IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19.10.2011 CORAM: THE HON'BLE MR.JUSTICE T.RAJA W.P.Nos.29987 and 29807 of 2003 and W.P.M.P.No.2883 of 2004 W.P.No.29987 of 2003 T.V.Natanasabapathy ... Petitioner Vs. 1. Deputy Registrar of Co-operative Societies, Mayiladuthurai. ... 1st respondent 2. Co-operative Special Appellate Tribunal, (Principal District Judge) Nagapattinam. ... 2nd respondent 3. M.S.Anthony ... 3rd respondent W.P.No.29807 of 2003 M.S.Anthony ... Petitioner Vs. 1. Deputy Registrar of Co-operative Societies, Mayiladuthurai. ... 1st respondent 2. Co-operative Special Appellate Tribunal, (Principal District Judge) Nagapattinam. ... 2nd respondent 3. T.V.Natanasabapathy ... 3rd respondent https://hcservices.ecourts.gov.in/hcservices/ COMMON PRAYER: Petitions filed under Article 226 of the Constitution of India for the issuance of Writ of Certiorarified Mandamus, calling for the records of the 1st respondent in his proceedings in Surcharge Case No.5 of 2001 bearing Ref.Na.Ka.No.682/2002 and proceeding of the 2nd respondent in CO-OP C.M.A.No.21 of 2002 and quash the respective orders therein dated 20.03.2002 and 07.08.2003 in so far as it relates to the petitioners and further forebear the 1st and 2nd respondents from recovering the amount of Rs.1,82,767.77 with interest at 16% p.a. from the petitioners. For Petitioner : Mr.S.Viswanathan for Mr.T.Thiagarajan for petitioner in w.P.No.29987/03 and 3rd respondent in W.P.No.29807/03 For Respondents : Mr.S.V.Durai Solaimalai, Additional Government Pleader for R1 in both W.Ps. R-2 Tribunal in both W.Ps. Ms.K.M.Nalinishree for 3rd respondent in W.P.No.29987/03 and for petitioner in W.P.No.29807/03 COMMON ORDER These writ petitions have been filed by the petitioners challenging the proceedings in Surcharge No.5 of 2001 bearing Reference Na.Ka.No.682 of 2000 dated 20.03.2002 passed by the first respondent/Deputy Registrar of Co-operative Society in Mayiladurai, as confirmed by the second respondent/Co-operative Special Appellate Tribunal, (Principal District Judge) in Nagapattinam in Co-Op CMA No.21 of 2002 dated 07.08.2003 and to quash the same insofar as it relates to the petitioners and further to forebear respondents 1 and 2 from recovering the amount of Rs.1,82,767.77 with interest at the rate of 16% p.a. from the petitioner. 2. The learned counsel appearing for the petitioner in WP No. 29983 of 2003 submits that while the petitioner was serving as Accountant in Mayiladuthurai Co-operative Land Development Bank Ltd., Myiladuthurai, he was placed under suspension by order dated 03.08.1985 along with six other employees on the charges of misappropriation of funds of the Co-operative Land Development Bank Ltd. After some time, on completion of the enquiry, he was terminated from service on 15.07.1987. Aggrieved against the order of termination passed by the Special Officer, the petitioner in W.P.No.29987/03 filed a civil suit in O.S.No.70 of 1987 on the file of the District Munsif Court at Myiladuthurai and the Civil Court granted interim order in his favour. Pursuant to the interim order passed by the Civil Court, he preferred claim petitions before the https://hcservices.ecourts.gov.in/hcservices/ Labour Court seeking payment of wages and other benefits and also questioned the order of termination. 3. When the matter stood as above, in view of several proceedings pending before various Forums, the Mayiladuthurai Co- operative Land Development Bank Ltd. wanted to give quietus to various litigation. On that basis, the elected Body of the Bank represented by its President entered into a settlement with the petitioner under Rule 25 of the Tamil Nadu Industrial Disputes Rules. In the settlement reached between the parties, it was agreed that the action based on the charges dated 20.01.1986 should be deferred till the decision of the criminal Court and further, as per the terms of agreement, T.V.Natanasabapathy has to withdraw the Civil Suit and various proceedings filed by him before the authorities regarding the termination and other monetary benefits. The agreement further stipulates that the service and other monetary benefits for the period 30.01.1987 to 31.05.1991 would depend upon the regularization proceedings of the management. The agreement also stipulate certain other conditions including acceptance to take back the petitioner in service. In terms of the settlement, T.V.Natanasabapathy withdrew all the cases filed by him against the Bank and after informing the withdrawal of all the cases, he was reinstated in service from 01.06.1991. 