IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 30/01/2004 CORAM THE HON'BLE MR.JUSTICE F.M.IBRAHIM KALIFULLA W.P.NO.20028 OF 2001 and W.P.Nos. 15079 & 46713 OF 2002, 19046, 19111, 19334, 21974, 22828, 23504, 24257, 24894, 25156, 25206, 25258, 26029, 26347, 26348, 26349, 26350, 26968, 28262 of 2003 AND W.P.M.P.NOS.29525 OF 2001, 20266 & 67883 OF 2002, 23903, 24147, 28223, 29872, 30603, 30604, 30911, 30912, 30972, 30973, 31024, 31025, 31885, 32233, 32235, 32953 AND 34537 OF 2003 W.P.NO.20028 OF 2001 V.S.Ramasubramaniam .. Petitioner -Vs- 1. The State of Tamil Nadu, rep. by its Secretary to Govt., Food, Co-operation Department, Fort St.George, Chennai-9. 2. The Registrar of Co-operative Societies, N.V.N.Maligai, Kilpauk, Chennai-600 010. 3. The Additional Registrar (M.P.D.), Office of the Registrar of Co-op. Societies, N.V.N.Maligai, Kilpauk, Chennai-10. 4. Thiru K.Jamal Mohamed Addl.Registrar/Zonal Officer for Madurai Region, Special Officer, Tamil Nadu Consumer Co-op.Federation Ltd., Saligramam, Chennai-600 093. 5. The Joint Registrar of Co-operative Societies, Madurai Region, 13, Kanaga Apartment, Lady Dock College Road, Madurai-625 002. 6. The Deputy Registrar of Co-op. Societies, Madurai Circle Meenakshi Bhavanam, Tallakulam Madurai-625 002. 7. The Special Officer, Madurai Urban Co-op.Bank Ltd., 32, Naicken New St., Madurai-625 001. 8. The Secretary Madurai Urban Co-op.Bank Ltd., 32, Naicken New St., Madurai-625 001. 9. Thiru G.Alagarsamy, Co-op.Sub Registrar, Office of the Registrar of Co-op.Societies, Chennai-10. .. Respondents Prayer: These Writ Petitions are filed under Article 226 of the Constitution of India, for the issuance of a Writ of Mandamus, Certiorari, etc. for the reliefs as stated therein respectively. For Petitioner :: Mr.M.Venkatachalapathy, SC in W.P.No.20028 of 2001 Mr.M.Suresh Kumar in W.P.No.22828 of 2003 Mr.K.Alagirisami for Mr.T.Ravikumar in WP No.24257 of 2003 Mr.S.Ravi for M/s.Hema Sampath M/s.R.Subramanian in W.P.Nos.19111,19334&46713/2002 Mr.K.Jegannathan in WP No.26347 & 26968 of 2003 Mr.T.S.Rajamohan in W.P.No.23504 of 2003 For Respondents :: Mr.R.Muthukumaraswamy, Addl.A.G. Assisted by Mr.M.S.Palanisamy, Spl.G.P. Mr.V.Perumal for R5 in W.P.No.15079 of 2003 Mr.P.S.Sivashanmughasundaram for R2 in WPNo.23504 of 2003& for R4 in WP No.22828 of 2003 :COMMON ORDER All the above Writ Petitions are related to Madurai Urban Cooperative Bank Limited (hereinafter called the Bank) and as such they were clubbed together and disposed of by this Common Order. 2. Writ Petition Nos.20028 of 2001, 15079 of 2002, 19046 of 2003, 2 8262 of 2003, 25156 of 2003 and 21974 of 2003 have been filed by one Thiru V.S.Ramasubramaniam, who was the Ex.President of the above said bank (hereinafter referred to as the Ex.President). 3. Writ Petition Nos.22828 of 2003 and 24257 of 2003 have been filed by one Thiru P.Raju, who was the Ex.Director of the bank ( hereinafter referred to as the Ex.Director). 4. Writ Petition Nos.23504, 26029 and 25206 of 2003 have been filed by one Thiru Mayan, who was the Secretary of the Bank (hereinafter referred to as the Ex.Secretary). He is now under suspension pending disciplinary action. 5. Writ Petition No.24894 of 2003 has been filed by one Thiru R. Venkatasamy, who was the Ex.Vice President of the Bank, (hereinafter referred to as the Ex.Vice President). 6. Writ Petition Nos.26347, 26348, 26349, 26350, 25258 and 26968 of 2003 have been filed by M/s.Perumal, A.Anbarasan, P.Rathinam, N.Abu Becker Siddique, N.Karnan and M.Sakthivel respectively, who were the Employees of the Bank (hereinafter referred to as the Ex.Employees). 