IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.03.2010 CORAM: THE HONOURABLE Mr. JUSTICE K. CHANDRU W.P.Nos.16247 to 16254 of 2008 and M.P.Nos.1 to 1 of 2008 The Special Officer S-495, Krishnagiri Taluk Agricultural Producers Co-operative Marketing Society Ltd., Krishnagiri. .. Petitioner in all the Writ Petitions Versus 1.The Presiding Officer District Co-operative Tribunal (Principal District Judge) Krishnagiri. 2.The Deputy Registrar of Co-operative Societies Krishnagiri. .. Respondents 1 and 2 Respondents in all the writ Petitions S.Nagaiyan V.Kirubakaran Durai Munisami S.Palanisamy .. Respondents 3 to 6 in W.P. 16247/08 Durai Munisami P.Mani T.C.Manickam V.Kirubakaran .. Respondents 3 to 6 in WP Nos.16248/08, 16250/08, 16251/08, 16252/08, 16253/08, 16254/08 Durai Munisami T.C.Manickam https://hcservices.ecourts.gov.in/hcservices/ V.Kirubakaran C.Loganathan .. Respondents 3 to 6 in WP 16249/08 S.Palanisamy ..Respondent 7 in WP 16248/08 S.P.Arumugam .. Respondent 7 in WP 16250/08, wp 16253/08 J.Mohan .. Respondent 7 in WP 16251/08, WP 16254/08 C.Loganathan .. Respondent 7 in WP 16252/08 and Respondent 6 in WP 16249/08 PRAYER: Writ petition filed under Article 226 of the Constitution of India, praying for the issuance of Writ of Certiorari, calling for the records in pursuance of the judgment and decree passed in C.M.A. (CS) Nos.39 of 2005 and 43 of 2005, 44 of 2005 and 11 of 2007, 45 of 2005 and 6 of 2007, 46 of 2005 and 12 of 2007, 47 of 2005 and 8 of 2007, 48 of 2005 and 10 of 2007, 49 of 2005 and 7 of 2007, CMA (CS) NOs.50 of 2005 and 9 of 2007, dated 30.11.2007 on the file of the 1st respondent and quash the same. For Petitioner (in all WPs') : Mr.M.S.Palaniswamy For Respondent - 2 (in all WPs') : Mr.P.Subramaniam Additional Government Pleader For Respondent - 5 in W.P.No.16247/2008 For Respondent - 3 in W.P.Nos.16248 to 16254/2008 : Mr.S.M.Subramaniam For Respondents - 3&4 in W.P.No.16247/2008 For Respondents - 5&6 in W.P.Nos.16248, 16250 to 16254/2008 For Respondents - 4&5 in W.P.No.16249/2008 : Mr.S.Doraiswamy https://hcservices.ecourts.gov.in/hcservices/ For Respondent - 6 in W.P.No.16249/2008 For Respondent - 7 in W.P.No.16252/2008 : Mr.T.Murugamanikam For Respondent - 7 in W.P.No.16248/2008 : Mr.S.Umapathy and Mr.V.Rajesh COMMON ORDER Heard both sides. 2.The Special Officer is the petitioner in all these writ petitions. These writ petitions are challenging the order dated 30.11.2007 passed by the first respondent-Cooperative Tribunal in C.M.A.(CS) Nos.39/2005 and 43/2005. 3.Surcharge proceedings were initiated against the respondents 3 to 7, who were employed in the petitioner-Society. Some of them are employees and some of them are Members of the Board. The allegations made against them by the Surcharge Officer was that one Sellamuthu, Director of Selvanayaki Jinning Press at Tharapuram and his son Natarajan, purchased cotton on credit basis which are agricultural produce produced by the members of the petitioner- Society. Since the due amount was not settled, arbitration proceedings were initiated against those persons. The Arbitral Authority, under Section 90 of the Tamil Nadu Co-operative Societies Act, decreed the proceedings claiming to a sum of Rs.75,78,831/-. Thereafter, in execution of the decree passed against M/s.Selvanayaki Jinning Press, Tharapuram, an Execution Petition in E.P.No.10/2000 was also filed. On coming to know that the properties were attached by the petitioner-Society, those persons created equitable mortgage of their properties with State Bank of India, Tharapuram and the Bank also filed a claim against the debtors in O.A.No.771/1997 before the Debts Recovery Tribunal, Chennai. The said Original Application was transferred to Debts Recovery Tribunal, Coimbatore and the properties have been sold and the net proceeds were taken away by the State Bank of India, Tharapuram. 4.In any event, in the surcharge proceedings, it was stated that the Surcharge Officer, namely, the second respondent, found that the contesting respondents were wilfully negligent in allowing such huge amount to be taken away by the debtors Sellamuthu and Natarajan and therefore, they are liable to make good the loss sustained by the Society. https://hcservices.ecourts.gov.in/hcservices/ 5.Aggrieved by the said surcharge proceedings, the contesting respondents filed appeals under Section 152 before the first respondent-Cooperative Tribunal and also obtained interim stay. The appeals were numbered as C.M.A.