4. Thereafter, on 13.06.1991, the first respondent, the Deputy Registrar of Co-operative Society sent a letter to the then Special Officer of the Bank informing that T.V.Natanasabapathy was wrongly employed in the Bank Service since his services had already been terminated. In view of this communication issued by the first respondent to the then Special Officer, apprehending termination, T.V.Natanasabapathy filed a writ petition in W.P.No.11405 of 1991 challenging the said letter dated 13.06.1991 written by the first respondent to the then Special Officer, with a further prayer to forebear the Bank from terminating him, since he was already reinstated on the basis of agreement under Rule 25 of the Tamil Nadu Industrial Disputes Rules. The said writ petition was admitted on 14.08.1991 and interim order was also granted. Thereafter, the Special Officer of the Bank also filed a vacate stay petition. After hearing the vacate stay petition, after lapse of three years, the order of interim injunction was vacated by order dated 04.11.1994. In the meanwhile, all the accused involved in the criminal case in crime No.8 of 1988, except the petitioner, were reinstated in service and the period of suspension was treated as service period and they were also paid with salary therefor. Since all other similarly placed persons were paid with salary except the petitioner, he submitted an application in the light of the above development to the Special Officer on 07.10.1994 requesting him to consider his case sympathetically and extend him the same privilege. In view of the letter given by the petitioner dated 07.10.1994, the then Special Officer, 3rd respondent herein / petitioner in W.P.No.29807 of 2003, https://hcservices.ecourts.gov.in/hcservices/ sought legal opinion from the Government Pleader, Myiladuthurai, who after considering the case of the petitioner and others and after considering that the other similarly placed persons were given monetary benefits and their services were also regularised, came to the conclusion that there cannot be any discrimination between the petitioner and others. On the strength of of the legal opinion given by the Government Pleader to extend the same treatment to the petitioner, the then Special Officer, 3rd respondent herein, by passing a Resolution No.69 dated 06.01.1995, passed an order for payment of salary to the petitioner for the period from 01.07.1986 to 31.05.1991 and also to treat the period from 03.09.1985 to 30.06.1986 as leave without payment of salary. They also agreed to adjust the salary with the subsistence allowance already paid to him. Thereafter, for the period for which the salary was sanctioned, the 3rd respondent worked out the arrears at Rs.1,82,767.77/- and the same was also paid to the petitioner in four installments on 07.01.1995, 18.01.1995 , 08.02.1995. Subsequently, this was objected by the Audit report. 5. On the basis of the audit report, the first respondent raised an allegation that the loss caused to the Bank by payment of salary to the petitioner was 1,85,767.77 and for the said allegation, he issued a notice dated 28.09.2001 to both the petitioner and the 3rd respondent alleging that they are jointly and severally liable to repay the said amount. Subsequently, Suo motu enquiry was initiated under Section 87 of the Tamil Nadu Co-operative Societies Act 1983. On completion of the enquiry, the first respondent held that the petitioner was liable to reimburse the salary drawn by him, accordingly, passed an order dated 20.03.2002 holding that the petitioner and the 3rd respondent were liable to reimburse the said amount together with interest at the rate of 16% p.a. Aggrieved by the said order, both the petitioner and the 3rd respondent preferred an appeal before the second respondent, the Co-operative Special Appellate Tribunal (Principal District Judge) at Nagapattinam. The second respondent, after hearing the parties, confirmed the order passed by the first respondent dismissing the Co-operative CMA No.21 of 2002 by order dated 07.08.2003. Aggrieved by the said orders, the petitioner and the 3rd respondent herein have filed the present writ petitions. 6. The learned counsel appearing for the petitioner in W.P.No.29987 of 2003 placed three points for setting aside the order passed by the first respondent, as confirmed by the second respondent. The service of the petitioner was terminated by the disciplinary authority/first respondent by order dated 15.07.1987. Aggrieved by the order of termination as illegal and in valid, the petitioner filed a suit in O.S.No.70 of 1987 on the file of learned District Munsif, Mayiladuthurai and further, he also filed claim petitions before the Labour Court claiming the payment of wages and other benefits and also questioning the order of termination. https://hcservices.ecourts.gov.in/hcservices/ Considering the number of proceedings pending between the petitioner and Mayiladuthurai Co-operative Land Development Bank Ltd., the Bank wanted to give a quietus to various litigation, as a result, the elected Body of the Bank, represented by its President, entered into a settlement with the petitioner under Rule 25 of the Industrial Disputes Rules, in and by which, both the parties agreed that the action based on the charges dated 20.01.1986 should be deferred till the decision of the Criminal Court, that the petitioner should withdraw the civil suit and other proceedings filed by him before various Forum regarding his termination and other monetary benefits and that the regularisation of service and payment of other monetary benefits for the period 30.01.1987 to 31.05.1991 would depend upon the regularization proceedings of the management. With these conditions, the Bank agreed to