7. Writ Petition Nos.19111 of 2003, 19334 of 2003 and 46713 of 2002 have been filed by M/s.C.Papa, Nagarajan, M.Veeraiah and Chithra respectively (who have borrowed funds from the Bank), for the issuance of a Writ of Mandamus, to direct the Registrar of Co-operative Societies to probe into the irregularities and fraudulent act of the petitioner in W.P.Nos.23504 of 2003, namely, Thiru M.Mayan who was the then Secretary of the Bank. 8. The Ex.President has filed W.P.No.20028 of 2001 challenging the proceedings dated 8-10-2001, by which an enquiry has been ordered under Section 81 of the Tamil Nadu Co-operative Societies Act ( hereinafter referred to as the Act) as to the affairs relating to mismanagement of the bank and the said enquiry has been directed to be held by one Thiru Alagiriswamy, Registrar of Co-operative Societies in the Office of the Registrar. W.P.No.15079 of 2002 has been filed by the Ex.President for the issuance of a Writ of Certiorari, challenging the proceedings of the Registrar dated 15-4-2002, in and by which, a discreet enquiry was directed to be made by his sub-ordinates with reference to the advancement of loans to a tune of Rs.2 lakhs and above from 1-12-1996 onwards by the Bank and to submit a report. 9. Writ Petition Nos.19046 and 22828 of 2003 have been filed by the Ex.President as well as the Ex.Director, challenging the proceedings of the Joint Registrar of Co-operative Societies, Madurai Region dated 27-5-2003, in and by which, the Ex.President and Ex.Director were called upon to show cause by virtue of the provisions contained in Section 36 of the Act for the purpose of permanent disqualification. 10. Writ Petition No.28262 of 2003 has been filed by the Ex. President, challenging the proceedings of the Additional Registrar of Cooperative Societies, Chennai, dated 29-7-2003 ordering an inspection under Section 82 of the Act. 11.Writ Petition Nos.W.P.Nos.24257, 24894, 25156, 25206,25258,26347 ,26348,26349, 26350, and 26968 of 2003 have been filed by the Ex. President, Ex.Director, Ex.Secretary, Ex.Vice President and the the Ex. Employees of the Bank, challenging the F.I.R. in Cr.No.9 of 2003 dated 22-8-2003 on the file of the Inspector of Police, CCIW-CID, Madurai. 12. Writ Petition No.21974 of 2003 has been filed by the Ex. President, challenging the Enquiry Reports of the Officers who were directed to hold such an enquiry by the Registrar in his proceedings dated 15 -4-2002 and who have filed their report dated 31-10-2002. 13. Writ Petition No.23504 of 2003 has been filed by the Ex. Secretary, challenging the charge sheet cum show cause notice issued to him in respect of certain alleged misconduct committed by him in the course of discharge of his duties as Secretary of the Bank. 14. Writ Petition No.26029 of 2003 has been filed by the Ex. Secretary, challenging the order of the Deputy Registrar of Co-operative Societies dated 5-9-2003, in and by which, an order of attachment before judgment came to be made as against certain immovable properties of the Ex.Secretary pursuant to the application filed by the Bank before the Deputy Registrar, Madurai pending certain main proceedings. 15. All the above said reliefs claimed in the different Writ Petitions are as a sequel to allegations of mismanagement and other alleged corrupt practices of the Ex.President, Ex.Vice President, Ex. Director, Ex.Secretary and the Ex.Employees of the Bank in the course of their functioning as such in their different capacities during the period between 1-11-1996 and 25-5-2001. 16. The brief facts, which led to the filing of the above Writ Petitions, can be stated as under: The Bank, which is a Co-operative Society registered under the provisions of the Tamil Nadu Co-operative Societies Act came into existence some time in the year 1904, which is stated to have commenced its banking services from the year 1984 as approved by the Reserve Bank of India (in short, RBI). The elected Office Bearers, some of whom, have been referred to above, were stated to have functioned in different capacities between 1-11-1996 and 25-5-2001. It is stated that in the matter of appointment of employees, advancement of loans, such as, housing loans, business loans, etc., as well as the regular transactions of the bank, certain serious irregularities came to be noticed. 