and directed them to pay the same together with 18% interest and therefore, on this count also, the impugned order is liable to be quashed.
______________ https://www.mhc.tn.gov.in/judis Page No 12 of 26 W.P.No.12542 of 2020
36. Opposing the prayer, the learned Additional Government Pleader for the first to fourth respondents submits that there are no irregularities committed by the fourth respondent while passing the impugned order dated 21.11.2019.
37. That apart, it is submitted by the learned Additional Government Pleader that the procurements are contrary to the Tamil Nadu Transparency in Tenders Act, 1998 and the Rules made thereunder and therefore the conduct of the petitioner and nine other was enquired which culminated in surcharge proceedings under the provisions of Section 87 of the Tamil Nadu Cooperative Societies Act, 1983.
38. It is further submitted that manner in which surcharge proceeding are to proceed are entirely different and distinct from the Tamil Nadu Civil Service (Discipline and Appeal) Rules. Therefore, the petitioner is not entitled to rely on Tamil Nadu Civil Service (Discipline and Appeal) Rules.
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39. A further reference was made to the decision of this Court in M.Perumal Vs. The Deputy Registrar of Co-op. Societies, Dharmapuri, in W.P.No.3402 of 2017 dated 13.08.2018, wherein, it has been held that alternate remedy of appeal before the Co-operative Tribunal has to be exhausted before a writ petition can be entertained. The relevant portion reads as under:-
6. This being the legal provisions contemplated under the Cooperative Societies Act, the present writ petition which has been filed challenging Section 81 cannot be considered at all. This is an inquiry stage, wherein the Deputy Registrar of Cooperative Society had ordered for an inquiry to find out the irregularities or illegalities, if any occurred in the Cooperative Society. Even otherwise also if any surcharge proceedings are initiated, the person against whom such notice was issued has to submit his explanation / objection in respect of the same and participate in the Inquiry to be conducted by the competent authority.
7. After passing of the final orders under Section 87 the Act, the person aggrieved has to approach the designated Cooperative Tribunal constituted under Section 152 of the Tamil Nadu Cooperative Societies Act. This being the legal principles to be followed, the present writ petition is not only premature and cannot be entertained, on the simple ground that mere ordering of an Inquiry will not constitute any cause of action for the purpose of moving the present writ petition. If at all any ______________ https://www.mhc.tn.gov.in/judis Page No 14 of 26 W.P.No.12542 of 2020 ground exist for the writ petitioner, the same has to be raised, if any action initiated based on the Enquiry report submitted by the Enquiry Officer under Section 81 the Act and therefore, the writ petition is devoid of merits and the same stands dismissed with the above observation. No costs.
Consequently connected miscellaneous petitions are closed.
40. In reply to the contention that the petitioner was not issued with Show Cause Notice, the learned Additional Government Pleader submits that a Show Cause Notice bearing reference Na.Ka.No.2054/2018/E dated 22.08.2019 was indeed issued to the petitioner and other nine persons to show cause as to why surcharge orders should not be passed against them and that the petitioner has also replied to the Show Cause Notice.
41. In this connection, a reference was made to the impugned order dated 21.11.2019, wherein, a reference was made regarding the issuance of show cause notice.
42. The learned Additional Government Pleader further submitted that after considering the depositions of all the ten persons including the ______________ https://www.mhc.tn.gov.in/judis Page No 15 of 26 W.P.No.12542 of 2020 petitioner, the persons other than the petitioner and the said K.S.Murali Prasad were exonerated from the charges as it has been proved that there were no irregularities committed by those eight persons. It is thereafter the final award dated 21.11.2019 was passed on merits.
43. The learned Additional Government Pleader also submits that the petitioner as the General Manager of the Union has violated the law by not purchasing from government approved firms or co-operative societies and instead, purchased from assembler firms.
44. The learned counsel for the respondents submits that the other co-delinquent viz., K.S.Murali Prasad had also challenged the impugned surcharge proceedings before this Court in W.P.No.12900 of 2020.