take back the petitioner in service and the settlement reached under Rule 25 of the Industrial Disputes Rules was acted upon. Thereafter, on the basis of the settlement, the petitioner withdrew all the cases filed by him against the bank. 7. Consequent thereof, by seeing the gesture from the petitioner's side, the Bank also reinstated him in service from 13.06.1991. Finding that the reinstatement of the petitioner was wrong, the first respondent sent a letter dated 13.06.1991 to the then Special Officer informing that he has been wrongly employed in the Bank. Apprehending the above communication, the petitioner filed a writ petition No.11405 of 1991 seeking to quash the said order and also prayed for grant of interim injunction to forebear the Bank from terminating his service. The writ petition was admitted on 14.08.1991 and interim order was also granted. When the matter was pending, six other similarly placed persons who were also facing criminal case in Crime No.8/88 were reinstated in service and their period of suspension was treated as service period and they were paid with money except the petitioner. Therefore, the petitioner made an application dated 07.10.1994 to the Special Officer, requesting him to extend the same benefit conferred to others to him also, sympathetically. Based on the said application, the 3rd respondent obtained legal opinion from the Government Pleader, Mayiladuthurai. The Government Pleader, after considering that other similarly placed persons were paid with salary during the period of suspension, gave his opinion to extend the same benefit to the petitioner as well. Only on the basis of the legal opinion given by the Government Pleader, Mayiladuthurai, the 3rd respondent herein passed resolution No.69 dated 06.01.1995 ordering the payment of salary for the period from 01.07.1986 to 31.05.1991 and thereafter, the said amount of Rs.1,82,767.77/- was paid to the petitioner. 8. At this juncture, the learned counsel submitted that when the 3rd respondent has acted only on the basis of the legal opinion given by the Government Pleader, Mayiladuthruai and when the Government pleader has given opinion on the basis of the reinstatement of six other similarly placed persons, the petitioner is not liable to https://hcservices.ecourts.gov.in/hcservices/ reimburse the salary drawn by him for the above said period. These aspects have not been considered by both the first respondent and the 3rd respondent, particularly, when the seven others were also proceeded with departmental enquiry pursuant to criminal proceedings launched against them and all of them were reinstated in service, except the petitioner. Hence, the petitioner was entitled to reinstatement with the backwages on par with the six other similarly placed persons, who were reinstated in service. When the first respondent has not questioned the payment and reinstatement in respect of six other persons, it is not open to him to discriminate the petitioner alone. Finally, it was contended that the criminal Court also, by its Judgement dated 26.10.1995, after holding them guilty, released them under the provision of Probation of Offender Act on maintaining good behaviour for one year. When the Judgment of the learned Judicial Magistrate was accepted in respect of others regarding continuance in service of other employees, the order passed by the first respondent directing the petitioner alone to reimburse the salary drawn by him to the Bank, is totally arbitrary and discriminatory. These aspects were overlooked and there was no finding against the petitioner that he has misappropriated, fraudulently rejoined service or committed breach of trust and thereby caused loss to the society. Therefore, the petitioner is not liable to repay the salary received by him to the Bank together with interest and he prayed for allowing the writ petition. 9. Per contra, opposing the said prayer, the learned Additional Government Pleader appearing for the first respondent submits that during the period of the petitioner's service in Myiladuthurai Co- operative Land Development Bank as accountant, he has committed grave and serious irregularities like misappropriation of funds to the tune of Rs.1,00,584.94, for which he was placed under suspension by order dated 03.08.1985 and subsequently, he was terminated from service, after holding proper enquiry, on 30.01.1987 for the proved criminal misconduct. Simultaneously, criminal proceedings were also initiated under relevant provisions of IPC and the criminal cases were also pending in Crime No.8/88 on the file of learned Judicial Magistrate, Mayiladuthurai. During these proceedings, the petitioner filed a Civil Suit in O.S.No.70 of 1987 on the file of District Munsif Court at Myiladuthurai challenging the order of termination. Again, he filed the claim petitions before the Labour Court for payment of wages. In view of pendency of Criminal case as well as Labour cases, the elected Body of the bank entered into a settlement under Rule 25 of the Tamil Nadu Industrial Disputes Rules. On 01.06.1991, the 3rd respondent reinstated the petitioner in service subject to the finding in C.C.Nos.2174 to 2178 and 2180 of 1991 pending trial on the file of the learned Judicial Magistrate, Myiladuthurai. 