17. Be that as it may, by G.O.No.204 (Co-operation, Food and Consumer Protection Department) dated 25-5-2001, the tenure of the elected Board of Management came to be restricted and a Special Officer came to be appointed with effect from 25-5-2001. Accordingly, the Board of the Management Bank ceased to hold office with effect from 25-5-200 1 and the Bank came to be managed by the Special Officer with effect from the above said date. 18. It is further stated that the banking operations during the above said period was monitored by the RBI. As the banking transactions of the bank were not satisfactorily carried out in the opinion of the RBI, inspections were carried out by the officials of the RBI and periodical reports came to be issued by the RBI on different dates between 23-3-2001 and 27-8-2003 and finally by the order dated 25-8-2003 , the licence to carry on banking business in terms of Section 22 of the Banking Regulations Act 1949 (as applicable to Co-operative Societies) in respect of the bank came to be cancelled. In terms of the said order, the bank was directed not to carry on any business transactions as defined in Section 5(b) and (c) as well as Section 7 and 49A of the Banking Regulations Act 1949 (as applicable to the Cooperative Societies) including repayment of deposits forthwith. 19. That apart, earlier in December, 1998, an enquiry under Section 81 of the Act was ordered by the Deputy Registrar of Madurai in his proceedings dated 24-12-1998 pursuant to which, a report came to be made by the Co-operative Sub Registrar, Vigilance, Madurai pointing out certain irregularities. However, the report did not suggest any serious action against the Management. The report of the Co-operative Sub Registrar was dated 7-4-1999. Subsequently, another enquiry was also ordered under Section 81 of the Act which came to be withdrawn by the Deputy Registrar of Madurai Region himself in his proceedings dated 23-10-2000. 20. In the above stated circumstances, when by the proceedings dated 8-10-2001, the Registrar of Co-operative Societies, Chennai ( hereinafter called the Registrar, Chennai) ordered for an enquiry under Section 81 of the Act, the Ex.President came forward with the Writ Petition in W.P.No.20028 of 2001, challenging the said proceedings. 21. As the allegation of mismanagement of the affairs of the bank was always brooding, the Registrar is stated to have issued a fresh proceedings dated 15-4-2002, calling upon four of his subordinates to hold a discreet enquiry in regard to the loans advanced by the Bank to the tune of Rs.2 lakhs and above after 1-12-1996 and submit a factual report. In fact, it was the said proceedings dated 15-4-2002 which has been challenged by the Ex.President in W.P.No.15079 of 2002. It will have to be stated that the very same proceedings were under challenge in W.P.No.15789 of 2002 by the Ex.Director, which Writ Petition came to be disposed of by His Lordship Mr.Justice E.Padmanabhan on 20-9-2002 holding that it was only a general investigation sought to be made as to the various loans advanced and that before taking any statutory action either under Section 80 or 81 of the Act, there would be every necessity to give proper opportunity to the concerned persons and therefore, there was no scope to interfere with the enquiry ordered by the Registrar, Co-operative Societies, Chennai in his proceedings dated 15-4-2002. Therefore, as far as the above said order of the Honble Mr.Justice E.Padmanabhan in W.P.No.15789 of 2002 dated 20 -9-2002 is concerned, though it is stated that a Writ Appeal has been preferred, the same has not so far been moved for admission. However, as on date, the issue involved in W.P.No.15079 of 2002 is squarely covered by the order dated 20-9-2002 made in W.P.No.15789 of 2002. I, therefore, feel that there is no point in probing anything further into the said Writ Petition which is covered by the said order dated 20-9-2002 in W.P.No.15789 of 2002 and following the said order, the Writ Petition in W.P.No.15079 of 2002 is liable to be dismissed. 