45. After considering the arguments advanced therein, this Court was pleased to dismiss the writ petition vide an order dated 24.09.2020 by directing K.S.Murali Prasad to file a statutory appeal under Section 152(2) of the Tamil Nadu Co-operative Societies Act, 1983. ______________ https://www.mhc.tn.gov.in/judis Page No 16 of 26 W.P.No.12542 of 2020
46. Learned counsel for the respondents further submits that the appeal in W.A.No.458 of 2021 against the order passed in W.P.No.12900 of 2020 was also dismissed by the Hon'ble Division Bench vide order dated 29.09.2021, pursuant to which, the said K.S.Murali Prasad has filed a statutory appeal under Section 152 of the Tamil Nadu Co-operative Societies Act, 1983, before the Principal District Judge at Vellore, Vellore District vide C.T.A.No.15 of 2021.
47. It is submitted that there are several disputed questions of fact and it is better if the issue is left open to be decided by the Tribunal in an appropriate appeal to be filed by the petitioner like the co-delinquent K.S.Murali Prasad.
48. That apart, it is submitted that since the matter is pending in the case of K.S.Murali Prasad before the Tribunal, any observation in this order on merits of this case would have a bearing on the said proceeding.
49.Furthermore, as the records are all before the Tribunal, the propriety of the petitioner in placing the order for the RO Plants for different units can be decided by the Tribunal.
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50. Hence, he prays that the writ petition be dismissed with liberty to the petitioner to work out an alternate remedy by condoning the delay as done in the case of K.S.Murali Prasad.
51. By way of rejoinder, learned counsel for the petitioner submits that the petitioner is on the verge of retirement and therefore facing ignominy for no fault of his. Hence, he prays for allowing the writ petition.
52. Learned counsel would submit that the petitioner's case is different from the manner in which it was projected by the said K.S.Murali Prasad and therefore the aforementioned order directing K.S.Murali Prasad to approach the Tribunal should not be applied to the case of the petitioner.
53. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Special Government Pleader for the respondents.
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54. I have also perused the affidavit filed in support of the present writ petition and the counter filed by the fourth respondent.
55. The admitted facts of case is that surcharge proceedings has been initiated against the petitioner and nine others which culminated in the impugned order dated 21.11.2019 bearing Reference j/jP/vz;/07/2019- 2020/c of the fourth respondent, Deputy Registrar of Co-operative Society (Dairy) whereby the petitioner and one K.S. Murali Prasad have been found guilty.
56. The impugned order of the first respondent dated 06.07.2020 has directed the third respondent to recover the surcharge amount from the petitioner K.S. Murali Prasad who was the General Manager and the Assistant General Manager for allegedly causing loss to the tune of Rs.17,17,820/- of the fifth respondent Union.
57. The impugned order of the first respondent dated 06.07.2020 is based on the above decision of the fourth respondent passed vide order dated 21.11.2019 in his proceeding bearing e/f/vz;/56695/2019/ogprp/1/1 and ______________ https://www.mhc.tn.gov.in/judis Page No 19 of 26 W.P.No.12542 of 2020 merely directs the third respondent to recover the amount from the petitioner.
58. Ordinarily this writ petition should have been dismissed at the time of admission by asking the petitioner to work out his remedy before the Appellate Authority in terms of the decision of the Full Bench of this Court in K.Marappan vs. The Deputy Registrar of Co-operative Societies, Namakkal Circle, Namakkal - 636 001 and another, 2006 (4) CTC 689 .
59. In fact, co-noticee K.S.Murali Prasad had filed W.P.No.12900 of 2020. The said Writ Petition was also dismissed by this Court on 24.09.2020. The said decision was affirmed by the Hon’ble Division Bench of this Court vide its order dated 29.09.2021.
60. Thereafter, K.S. Murali Prasad has filed C.T.A.No.15 of 2021 before the Principal District Judge, Vellore which is said to be pending on the date when this case was heard and reserved for passing orders. ______________ https://www.mhc.tn.gov.in/judis Page No 20 of 26 W.P.No.12542 of 2020
61. Therefore, the decision in this case will have both direct and indirect bearing on the pending appeal in C.T.A.No. 15 of 2021 filed by the said K.S. Murali Prasad. Either way, this order will have an impact on the said proceeding.
62. The impugned order dated 21.11.2019, passed by the fourth respondent, prima face, smacks of bias and is arbitrary as the fourth respondent, the Deputy Registrar of Co-Operative Society was a member of the 23 Member Board which took a decision to procure the RO Plants for 36 Bulk Milk Coolers (BMC) and 4 Chilling Centres within the jurisdiction of fifth respondent Vellore-Tiruvannamalai DCMPU.
