IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 20.1.2011 CORAM: THE HONOURABLE MR.JUSTICE P.JYOTHIMANI W.P.No.19890 of 2004 C.Logeswaran .. Petitioner Vs. The Special Officer C1317, Arakkonam Cooperative Primary Agricultural and Rural Development Bank Ltd. Arakkonam, Vellore District. .. Respondent PRAYER: Petition under Article 226 of the Constitution of India for issue of a writ of Certiorarified Mandamus to call for the records relating to the charge memo dated 25.6.2004 of the respondent, quash the same since the respondent has no power to continue the disciplinary proceedings having relieved the petitioner from service with effect from 30.6.2004 on attaining the age of superannuation and to consequently direct the respondent to release the terminal benefits with penal interest. For Petitioner : Mr.S.Venkataraman For Respondent : Mr.G.Jermiah ORDER The writ petition is directed against the charge memo of the respondent dated 25.6.2004, on the basis that the respondent has no power to continue the disciplinary proceedings since the petitioner was relieved from service with effect from 30.6.2004 on attainment of the age of superannuation. 2.1. The petitioner was employed as a Secretary of the respondent/ Society, which is a co-operative society, and he was to retire from service on attainment of the age of superannuation on 30.6.2004. It was five days before the date of superannuation the impugned charge memo came to be issued on 25.6.2004, on the basis that he was involved in the issuance of loans in an improper manner to power loom weavers and failed to recover the loans. It was also charged that the petitioner has failed to shift the society to the new building, for which sanction was given in the year 2001. https://hcservices.ecourts.gov.in/hcservices/ 2.2. It is the case of the petitioner that the charge memo is motivated and according to him, on 30.6.2004, the petitioner was relieved from service on attaining the age of superannuation without prejudice to the disciplinary proceedings pending against him. The terminal benefits of the petitioner have been withheld by invoking the power under Rule 149(3) of the Tamil Nadu Co-operative Societies Rules, 1988 (for brevity, "the Rules"). It is the case of the petitioner that neither the bye-laws of the society nor the Rules confer power on the respondent to continue the disciplinary proceedings after relieving him from service on attainment of age of superannuation and therefore, the respondent has no power to proceed with the charge memo. 2.3. The impugned charge memo is challenged on various grounds, including that as per the bye-laws governing the respondent/society, there is no provision to continue the disciplinary proceedings even after the employee is relieved from service on attainment of age of superannuation; that Rule 149(3) of the Rules has no application, since it cannot be deemed to be an enabling provision enabling the respondent/society to proceed with the disciplinary proceedings; and that even if the rules applicable to the government servants are applicable, unless as per Rule 56(1)(c) of the Fundamental Rules an order is passed retaining the delinquent in service and not allowing him to retire, there is no power to proceed with the disciplinary proceedings. 3.1. It is the case of the respondent, as it is stated in the counter affidavit, that the respondent is a co-operative society and as per the decision of the Larger Bench of this Court K.Marappan v. The Deputy Registrar of Co-operative Societies, Namakkal, 2006 (4) CTC 689, the writ petition under Article 226 of the Constitution of India is not maintainable. It is stated that the service conditions of the petitioner are governed by the bye-laws framed by the respondent/society. 3.2. It is also stated that the charges against the petitioner are grave in nature and huge amounts are due to the respondent/society due to the negligent act of the respondent. The petitioner was employed as a Secretary of the respondent/society and it was his duty to attend to the day to day administration of the respondent/society and the failure on his part has resulted in huge financial loss and that resulted in issuance of the charge memo. It is stated that the petitioner was due to retire on 30.6.2004 and he was allowed to retire on the said date without prejudice to the charges pending against him. 3.3. It is stated that Rule 149(3) of the Rules makes it clear that the rules governing the government servants are applicable and therefore, there is no impediment for relieving the petitioner and https://hcservices.ecourts.gov.in/hcservices/ continuing the disciplinary proceedings against him. The charge memo was issued prior to his retirement and relieving of the petitioner is without prejudice to the rights of the respondent/society in proceeding with the enquiry and it is always open to the petitioner to file his objections and due to the negligence of the petitioner, the respondent/society has incurred a loss to the tune of ` 35 Lakhs and no prejudice would be caused by the continuation of the proceedings against the petitioner. 