22. After the proceedings dated 15-4-2002, the concerned officials who were directed to make certain enquiries as regards the loans advanced by the Bank to the tune of Rs.2 lakhs and above, the team of officials have completed their task and filed the report dated 31-10-20 02. It is the said report which has triggered further probe into the various aspects relating to allegation of corrupt practice and mismanagement in respect of the affairs of the bank by the Ex.Office Bearers as well as Ex.Employees of the bank. In fact, as a sequel to the said report dated 31-10-2002, it is stated that while on the one hand, the F.I.R. came to be registered on 22-8-2003 in Cr.No.9 of 2003 on the file of the Inspector of Police, CCIW-CID, Madurai, a regular enquiry has also been in the anvil to be held under Section 81 of the Act apart from inspection ordered under Section 82 of the Act. The Ex.Office Bearers and the Employees have therefore come forward with the present Writ Petitions, seeking to thwart the initiation of any enquiry under Section 81 of the Act and also the quashing of the FIR itself for various grounds urged in their respective Writ Petitions. 23. As far as Writ Petition Nos.19111 and 19334 of 2003 and 46713 of 2002 are concerned, the respective petitioners therein claim that their names were misused by the Ex.Office Bearers and Ex.Employees of the bank with the assistance of some real estate agents, who according to the petitioners, misappropriated the funds of the bank while at the same time, the liability for repayment has been fastened on these petitioners. The petitioners in the above Writ Petitions, therefore, while seeking for the appropriate action against the Ex.Office Bearers, Ex.Employees and the concerned real estate agents want to get themselves freed from any monetary liability to the bank. 24. In the above stated background, the contentions raised by Mr. Venkatachalapathy, learned Senior counsel on behalf of the Ex.Office Bearers and Ex.Employees of the bank, are that the allegations of mismanagement and misuse of the funds of the bank were repeatedly made from the year 1998; that on more than one occasion, such allegations riped into the form of an enquiry under Section 81 of the Act, in which, it has been categorically reported that there was no basis for any fraudulent transaction in the matter of either advancement of loans or mal-administration of the affairs of the bank and in the circumstances, there is no scope for repeatedly invoking Sections 81 or 82 of the Act which is now attempted to be done solely with a view to malign the petitioners. It is also contended that when the allegation of mismanagement or corrupt practice or mal-administration of the bank having been found to be not established in the enquiry already initiated under Section 81 of the Act, there was no justification or legal sanction for the issuance of notice for permanent disqualification under Section 36 of the Act. As far as the legality of criminal prosecution in the form of FIR was concerned, it is contended that under Section 164(3) of the Act, no prosecution can be initiated without the previous sanction of the Registrar of Co-operatives and in the circumstances, the Registration of FIR is hit by the said statutory requirement and therefore, the same is liable to be set aside. Reliance was placed upon the judgments reported in 2001(4) CTC 339 (N.VARADARAJAN ( CO-OPERATIVE SUB-REGISTRAR), SPECIAL OFFICER, SALEM CO-OPERATIVE HOUSING SOCIETY LTD., SALEM versus STATE OF TAMIL NADU, REP. BY ITS SECRETARY TO GOVERNMENT, CO-OPERATION, FOOD AND CONSUMER PROTECTION DEPARTMENT, MADRAS-9 AND TWO OTHERS); AIR 1999 Madras 254 (ARIGNAR ANNA WEAVERS CO-OPERATIVE SOCIETY LTD. Versus STATE OF TAMIL NADU AND OTHERS); 1971 SC 1447; 2000 Wr.LR 517; 1979(1) MLJ 6 (M.KUNJITHAPATHAM AND OTHERS versus THE THIRUVILAIYATTAM VILLAGE CO-OPERATIVE AGRICULTURAL CREDIT SOCIETY ZB-95, BY ITS SECRETARY, THIRUVILAIYATTAM AND ANOTHER); 1 978(1) MLJ 284 (S.VENKATARAMAN versus THE DEPUTY REGISTRAR OF COOPERATIVE SOCIETIES, THANJAVUR AND OTHERS); AIR 1991 SC 1117 (K.R.DEB versus THE COLLECTOR OF CENTRAL EXCISE, SHILLONG) and 2003(1) TNLJ 321 (TVL.RAJESH MOTORS, CHENNAI versus THE COMMERCIAL TAX OFFICER, CHENNAI) 25. As regards the challenge to the criminal prosecution, which is now at the stage of registration of the FIR in Cr.No.9 