IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :20.04.2010 CORAM: THE HONOURABLE MR.JUSTICE P.JYOTHIMANI Writ Petition No.35621 of 2007 and W.P.No.114 of 2008 A.Abdul Hameed ... Petitioners in both W.Ps. Vs. 1.The Deputy Registrar of Co-operative Societies, Pudupalayam Main Road, Cuddalore – 607 001. 2.T.Nedungari Primary Agricultural Co-operative Bank Ltd., rep. by its Special Officer, T.Nedungeri (Po) Chidambaram (Tk) 3.Co-operative Tribunal, [Principal District Judge), Cuddalore – 607 001. ... Respondents both W.Ps. PRAYER in W.P.No.35621 of 2007: Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of Certiorari, calling for the records of the first respondent relating to his order No.Rc.5861/2001 Ku.Na.dated 20.05.2002 and of the Co-operative Tribunal, Cuddalore, the third respondent herein, relating to the order No.CO-OP CMA.No.11 of 2005, dated 27.09.2007 and quash both the orders. PRAYER in W.P.No.114 of 2008: Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of Certiorari, calling for the records of the first respondent relating to his order No.Rc.7288/2000 Ku.Na.dated 20.05.2002 and those of the third respondent Co-operative Tribunal relating to the order No.CO.op.CMA.No.12 of 2005, dated 24.10.2007 and quash both the orders. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner :Mr.P.Anbarasan (In both W.Ps) For 1st Respondent :Mr.Mr.Litasrinivasan, (In both W.Ps) Government Advocate. For 2nd Respondent : Mr.M.S.Palaniswamy in W.P.No.114/08 for R2 in W.P.35621/07 : No appearance COMMON ORDER The writ petitions are filed challenging the order of the first respondent Deputy Registrar of Co-operative Societies, dated 20.05.2002 and the subsequent order of the Co-operative Tribunal, Cuddalore in C.M.A.No.11 of 2005, dated 27.09.2007 and the order of the first respondent, dated 20.05.2002 and the consequential order of the Tribunal in C.M.A.No.12 of 2005, dated 24.10.2007 respectively. 2.The brief facts leading to the filing of the writ petitions are that the petitioner while working as Co-operative Sub Registrar in the State Co-operative Department has retired from service on 28.02.1997. It is stated that during his service, he was working as Sub Registrar (PDS) supervising ration shops at Kattumannarkoil Taluk and he was put in additional charge of about six co-operative societies in the said Taluk. He has also worked as the Special Officer of the second respondent Co-operative bank during 29.02.1992 to 24.08.1995. It is stated that the Government has appointed a Committee to streamline the cadre strength, pay scale and allowances of the employees of Primary Agricultural Co- operative Bank and revised scale of pay approved in G.O.Ms.2(2D) No.68 Co-operation Food and Consumer Protection Department, dated 12.11.1993. It is to give effect to the said government order, it is stated that the Primary Agricultural Co-operative Banks were advised to enter into a settlement with the employees under Section 12(3) of the Industrial Disputes Act and based on that on behalf of the second respondent bank, represented by the petitioner as its Special Officer has signed a settlement before the Labour Officer, Cuddalore on 31.03.1994, for the period from 01.07.1992 to 20.06.1997. It is stated that as per the agreement, the benefits were worked out and the working sheet was approved by the Co-operative Sub Registrar (Arbitration) being the representative of the first respondent and it was based on the same, the amounts were disbursed to the employees. https://hcservices.ecourts.gov.in/hcservices/ 3.The arrears amount paid to the then Secretary and also the Fertiliser Salesman. On the basis of an audit stated to have been effected in 1994-1995, it was noticed that excess amount were paid to the tune of Rs.11464.45 in respect of the said two employees and also the objection from the audit regarding the enhanced pay and allowance in respect of a Clerk and an Office Assistant to the extent of Rs.74,534/- for which the first respondent has passed the impugned order on 20.05.2002 which is the subject matter of dispute in W.P.No.35621 of 2007. A direction was issued to the petitioner as well as the other three persons including the Secretary and Fertiliser Salesman to remit an amount of Rs.11,456/- and the share of the petitioner works out to Rs.2864/-. That apart, the first respondent has also directed to recover Rs.74,534/- from the petitioner and four others including the clerk and office assistant, in which the petitioner's share works out to Rs.14,907/- and in that regard, the total amount for which the petitioner was made liable was Rs.17,771/-. 4.After the petitioner's retirement, the first respondent has caused inspection and as per the inspection report, dated 13.11.1999, the first respondent issued notice under Section 87 of the Tamil Nadu Co-operative Societies Act, dated 30.11.2001 for an alleged violation of Rule 104(7) of the Tamil Nadu Co-operative Societies Act, 1988 alleging that Rs.35661.45 was paid in excess to one Mr.Govindarajan, Secretary and Mr.Vaidyanathan, Fertiliser Salesman and Mr.Thirumalavan and Mr.Basha, two employees who were irregularly appointed and whose revision of pay was amounting to Rs.60,488.05 for the years 1994-1995 and 1995-1996. The petitioner gave explanation on 31.01.2002 to the effect that the said persons are still working and the payment was made only based on the pay fixation approved by the Co-operative Sub Registrar as representative of the first respondent. However, the first respondent has passed the impugned order dated 20.05.2002. According to the petitioner, it was antedated to get over the limitation point and communicated to him by registered post only on 15.12.2004 after the delay of more than 2 years and that is the subject matter of dispute in W.P.No.114 of 2008. 