4.1. It is the contention of Mr.S.Venkataraman, learned counsel for the petitioner that the judgment of the Larger Bench of this Court in K.Marappan v. The Deputy Registrar of Co-operative Societies, Namakkal, 2006 (4) CTC 689 is not applicable. It is his submission that there is a statutory violation, since Rule 149(3) of the Rules does not empower the respondent/society to continue the disciplinary proceedings even after relieving. 4.2. It is his submission that under the Employees' Provident Fund and Miscellaneous Provisions Act, the employer's share has been withheld and as per the Employees Provident Fund Scheme, the withholding of such provident fund is again a statutory violation and it would amount to attachment and that is prohibited under Section 10 of the Employees' Provident Fund and Miscellaneous Provisions Act. It is also submitted that as per the Payment of Gratuity Act, the withholding of the gratuity is a statutory violation and therefore, according to him, even as per the Larger Bench judgment in K.Marappan case, supra, by virtue of the statutory violation, the jurisdiction of this Court under Article 226 of the Constitution of India cannot be stated to be ousted. 4.3. On merits, it is his submission that there is no enquiry conducted under Section 81 of the Tamil Nadu Co-operative Societies Act; there was no proceeding initiated under Section 87 of the Act; the charges themselves are vague and there are no particulars given; and therefore, there was no opportunity for the petitioner to given proper explanation at all and in this regard, he would rely upon the judgment in Jaswant Singh Gill v. Bharat Coking Coal Limited and others, [2007] 1 SCC (L&S) 584. 5. On the other hand, it is the contention of Mr.G.Jermiah, learned counsel for the respondent that the writ petition is not maintainable inasmuch as the service conditions of the petitioner are governed by the bye-laws and even if the petitioner has got any remedy, the same is not by way of a writ petition under Article 226 of the Constitution of India. 6. The fact that the petitioner was to attain the age of superannuation on 30.6.2004 is not denied and the further fact that the petitioner was allowed to retire on the said date was also not denied. However, the relieving was without prejudice to the https://hcservices.ecourts.gov.in/hcservices/ continuation of the disciplinary proceedings. The impugned charge memo was issued against the petitioner five days before his retirement, namely on 25.6.2004. Admittedly, the petitioner was an employee of the respondent, which is a co-operative society governed by the Tamil Nadu Co-operative Societies Act, 1983 (for brevity, "the Act"). It is also not in dispute that the service conditions of the petitioner are governed by the bye-laws framed under the said Act. 7. In K.Marappan v. The Deputy Registrar of Co-operative Societies, Namakkal, 2006 (4) CTC 689, a Larger Bench of this Court, while deciding about the maintainability of a writ petition against co-operative society, has laid down the following proposition: "21. From the above discussion, the following propositions emerge: (i) If a particular co-operative society can be characterised as a 'State' within the meaning of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be 'an authority' within the meaning and for the purpose of Article 226 of the Constitution. In such a situation, an order passed by a society in violation of the bye-laws can be corrected by way of writ petition; (ii) Applying the tests in Ajay Hasia v. Khalid Mujib Sehravardi, [1981] 1 SCC 722 it is held that a co- operative society carrying on banking business cannot be termed as an instrumentality of the State within the meaning of Article 12 of the Constitution; (iii) Even if a society cannot be characterised as a 'State' within the meaning of Article 12 of the Constitution, a writ would lie against it to enforce a statutory public duty cast upon the society. In such a case, it is unnecessary to go into the question whether the society is being treated as a 'person' or 'an authority' within the meaning