of 2003, the contention raised on behalf of the petitioners by Mr.K.Alagiri Swamy, learned senior counsel is that when the informal report of the officials of the Registrar of the Societies, Chennai dated 31-10-2002 was the basis and when the Act is a self contained code, the prosecution could only be made under Section 162 of the Act. Further, according to the learned Senior counsel, when there is no scope to invoke the general penal provisions of the Indian Penal Code, by virtue of Section 162 of the Act, in the absence of compliance of Section 164(3) of the Act, the FIR cannot stand. The learned Senior counsel further contended that even going by the report, which was the basis for the present complaint, where there was no specific allegation found in the report dated 31-10-2002 as against the petitioners in W.P.Nos.28262, 2425 7, 24894, 25156, 24257, 25206, 24894, 26347, 26348, 26349, 26350, 252 58 and 26968 of 2003, the FIR could not have been registered and on this ground as well, the same was liable to be quashed. Reliance was also placed upon the order of Mr.Justice Malai.Subramanian dated 8-1 -2003 in Crl.M.P.No12756 of 2002 as well as AIR 2000 SCW 698 (STATE OF MAHARASHTRA versus LALJIT RASHI SHAH AND OTHERS) and also AIR 1998 SC 128 (PEPSI FOOD LIMITED AND ANOTHER versus SPECIAL JUDICIAL MAGISTRATE AND OTHERS). Reliance was also placed upon the judgments reported in 1990 MLJ (Crl.) 529(K.SOMASUNDARAM versus STATE BY INSPECTOR OF POLICE, COIMBATORE) 1998 (I) LW (Crl.) 315 (PARIVALLAL AND ANOTHER versus SUB INSPECTOR OF POLICE, SATHANUR DAM) and AIR 1985 SC 1665 ( RAMESH BALKRISHNA KULKARNI versus STATE OF MAHARASHTRA) apart from 1993 (1) SCC 302.(STATE OF MADYA PRADESH versus AJAY SINGH AND OTHERS, ETC.,) 26. Mr.M.Venkatachalapathy, learned Senior counsel appearing for some of the petitioners, contended that FIR in verbatim contains the report dated 31-10-2002, and the said report is not a statutory report and in the circumstances when the petitioners are not public servants, the registration of the crime for the various offences including Section 409 IPC which is relatable to a public servant, cannot be maintained. The learned senior counsel placed reliance upon 1990 MLJ ( Crl.) 529, 1998(1) LW (Crl.) 315 and AIR 1985 SC 1665 (cited supra). 27. As against the above said submissions, the learned Additional Advocate General, at the out set, contended that the report dated 31-1 0-2002 is only a fact finding report, that a perusal of the FIR would disclose that it came to be registered based on the complaint against the various individuals including the petitioners and therefore, merely because, the report dated 31-10-2002 did not specifically refer to the names of the Ex-Office Bearers or some of the Ex-Employees, it cannot be held that there was no scope to proceed against the petitioners based on the FIR registered in Cr.No.9 of 2003. 28. As regards the contention that the Act is a self-contained code and therefore, any criminal proceedings could be only under Section 162 read along with Section 163 and 164 of the Act, the learned Additional Advocate General, by referring to the very same judgment relied upon by the learned senior counsel for the petitioners in "AIR 2000 SCW 698 (STATE OF MAHARASHTRA versus LALJIT RASHI SHAH AND OTHERS)", contended that in that very judgment, the said argument came to be repelled. According to the Additional Advocate General, the requirements of Sections 162 and 163 of the Act is referable to the offences only under that Act and same will have no application when the petitioners are proceeded under the general criminal law. 29. Alternatively, the Additional Advocate General contended that at best it can only be contended that they could not be proceeded against under both the enactments by virtue of Section 26 of the General Clauses Act. The learned Additional Advocate General relied upon AIR 1957 Orissa 165 (STATE versus BANCHHANIDHI MEHAR); AIR 1968 Bombay 1 24 (WAMAN SAMBHAJI DUKA versus NARHARI SAMBHAJIRAO PHATALE); AIR 196 5 SC 87 (MANIPUR ADMINISTRATION, MANIPUR versus THOKCHOM BIRA SINGH); AIR 1989 SC 1 (STATE OF BIHAR versus MURAD ALI KHAN & OTHERS) and AIR 1967 SC 170.