5.In the order of the first respondent, a sum of Rs.35,661.45 was directed to be recovered from the petitioner and three others and the share of the petitioner comes to Rs.8,915/-. Further, the amount of Rs.1,34,368.50 representing the payment of wages made to Mr.Thirumavalavan and Mr.S.A.Basha for the years 1994-95 and 1995- 1996 was ordered to be recovered out of which Rs.40,532.70 paid to Mr.Thirumavalavan and Rs.34,001.30 paid to Mr.S.A.Basha for the year 1994- 1995 has already been covered in the other surcharge order which is the subject matter of the above said writ petition. https://hcservices.ecourts.gov.in/hcservices/ 6.As per the direction of this Court in M.P.No.2 of 2007 in W.P.No.35621 of 2007 an amount of Rs.17,500/- has been deposited by the petitioner in the second respondent bank on 15.12.2007. The remaining amount of Rs.59,835.50 was to be recovered from five persons, the petitioner's share works out Rs.11,697/- and the total amount recoverable from the petitioner works out to Rs.20,882/-. The said orders were challenged by the petitioner before the third respondent tribunal in C.M.A.Nos.11 and 10 of 2005 respectively on various grounds that the pay fixation settlement was approved by the first respondent that the Registrar of Co-operative Societies has permitted the temporary employees whose services were not regularised and as ordered by the Government that the wages given to the employees who were not regularised for the year 1991-1992, 1992-1993 and 1993-94 were not objected to by the audit; that the fixation of pay of the employes was checked and countersigned by the first respondent. However, notice and surcharge was issued after lapse of 7 years which was communicated only on 15.12.2004. The third respondent tribunal in the orders dated 27.09.2007 and 24.10.2007 respectively, passed in C.M.A.Nos.11 and 10 of 2005, by relying upon the Rule 149 (1)(iii) to (v) of the Tamil Nadu co-operative Societies Rules which prescribes the fixation of cadre strength, method of recruitment, fixation of scale of pay and allowances etc., which cannot be relied upon since they were not in existence at the relevant period namely, 1994-1995 since the same came into effect only from 02.8.1995, confirmed the surcharge orders of the first respondent. 7.The orders of the co-operative tribunal are challenged on various grounds including that the surcharge proceedings initiated by the first respondent itself is time barred; that the reliance placed on Rule 149 (1)(i), (iii) to (v) of the Tamil Nadu co- operative Societies Rules are not applicable; that the surcharge proceeding is in violation of Section 87 (1) of the Tamil Nadu Co-operative Societies Act since it has been commenced after a lapse of 7 years. While the settlement was entered on 31.03.1994 and fixation approved on 23.07.1994, the proceedings were initiated only on 30.11.2001 and therefore, it is clearly time barred; that as per Section 87(1) action should be completed within six months and such period may be exceeded for further period of six months with the permission of the higher authority and therefore, there is no power. In respect of the second case, subject matter of C.M.A.No.12 of 2005, the action was commenced by issuing notice on 30.11.2001, which should have been completed by 29.05.2002 but the first respondent in the impugned order of surcharge proceedings has antedated to 20.05.2002. However, the same was communicated to the petitioner only on 15.02.2004 and https://hcservices.ecourts.gov.in/hcservices/ that conduct of antedate is only for the purpose of saving action from the purview of the limitation, which is illegal; that the inspection itself was conducted in violation of Section 82(4) of the Co-operative Societies Act and the impugned order in the first case, the date of inspection has been deliberately suppressed and in the inspection report date, mentioned as 19.12.2000, as indicated in the notice, dated 30.11.2001 and therefore, initiation of action under section 87 based on such illegal inspection report is bad in law; that the follow up action as per Rule 104(7) is to be taken within three months of the inspection report and there has been unexplained delay of nearly 11 months in the first case and nearly two years in the second case and it vitiates the proceedings under Section 87 of the Act; that the fixation of settlement having been checked and approved by the representative of the first respondent, the first respondent is estopped from proceeding against the petitioner to charge under Section 87 of the Act; that the respondents failed to appreciate the judicial decisions that the arrears of pay and allowances to the employees not regularly appointed should not be recovered under surcharge proceedings as it was held in Justin Vs. Registrar of Co-operative Societies reported in 2002 (4) CTC 389; that even a copy of the inspection report has not been furnished to the petitioner along with the show cause notice, dated 30.11.2001, in respect of the first case, while the surcharge notice in respect