of Article 226 of the Constitution and what is material is the nature of the statutory duty placed upon it and the Court will enforce such statutory public duty. Although it is not easy to define what a public function or public duty is, it can reasonably said that such functions are similar to or closely related to those performable by the State in its sovereign capacity; (iv) A society, which is not a 'State' would not normally be amenable to the writ jurisdiction under Article 226 of the Constitution, but in certain circumstances, a writ may issue to such private bodies or persons as there may be statutory provisions which need to be complied with by all concerned including https://hcservices.ecourts.gov.in/hcservices/ societies. If they violate such statutory provisions a writ would be issued for compliance of those provisions; (v) Where a Special Officer is appointed in respect of a co-operative society which cannot be characterised as a 'State' a writ would lie when the case falls under Clauses (iii) and (iv) above; (vi) The bye-laws made by a co-operative society registered under the Tamil Nadu Co-operative Societies Act, 1983 do not have the force of law. Hence, where a society cannot be characterised as a 'State', the service conditions of its employees governed by its bye- laws cannot be enforced through a writ petition; (vii) In the absence of special circumstances, the Court will not ordinarily exercise power under Article 226 of the Constitution of India when the Act provides for an alternative remedy; and (viii) The decision in M. Thanikkachalam v. Madhuranthagam Agricultural Co-operative Society, 2004 (5) CTC 556 is no longer good law, in view of the decision of the seven-Judge Bench of the Supreme Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and Ors., [2002] 5 SCC 111 and the other decisions referred to here before." Therefore, as per the judgment of the Larger Bench, it is not that in all cases the writ petition against the co-operative society is to be dismissed, even though the society is not a "State". The material fact is the nature of statutory duty placed upon a co-operative society and if there is any public duty, the court will interfere. Hence, it is clear that unless there are special circumstances in existence on the facts of the present case, by applying the Larger Bench judgment, the writ petition has to be dismissed by driving the petitioner to a Civil Court or any other appropriate remedy available. 8. One must take into consideration on the factual matrix that this writ petition is of the year 2004 and the same has been kept pending in these years and in fact, the Larger Bench judgment, which predominantly declares that the writ petition is not maintainable in cases where the service conditions of the employee of a co-operative society are governed by the bye-laws of the society, itself came into existence only in the year 2006. Whereas, on the facts of the present case, the impugned charge memo was issued on 25.6.2004, much before the date of the judgment of the Larger Bench and the writ petition also came to be filed much before the date of the judgment of the Larger Bench. 9. It is no doubt true that in cases where by the conduct of an employee of the co-operative society monetary loss has been caused https://hcservices.ecourts.gov.in/hcservices/ enquiry can be conducted under Section 81 of the Act and surcharge proceedings can be initiated in respect of the loss that may be caused to the society by that employee and for recovery of such amount. The intervening superannuation or retirement of an employee of the co-operative society is certainly not an impediment for the co-operative society from making recovery of the said amount. In fact, it is law that in such cases even after the death of such employee of the co-operative society, the amount can be recovered from the legal heirs, if the legal heirs claim the property right. But the issue involved in this case is as to whether the petitioner, who has been allowed to retire on the attainment of the age of superannuation on 30.6.2004, can be proceeded with the disciplinary proceedings. 10. Admittedly, as it is seen in the counter affidavit, there is no bye-law of the respondent/society which specifically enables the respondent/ society to either continue the disciplinary proceedings after superannuation or allow the bank to superannuate its employee subject to the continuation of the disciplinary proceedings. The only power which is traced to the respondent/society is as per Rule 149(3) of the Rules, which is as follows: "Rule 149. Conditions of service of paid officers and servants of societies.