(CHANDRIKA SAO AND ANOTHER versus STATE OF BIHAR). As far as the order dated 8-1-2003 of Mr. Justice Malai. Subramanian in Crl.O.P.No.12756 of 2002, according to the learned Additional Advocate General, the said judgment is per incurium in the light of the fact that the learned Judge failed to take note of Section 26 of the General Clauses Act and also the fact that there is already a ruling of this Court contrary to what has been held by the learned Judge, apart from the fact that the said view of the learned Judge is contrary to the legal position settled by the Hon'ble Supreme Court reported in AIR 1967 SC 170 as well as AIR 2000 SCW 698 (cited supra). In any event, according to the learned Additional Advocate General, when the FIR cannot be correlated to the report dated 31-10-2002 but also to other materials which weighed with the complainant while preferring the complaint dated 25-7-2003 such as various statements collected by the complainant from different individuals, it cannot be held that the FIR was lacking in material particulars as against the petitioners in order to interfere with the same at this stage. The learned Additional Advocate General took pains to point out that while considering the scope of interference either under Section 482 of Cr.P.C. or in a Writ Petition under Article 226 of the Constitution in relation to the quashing of a FIR, the Hon'ble Supreme Court has pointed out that the Courts should be slow and only under extraordinary circumstances, such interference can be resorted to. The learned Additional Advocate General also referred to the preliminary report of the Sub Registrar of Co-operative Society which held an inspection under Section 82 of the Act to point out that the petitioners exceeded their limits while functioning as Office Bearers and as Employees of the Bank in the matter of handling the funds of the Bank and therefore, no interference should be made at this stage and that the law should be allowed to take its own course to find out who is responsible for the malfunctioning of the bank whose licence for banking operations came to be cancelled by the RBI for its mal-functioning. In support of his submissions, the learned Additional Advocate General also relied upon AIR 1992 SC 604 (STATE OF HARYANA & OTHERS versus CH.BHAJAN LAL AND OTHERS), AIR 1999 SC 1044 (STATE OF KERALA AND OTHERS versus O.C.KUTTAN & OTHERS); AIR 2000 SC 202 (MANOHAR M.GALANI Versus ASHOK N.ADVANI & ANOTHER) and 2003(4) Supreme 466 (UNION OF INDIA versus PRAKASH P. HINDUJA & ANOTHER). 30. Mrs. Hema Sampath, learned counsel appearing for the petitioners in W.P.No.46713 of 2002, contended that the contentions of the Ex. Office Bearers as well as the Ex-Employees of the bank should not be accepted and that the State should be allowed to proceed with the enquiry and inspection ordered under Sections 81 and 82 of the Act respectively, and that the real culprits should be brought to book. According to the learned counsel, the Ex.office Bearers and the Ex. Employees of the bank who acted hand in glove with the real estate agents were responsible for various corrupt practices indulged in by them, because of which, the petitioners in W.P.Nos.19111 of 2003, 19334 of 200 3 and 46713 of 2002 and also similar such other innocent persons came to be affected, that they indulged in forgery and other malpractices while in office, whereby several housing loans or other types of loans which were availed in the name of certain individuals were fraudulently credited in some Savings Account for the benefit of those Ex. Office Bearers and Ex.Employees while no part of the money was actually lent to such Account holders. It was, therefore, contended that while directing appropriate action to be initiated against Ex.Office Bearers and Ex.Employees, these petitioners in W.P.Nos.19111 of 2003, 1 9334 of 2003 and 46713 of 2002 should not be forced to repay the loans. While considering the submissions of the learned counsel, I shall deal with the