of the second case dated 30.11.2001 is vague without any particulars and these vital issues have not been considered by the tribunal; that in respect of the second case, regarding the amount paid as salary to Mr.K.Thirumalavan and Mr.S.A. Basha, the respondents failed to take note of the fact that the petitioner did not appoint them and even in respect of part of amount as directed by this Court in W.P.No.35621 of 2007, the amount has been deposited which has not been taken note of by the tribunal; that the entire proceedings is motivated to harass the petitioner; that availing of the services of the employees is only a natural consequence for the benefit of the second respondent bank and the second respondent having relied upon their services cannot recover the amount of salary paid to them from the petitioner which amounts to double enrichment for the second respondent bank and that amount of recovery is attempted to be made against the petitioner who is at the verge of 69 years, as a senior citizen, apart from other grounds. 8.In the counter affidavit of the first and second respondents in these cases, it is stated that the amounts have been paid to the Secretary and Fertilizer salesman to the extent of Rs.26,892/- by the petitioner which was found out as irregular https://hcservices.ecourts.gov.in/hcservices/ by the audit of accounts in 1994-1995 in which it was found the excess amount of Rs.11,456.45 was paid. That apart, there was audit objection in respect of pay and allowances to a clerk and office assistant to the extent of Rs.74,534/- and these two items constituted Rs.85,990.45 covered by the surcharge proceedings of the first respondent, dated 20.05.2002 which is the subject matter of W.P.No.35621 of 2007 and it was based on the audit report and statutory inspection conducted under Section 82 of the Tamil Nadu Co-operative Societies Act, dated 19.12.2000, the first respondent issued a notice on 30.11.2001, directing the petitioner to give explanation. It was explained by the petitioner on 31.1.2002. Thereafter, the first respondent passed an order dated 20.05.2002 directing the petitioner and three other persons to remit the amount of Rs.11,456.45 in respect of which, the petitioner's share comes to Rs.2,864/- and also directed to recover the amount of Rs.74,534/- apart from the petitioner and four other employees in which case, the petitioner's share works out Rs.14,907/- and total amount payable by the petitioner is Rs.17,771/-. 9.Likewise, in respect of W.P.No.114 of 2008, it is stated by the second respondent in the counter affidavit that on the basis of the settlement dated 31.03.1994 under Section 12(3) of the Industrial Disputes Act for the period from 01.07.1992 to 20.06.1997, the petitioner has worked out the settlement amount by way of arrears of Rs.35,661.45 to the Secretary and Fertiliser salesman of the second respondent bank and that was found out as irregular in the audit relating to the year 1995-1996 and the audit objection also received in respect of the payment of enhanced amount of Rs.1,34,369.50 and these two constitute total amount of Rs.1,70,030.95 covered by the surcharge proceedings, dated 20.05.2002 which is the subject matter of the above said writ petition in W.P.No.114 of 1998 and therefore, recovery orders were made. 10.It is stated by the first respondent in W.P.No.35621 of 2007 that the surcharge orders of the tribunal are valid in law and the reliance placed on Rule 149 of the Tamil Nadu Co-operative Societies Rules, 1988 is on sound principle and the provision of Section 87 of the Tamil Nadu Co-operative Societies Act scrupulously followed; that in respect of the irregular employees payment was made upto 31.3.1995 which was objected by the audit and therefore, the first respondent initiated action on 19.04.2001 which is within the 7 years period and therefore, there is no violation of Section 87(1) of the Tamil Nadu Co-operative Societies Act. It is also stated that the inspection has been done within three months time and there is no statutory violation and the result of the enquiry was also communicated as per the Section https://hcservices.ecourts.gov.in/hcservices/ 104 (1) of the Tamil Nadu Co-operative Societies Rules, 1988 and it is also stated that the first respondent has assured and was willing to furnish a copy of inspection report and ultimately, it is seen based on the audit objection the entire proceedings have been commenced. 11.Likewise, it is also the case of the second respondent Special Officer in respect of W.P.No.114 of 2008, that the proceedings have been initiated within the period of 7 years; that there is no violation of the provision of Section 87 of the Tamil nadu Co-operative Societies Act and even otherwise, the Division Bench of this Court of 2008 (8) MLJ 231 (S.V.K.Sahasramam Vs.Deputy Registrar of Co-operative Societies, Tiruvannmalai Circle, Tiruvannamalai and others) has held that the period of limitation prescribed under Section 87 (1) of the Act, is only directory and not mandatory. 