63. That apart, the Enquiry Officer appointed examined the witnesses without the presence of the petitioner. Copy of the Enquiry Report dated 08.08.2019 was also not furnished to the petitioner. Thus, it is clear that there was a clear violation of principles of natural justice. ______________ https://www.mhc.tn.gov.in/judis Page No 21 of 26 W.P.No.12542 of 2020
64. A comparison of purchases made during previous years, prima facie, also shows that the conclusion arrived in the impugned surcharge order dated 21.11.2019 was arbitrary.
65. Price difference, prima facie, was on account of the tax component. During the previous procurements, VAT component under the TNVAT Act, 2006 was on the basic price at 5%. When the procurement of 40 RO Plants were made Central GST and State GST was paid on the basic price at 18% as in force with effect from 01.04.2017.
66. That apart, prima facie, it appears the purchase was also approved by three other committees namely Justification Committee, Technical Committee and Quotation Committee.
67. It is thus clear that prima facie there has been an arbitrary exercise of power in the initiation of the surcharge proceeding by the fourth respondent on the instruction of the second respondent. Therefore, the impugned order deserves to be quashed with consequential relief to the petitioner.
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68. Though the conclusion arrived herein may have a bearing on the pending proceedings in C.T.A.No.15 of 2021 before the Principal District Judge under Section 152 of the Tamil Nadu Cooperative Societies Act, 1983 at the instance of the said K.S. Murali Prasad, it cannot be helped.
69. Therefore, the impugned order dated 21.11.2019 bearing reference j/jP/vz;/07/2019-2020/c passed by the fourth respondent under Section 87 of the Tamil Nadu Co-operative Societies Act, 1983 is quashed and the case is remitted back to re-examine the issue afresh after furnishing the petitioner a copy of the Enquiry Report dated 08.08.2019 to the petitioner. Liberty is given to the petitioner to raise all defences that are available in law.
70. The second respondent is directed to nominate a person of equal or senior rank of the fourth respondent who was not part of the purchase committee which approved the purchase of 40 RO Plants which were purchased by the Purchase Committee of which the petitioner and nine other persons were members. If it is concluded that the enquiry ______________ https://www.mhc.tn.gov.in/judis Page No 23 of 26 W.P.No.12542 of 2020 report was itself vitiated, it is open for such officer to order a fresh enquiry subject to law as justice should not only be done but also be seen to be done to eliminate bias and arbitrariness.
71. This exercise shall be completed by the officer to be nominated in place of the fourth respondent to examine the case afresh, preferably, within a period of four months from the date of receipt of a copy of this order.
72. The Officer nominated to conduct the de novo proceedings shall conduct the proceedings without getting influenced by any of the observation on the merits contained herein as if it were a fresh proceedings before him. The proceedings shall be in compliance with Principles of Natural Justice and after a copy of the Enquiry Report generated under Section 81 of the Tamil Nadu Co-operative Societies Act, 1983 is given to the petitioner.
73. All recovery proceedings pursuant to the order dated 06.07.2020 of the first respondent directing the third respondent to ______________ https://www.mhc.tn.gov.in/judis Page No 24 of 26 W.P.No.12542 of 2020 recover the amounts from the petitioner shall be kept in abeyance. Recovery proceedings shall be subject to order in the de-novo proceedings.
74. In the light of the above discussion, this writ petition is disposed. No costs. Consequently, connected miscellaneous petitions are closed.
19.10.2022
Index : Yes/No
Internet : Yes/No
Speaking : Non Speaking Order
kkd
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https://www.mhc.tn.gov.in/judis
Page No 25 of 26
W.P.No.12542 of 2020
C.SARAVANAN,J.
kkd
To
1. The Director of Rural Development and
Panchayat Raj Department,
Panagal Building,
Saidapet, Chennai 15.
2.The Director of Mil and Dairy Development, 3A, Pasumpon Muthuramalinganar Salai, Nandanam, Chennai 600 035.
3.The Project Director, Madurai District Mahalir Thittam Office, Madurai.
4.The Deputy Registrar of Co-operative Society(Dairy) (Full Additional Charge), Vellore.
5. The General Manager, Vellore-Tiruvannamalai District Co-operative Milk Producers Union, Sathuvachari, Vellore 632 009 Pre-delivery Order in W.P.No.12542 of 2020 19.10.2022 ______________ https://www.mhc.tn.gov.in/judis Page No 26 of 26