- (1) and (2) ...... (3) In matters of reservation for appointments and age for appointment and retirement, the rule applicable to the Government servants shall be followed." If the said provision is to mean that the rule applicable to the government servants is to be followed, then Rule 56(1)(c) of the Fundamental Rules comes in, which is as follows: "Rule 56. (1) Retirement on Superannuation.— (a) and (b) ..... (c) Notwithstanding anything contained in clause (a), a Government servant who is under suspension, (i) on a charge of misconduct; or (ii) against whom an enquiry into grave charges of criminal misconduct or allegations of criminal misconduct, is pending; or (iii) against whom an enquiry into grave charges is contemplated or is pending; or (iv) against whom a complaint of criminal offence is under investigation or trial. shall not be permitted by the appointing authority to retire on his reaching the date of retirement, but shall be retained in service until the enquiry into the charge of misconduct or criminal misconduct or the enquiry into allegations of criminal misconduct or the enquiry into contemplated charges or disciplinary proceeding taken under rule 17(c) of the Tamil Nadu Civil Services (Discipline and Appeal) Rules or rule 3(c) of the Tamil https://hcservices.ecourts.gov.in/hcservices/ Nadu Police Sub-ordinate service (Discipline and Appeal) Rules, as the case may be, in respect of item (iv) above is concluded and a final order passed thereon by the competent authority or by any higher authority. Explanation.— For the purpose of this clause, the expression ‘criminal misconduct’ shall have the same meaning as in Section 13 of the Prevention of Corruption Act, 1988 (Central Act 49 of 1988). Instruction under Rule 56 (1) (c).—Whether a Government servant referred to in clause (c) is fully exonerated or not, he shall be considered to have been on extension of service for the period from the date of retirement to the date of termination of the proceedings. During such an extension of service, the service rights which have accrued to the Government servant shall freeze at the level reached on the date of retirement and the salary during that period shall not exceed the pension which has accrued to the Government servant on that date." By virtue of the said Rule, a person who has attained the age of superannuation shall not be allowed to be continued in service except on public grounds. Secondly, with regard to a person against whom disciplinary proceedings are initiated or pending on the date of attainment of superannuation, a positive order should be passed not allowing him to retire and retaining him in service for continuation of disciplinary proceedings. Therefore, even as per the terms of the Fundamental Rules, unless by invoking the powers under Rule 56(1)(c) of the Fundamental Rules the respondent/society passes an order retaining the petitioner in service for the purpose of continuation of disciplinary proceedings, the mere passing of an order relieving him without prejudice to the right of the respondent/society to continue the disciplinary proceedings has no legal meaning. When once an employee is allowed to retire, the relationship of employer and employee comes to an end and thereafter, there is no question of proceeding with the disciplinary proceedings. That has been the view even in respect of a person against whom disciplinary proceedings were pending, who subsequently retires. Even under the Tamil Nadu Pension Rules, unless an order akin to Rule 56(1)(c) of the Fundamental Rules is passed retaining the employee in service, even the recovery cannot be effected from pension. 11. As stated above, it is to be reiterated that if it is a case of surcharge proceedings, certainly it stands on a different footing and there is no impediment for surcharge proceedings to continue for the purpose of imposing the financial liability on the retired employee to make good the loss caused to the society. On the other hand, the present case is one of disciplinary proceedings as per the bye-laws. Therefore, in the absence of any bye-laws of the respondent/society allowing the petitioner to retire without https://hcservices.ecourts.gov.in/hcservices/ prejudice to the continuation of the disciplinary proceedings and in the absence of any specific order passed by the respondent/society retaining the petitioner in service for the purpose of continuing disciplinary proceedings, by following the hierarchy of judgments of the Supreme Court, including that of Bhagirathijena v. Board of