(CS) Nos.38/2001 and 41/2001. The appeals were allowed and the award was set aside and the matter was remanded to the Deputy Registrar of Co-operative Societies for conducting fresh enquiry. Once again, the Deputy Registrar of Co- operative Societies, passed a fresh award on 20.07.2004 . It is as against the said award, the contesting respondents preferred C.M.A. (CS) Nos.39/2005 and 43/2005 before the first respondent-Cooperative Tribunal. The first respondent-Cooperative Tribunal allowed the appeals by its final order dated 30.11.2007. 6.Aggrieved by the order dated 30.11.2007 passed by the first respondent-Cooperative Tribunal, the petitioner-Society has come forward to challenge the same by filing these writ petitions. 7.The writ petitions were admitted on 09.07.2008 and this Court granted interim stay. It is seen from the impugned order passed by the first respondent-Cooperative Tribunal that the Tribunal was persuaded to allow the appeals on two grounds which are found in para Nos.14 and 15 and the same read as follows: "14.As per the proviso to section 87 of Tamil Nadu Co-operative Societies Act 1983 the proceedings ought to have been completed within the stipulated period of six months. But it is manifest that the Deputy Registrar / Arbitrator of Co-operative Societies, Krishnagiri has not complied with section 87 of Tamil Nadu Co-operative Societies Act. 15.Further it is obvious to note here that already there is an award passed against the same claim against the debtor Natrajan and in pursuant to the above said award dated 30.11.1998 in Claim No.11/98-99 an Execution Proceedings in E.P.No.10/2000 has been initiated and it is pending. When such being the case the present award dated 20.07.2004 and made in Surcharge Proceedings No.3/2000 Sa.Pa.1 for the same relief is not maintainable." 8.However, Mr.M.S.Palaniswamy, learned counsel appearing for the petitioners submitted that so far as the first ground is concerned, the same is not sustainable because the limitation prescribed therein is not mandatory but only directory and in this regard, a reference was made to the judgment of this Court in https://hcservices.ecourts.gov.in/hcservices/ G.PANNERSELVAM AND OTHERS VS. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES, DHARMAPURI AND OTHERS reported in 2009 (2) MLJ 901. In that case, this Court has held that if there is substantial compliance with regard to Section 87(1) of the Tamil Nadu Co- operative Societies Act, then that can be attacked as barred by limitation. Such judgment was also subsequently confirmed by the Division Bench of this Court in A.BALARAMAN AND OTHERS VS. THE DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES, TIRUVANNAMALAI DISTRICT AND OTHERS reported in 2009 (3) MLJ 1032. 9.However, in S.V.K.SAHASRAMAM VS. DEPUTY REGISTRAR OF CO- OPERATIVE SOCIETIES, TIRUVANNAMALAI CIRCLE, TIRUVANNAMALAI AND OTHERS reported in 2008 (8) MLJ 231, the Division Bench of this Court presided by A.K.Ganguly (as he then was) in para Nos.11 to 13, held as follows: "11.We are constrained to hold that even though no appeal has been taken to us from the said judgments, yet having regard to the well settled legal position which has been referred to herein above, the finding of the learned Judges in these two judgments that the period of six months in the second proviso to Section 87 of the said Act is mandatory is not a correct finding in law. We find that even though before the learned Judge of the writ Court those two judgments of the learned single Bench were cited, the learned Judge of the writ Court was not swayed by those two decisions and came to a correct finding, relying upon the well settled proposition laid down by the Supreme Court as pointed above hereinabove. 