10. When the petitioner was reinstated on the basis of the settlement on 01.06.1991, subject to the finding of the criminal case, it is very obvious that the payment of salary for the period of https://hcservices.ecourts.gov.in/hcservices/ termination from service will depend upon on the regularization of the period only after the judgment given by the Criminal Court. In the meanwhile, writ petition No.11405 of 1991 filed by the petitioner before this Court was also dismissed on 04.11.1994. While so, the 3rd respondent herein, the then Special officer knowing that the petitioner was terminated from service 30.01.1987 and as per the settlement reached under Rule 25 (1) of the Industrial Disputes Rules dated 01.06.1991, should have waited till the judgment in the Criminal case. Instead, the then Special Officer/3rd respondent herein, who, after getting erroneous opinion from the Government Pleader, Mayiladuthurai paid the entire salary to the petitioner for the period during which he was placed under suspension to the tune of Rs.1,82,767.77/. Further, the petitioner and the 3rd respondent, without taking appropriate orders from the Superior Officer, by circumventing all provisions, committed serious misconduct in reinstating the petitioner in service by reaching an invalid settlement under Rule 25(1) of the Industrial Disputes Rules on 01.06.1991. Even in the settlement, they agreed that the arrears of salary will be paid only after the judgment of the criminal court, but, before the final decision taken by the criminal Court, released the salary by taking excuse that the 3rd respondent has taken legal opinion from the Government Pleader, Mayiladuthurai, which is not only unfair and unjustified, but also upstage, because the 3rd respondent should have taken order from the higher officer and without following the legal procedure he paid out even the arrears of the salary and thereby caused loss to the bank. Under those circumstances, the first respondent has rightly initiated surcharge proceedings calling upon both the petitioners to jointly and severally make good the loss caused to the bank and it cannot be said to be erroneous or arbitrary. 11. I have considered the submissions made on either side. 12. No doubt, the agreement reached between the petitioner and the Special Officer, the 3rd respondent under Section 18(1) is a valid settlement. As per the Act, if any settlement is reached for resolution of any dispute, it has to be given effect to. But at the same time, after the award was passed and when the petitioner was reinstated in service, after his reinstatement, such a question does not arise. When the terms of settlement between the parties under Section 18(1) clearly states that the petitioner is entitled to get his arrears of salary only after the decision given by the Criminal Court, even before the finalization of the criminal case by the learned Judicial Magistrate at Mayiladuthurai, reimbursing the entire amount of Rs.1,82,767.77/- is against the settlement. Therefore, though the first respondent, Deputy Registrar of Co-operative Society is wrong in questioning the settlement, he is right in questioning the reimbursement of arrears of salary before the conclusion of criminal case, for the simple reason that the settlement itself points out that the arrears of salary will be subject to the result https://hcservices.ecourts.gov.in/hcservices/ of the criminal case. In the criminal case, the accused were found guilty, however, they were released under probation of offenders act. Therefore, the 3rd respondent ought to have awaited till the conclusion of the criminal case and thereafter the payment of arrears was made to the petitioner. Hence, the Deputy Registrar, first respondent is right in initiating surcharge proceedings on the ground of loss of banks money to the tune of Rs.1,00,584.94/- 13. Another point in favour of the petitioner also needs to be mentioned herein is that the first respondent, Deputy Registrar of Co-operative Society was not a party to the dismissal order that has been passed by the Special Officer. Therefore, when the Special Officer passed the order of termination, he is legally entitled to enter into the settlement for reinstatement. Further, the petitioner should not have been reimbursed the money as against their own settlement. 14. Under these circumstances, the submission made by the learned Additional Government Pleader appearing for the first respondent carries much merit and force for more than two reasons. Firstly, when the petitioner was terminated from service by order dated 30.01.1987 for the proved charges of misappropriation of funds for a sum of Rs.1,00,584.94/-, he entered into a settlement to withdraw his suit and other claim petitions filed before the authorities, agreeing to reinstate the petitioner in Bank service. 