Directors, O.S.F.C. & Others, 1999 I LLJ 1236 (SC) : AIR 1999 SC 1841, wherein the Supreme Court has held as follows: "7. In view of the absence of such provision in the abovesaid regulations, it must be held that the Corporation had no legal authority to make any reduction in the retiral benefits of the appellant. There is also no provision for conducting a disciplinary enquiry after retirement of the appellant and nor any provision stating that in case misconduct is established, a deduction could be made from retiral benefits. Once the appellant had retired from service on 30.6.95, there was no authority vested in the Corporation or continuing the departmental enquiry even for the purpose of imposing any reduction in the retiral benefits payable to the appellant. In the absence of such authority, it must be held that the enquiry had lapsed and the appellant was entitled to full retiral benefits on retirement.", the continuation of disciplinary proceedings against the petitioner is not valid in law. 12. That was also the view of the Division Bench of this Court in M.K.S.Balasubramanian v. The Kancheepuram Central Co-operative Bank Limited, 2010 (2) CTC 569. The Division Bench, by relying on a judgment reported in N.Kunnai Gowder v. The Coimbatore District Co- operative Milk Producers Union Limited, 2007 (5) CTC 49; an unreported judgment of a Division Bench made in W.A.No.4108 of 2003, dated 1.9.2006; and a judgment of the Supreme Court in U.P. State Sugar Co-operation Limited and others v. Kamal Swaroop Tondon, [2008] 2 SCC 41, wherein the Supreme Court has held that a retired employee could be proceeded to recover the loss caused by him from the retirement benefits, has ultimately set aside the continuation of disciplinary proceedings after retirement and granted liberty to the society to proceed under Section 87 of the Act, in the following operative portion: "14. In view of the above findings, the order of the learned single Judge is modified holding that the condition to continue the disciplinary proceedings after retirement against the appellant is set aside and the respondent is granted liberty to proceed with the surcharge proceedings to be initiated under Section 87 of the Tamil Nadu Cooperative Societies Act, 1983 for the alleged loss. The amount as ordered by the learned Single Judge is permitted to be withheld and the balance shall be paid to the appellant within four weeks from the date of receipt of this order." https://hcservices.ecourts.gov.in/hcservices/ 13. As far as the points raised regarding the non contribution of provident fund and payment of gratuity, there is no allegation of that sort which has been raised in the affidavit filed by the petitioner and consequently, there is no opportunity to the respondent to explain about the same. Therefore, it is not proper for this Court at this stage to refer to the said contention raised by the learned counsel for the petitioner. 14. On the factual matrix, I am, therefore, convinced that certainly a special circumstance is in existence. 15. By referring to the two charges, which are as follows: "Fw;wr;rhl;L vz;/ 1 t';fpapd; cWg;gpdh;fSf;F fld; tH';FtJ bjhlh;ghd tpjpKiwfisg; gpd;gw;whky; tpirj;jwp fld;fs; tH';fg;gl;L Fwpj;j jtiz fhyj;jpy; mf;fld;fis tR {ypf;fhky; mf;fld;fs; jtiz jtwp epYit epd;wjpd; K:yk; jpU.rp.nyhnf!;tud; t';fpf;F bgUj;j epjpapHg;g[ Vw;gLj;jpdhh;. Fw;wr;rhl;L vz;/ 2 jpU.rp.nyhnf!;tud; brayhsh; t';fpapd; g[jpa fl;olk; fl;o Kof;fg;gl;L t';fp mf;fl;olj;jpy; bray;gLtjw;F jf;f Kidg;ghd eltof;ifia nkw;bfhs;shky; jdJ flik kw;Wk; bghWg;g[fspypUe;J jtwpa[s;shh;/" certainly it can be said that they are vague and bereft of particulars. If really loss has been caused to the respondent/society by the conduct of the petitioner, the proper course for the respondent/society is to initiate surcharge proceedings. In the absence of such surcharge proceedings having been initiated, the disciplinary proceedings cannot be allowed to continue after the petitioner was allowed to retire from service. In such view of the matter, the writ petition stands allowed and the impugned charge memo is set aside, however with liberty to the respondent/society to proceed against the petitioner under Section 87 of the Act, if so advised. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar sasi https://hcservices.ecourts.gov.in/hcservices/ To The Special Officer C1317, Arakkonam Cooperative Primary Agricultural and Rural Development Bank Ltd. Arakkonam, Vellore District. 1 cc To Mr.S.Venkataraman, Advocate, SR.3934 W.P.No.19890 of 2004 TRM (CO) RH (4.2.11) https://hcservices.ecourts.gov.in/hcservices/