12.We, therefore, affirm the order of the learned single Judge in this case. We are of the view that in a case where there are allegations of embezzlement and misappropriation of public funds, the members of general public who have been cheated have no control over those who hold the enquiry in respect of the time limit. To hold that such an enquiry which has been continued beyond the time limit is bad would cause great injustice. 13.Therefore, if such enquiry is continued beyond the time limit mentioned in the relevant statute, the said time cannot be held to be mandatory in view of the principles laid down in Montreal Street Railway Company v. Normandi (supra), which has been affirmed by the Supreme Court." https://hcservices.ecourts.gov.in/hcservices/ Therefore, the findings of the Tribunal in respect of the surcharge proceedings being barred by limitation as found in para 14 of the impugned order cannot be sustained. 10.The second contention, as found in para 15 of the impugned order that already an award has been passed against the debtor Natarajan and in pursuance of the said award dated 30.11.1998 in Claim No.11/98-99, an Execution Petition has also been filed in E.P.No.10/2000 and therefore, no further relief can be claimed against the contesting respondents, also cannot be accepted. The proceedings against the two individuals viz., Sellamuthu and Natarajan are entirely different from the proceedings initiated against the contesting respondents, who are either Board of Directors or employees of the Society. 11.A claim under Section 87 of the Tamil Nadu Co-operative Societies Act is maintainable if ingredients under Section 87 are satisfied namely, wilful negligence in not following the procedure prescribed for running the Society. It is more of a recovery of the loss sustained due to the negligence of the officials or the Members of the Society. The claim against Natarajan was recovery of a loan amount advanced to him in carrying on business. It cannot be held that one proceeding will cancel the other proceedings. It is nobody's case that the claim petition filed by the Society and the Original Application filed by the Bank before the Debts Recovery Tribunal arise out of same issue. The Bank was able to substantiate its case before the Debts Recovery Tribunal and was successful in getting the properties attached; selling them and recovering the amount. On the other hand, the Society, though ordered an order in their favour and invited Execution Petition was not able to receive objection of executing the decree. The observation of the Tribunal that it was a claim on similar relief and therefore the surcharge proceedings are not maintainable is not only contrary to the provisions of the Co-operative Societies Act, but also contrary to the Contract laws. 12.Since the first respondent-Cooperative Tribunal did not go into the other issues raised namely, whether the surcharge proceedings have been passed in accordance with law and whether the contesting respondentswere responsible in causing loss and since there is no discussion with regard to these vital aspects, the writ petitions are allowed. No costs. Consequently, connected miscellaneous petitions are closed. 13.The impugned order dated 30.11.2007 in C.M.A.(CS) Nos.39 of 2005 and 43 of 2005 stands set aside. The matter is remanded to the first respondent-Cooperative Tribunal for fresh disposal in https://hcservices.ecourts.gov.in/hcservices/ accordance with law and in the light of the observation made in the present writ petitions. Since the matter is already five years old, the first respondent shall give preference to hearing of these appeals and in any event, shall dispose of the same within six months from the date of receipt of a copy of this order, after due notice to the parties. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. TK To 1. The Presiding Officer District Co-operative Tribunal (Principal District Judge) Krishnagiri. 2. The Deputy Registrar of Co-operative Societies Krishnagiri. + 1 cc to Mr.S.Doraisamy Advocate Sr 16479 + 1 cc to Mr.S.M.Subramanian, Advocate Sr 16364 + 1 cc to Govt., Pleader, Sr 16911 + 1 cc to Mr.T.Murugamanikkam, Advocate Sr 16930 + 1 cc to Mr.M.S.Palanisamy Advocate Sr 17253 + 1 cc to Mr.S.Umapathy Advocate Sr 16563 W.P.NOS.16247 TO 16254 OF 2008 TM 9CO) RH (1.4.10) https://hcservices.ecourts.gov.in/hcservices/