15. Secondly, when the settlement itself clearly shows that his arrears of salary for the period during which he was kept out of service should be paid only after the decision given by the Criminal Court in CC.Nos.2174 to 2178 and 2180 of 1991, even before the conclusion of criminal case and against the terms of settlement, he has committed a mistake by approaching the Government Pleader, Mayiladuthurai to get opinion regarding the petitioner's claim. The said Government Pleader, Mayiladuthurai without knowing the fact that there was an agreement between the petitioner and the 3rd respondent and as per the said agreement, the arrears of pay should be settled only after the finalization of the criminal case by the learned Judicial Magistrate, Mayiladuthurai, has wrongly given an erroneous opinion which also goes to show that the petitioner and the 3rd respondent, the then Special Officer of the Bank have concluded with each other, because, it is not the case of the 3rd respondent that the petitioner salary should be paid in terms of the settlement. When the settlement itself says that the arrears of salary should be paid only after the conclusion of the criminal case pending on the file of the District Magistrate, Mayiladuthurai, he ought not to have approached the District Government Pleader, Mayiladuthurai for getting legal opinion and thus, committed a serious mistake in approaching the Government Pleader, Mayiladuthurai as against the terms of the settlement dated 01.06.1981 and even before the decision given by the criminal court in CC Nos.2174 to 2178 and 2180 https://hcservices.ecourts.gov.in/hcservices/ of 1991, paying out the entire salary to the petitioner on the ground that similarly placed other persons have been paid with salary, which is totally unacceptable. In that view of the matter, the order passed by the first respondent having been confirmed by the Co- operative Special appellate Tribunal (Principal District Judge) Nagapattinam, I do not find any infirmity with the order. 16. Another argument placed by the learned counsel appearing for the petitioner in W.P.No.29987 of 2003 is that the petitioner alone should not be discriminated when six other similarly placed persons were reinstated and paid with salary is not acceptable to this Court since the petitioner alone misappropriated the funds of the Bank, for which he alone was terminated from service. In any event, in the case of misappropriation of Society's fund when the criminal case was finally ended in conviction and he was granted the benefits of Probation of Offenders Act, it is not open to complain that equality clause has been violated as the respondent has exonerated some of the delinquents and failed to extent the same to him. Therefore, the writ petition in W.P.No.29987 of 2003 is liable to be dismissed. 17. In the writ petition in W.P.No.29087 of 2003, the learned counsel appearing for the petitioner/3rd respondent in W.P.No.29987 of 2003 argued that when there was a settlement reached between the parties i.e. M.S.Anthony, the Special Officer and T.V.Natanasabapathy, under Rule 25 (1) of the Tamil Nadu Industrial Disputes Rules on 01.06.1991 as per the Judgment reported in 1999(1) MLJ 431, the said judgment cannot be unilaterally set aside by the Registrar of Co-operative Society and further proceedings can be initiated for recovery of amount for the alleged demand of excess made to the employees on the basis of such settlement. On that basis, she further submitted that the first respondent, Deputy Registrar, has no jurisdiction to effect recovery of payment of salary made to the third respondent. This arguments do not carry any substance. 18. Because, as I held above, the Special Officer, being head of the Mayiladuthurai Co-operative Land Development Bank, was very well aware of the fact that Mr.T.V.Natanasabapathy was terminated from service of the Bank on proved charges of misappropriation of sum of Rs.1,00,584.94/-. While so, before entering into a settlement, being the Special Officer should have obtained permission from higher officer like the first respondent Deputy Registrar of Co-operative Society whether he can go for entering into a settlement under a particular provision or not. When the said T.V.Natanasabapathy was terminated from service for misappropriation of huge amount of Rs.1,00,584.94/-, he should have taken prior permission from his higher officers whether any settlement at all could be reached, for the reason that the delinquent had filed several petitions before the Civil Court and Labour Court. It is not the question of doubt as to whether the Special Officer was unaware of the provision to enter https://hcservices.ecourts.gov.in/hcservices/ into a settlement or not, when a criminal case was filed with an allegation of embezzlement of Society's fund, after entering into an agreement under Section 25(1) of the Industrial Dispute Act that the arrears of salary to the Accountant Mr.T.V.Natanasabapathy should be disbursed only after the decision given by the Criminal Court, he should not have disbursed the salary by obtaining an opinion from the Government Pleader, before the result of the criminal case was made known. That itself is a violation of the very settlement. Further, the delinquent was convicted by the criminal court. 19. Looking at any angle, the action of the Special Officer from the