12.It is the contention of the learned counsel for the petitioner in both the cases that there are violation in the entire proceedings. First of all, the inspection report has not been furnished as per the provision 82 of the Tamil Nadu Co- operative Societies Act; that the amount paid in 1994 and the proceedings under Section 87(2) initiated after 7 years and there were no specific grounds of misconduct raised especially when the employees are still working and the learned counsel for the petitioner would rely upon the judgments reported in 2009(4) MLJ 992 (K.Ajay Kumar Gosh and others Vs.Tribunal for Co-operative Cases, (District Judge of Kanyakumari District) Nagercoil and another), 2007 Writ L.R.502 (L.Ranganathan Vs.The Deputy Registrar of Co-operative Societies, Salem Circle, Salem District) and in 2009 4 L.W 427 (H.Rajasekar and others Vs.The Deputy Registrar of Cooperative Societies, Krishnagiri Circle, Krishnagiri District and others). 13.On the other hand, it is the contention of the learned counsel for the respondent bank that as explained in detail in the counter affidavit, every provision of the Act have been scrupulously followed and the petitioner having caused enormous monetary loss to the second respondent co-operative bank which was found out under the statutory enquiry and audit objection as per the Section 82 of the Tamil Nadu Co-operative Societies Act and it was only based on that the surcharge proceedings under Section 87 were initiated which cannot be found fault with. 14.Mr.M.S.Palaniswamy, learned counsel also bring to the factual aspects to substantiate his contention that the https://hcservices.ecourts.gov.in/hcservices/ proceedings have been conducted well within the stipulated period as per the provisions of the Act at every stage and in fact, in the impugned orders of the first respondent and surcharge proceedings as well as the order of the tribunal confirming the surcharge orders the entire fact has been analysed in detail and there is no necessity to interfere with the orders of the tribunal. 15.I have considered the submissions of the learned counsel for the petitioner as well as the learned counsel for the respondents and perused the entire records and given my anxious thought to the issue involved in this case. 16.The petitioner has retired from service as a Co-operative Sub Registrar on 28.02.1997. Two surcharge proceedings have been initiated against the petitioner under Section 87 of the Tamil Nadu Co-operative Societies Act. Both the proceedings were based on inspection and investigation effected under Section 82 of the Tamil Nadu Co-operative Societies Act as it is seen in the original order passed by the first respondent in the surcharge proceedings dated 20.05.2002. In respect of the surcharge proceedings, subject matter of issue in W.P.No.35621 of 2007, the orders were passed by the first respondent under two heads regarding the payment of arrears to the Secretary, Mr.Govindarajan and Fertilizers Salesman K.Vaidyanathan finding that the excess amount of Rs.11456.45 were paid to them and that was the amount paid during the period 01.07.1992 to 30.06.1994. Likewise the second count related to bank clerk K.Thirumalavan and S.A.Basha, Office Assistant in respect of arrears of salary paid from 01.01.1994 to 31.01.1995 in which an excess amount of Rs.74,534/- was found to have been paid and that is stated to be on the basis of irregular appointment without reference from the employment exchange and by virtue of a 12(3) settlement. It has been the case of the petitioner in that regard that the appointment is not within the purview of the Special Officer and it is a decision taken by the Committee of the Bank and based on the resolution, such decisions were taken. It was the further case of the petitioner that as far as the Mr.K.Thirumalavan, he was appointed by the previous Special Officer on 13.08.1990 while the petitioner has fixed the salary on 28.06.1991 and stated that there was no loss to the bank. It was also his case that he was directed to enter 12(3) settlement as per the circular of the Registrar and the payments were made only after the decision was approved by the first respondent stating that the said actions were taken in good faith. It was also stated that there was no possibility for fixing the salary without the approval of the first respondent. However, the first respondent has found that the fixation of salary under https://hcservices.ecourts.gov.in/hcservices/ 12(3) settlement was against the circular and passed the surcharge orders. The Tribunal, on appeal has found that the petitioner has not obtained prior approval of the Registrar of the Co-operative Societies as per the Rule 149(1) (iii) to (v) of the Tamil Nadu Co-operative Societies Rules before fixing the scale of pay and allowance for each of the post. The tribunal has also found that as per Rule 149 (2) the appointments have to be done not directly but through the employment exchange and by giving public notification in the notice board when the employment exchange issues non availability certificate and therefore, the tribunal found that such appointment becomes nullity and it should be treated as a backdoor entry since the regular recruitment process has not been followed. The tribunal has also found that no right is created under 12(3) settlement to enforce the same and therefore, it cannot be stated that any approval could be made by the authorities under the Tamil Nadu Co-operative Societies Act. The Tribunal, has also found that there cannot be a wage revision suo moto unless the rules enable the same and in that view of the matter dismissed the appeal filed by the petitioner. 17.Likewise in respect of W.P.No.114 of 2008 relating to the petitioner the defects were found against the petitioner under Section 87 surcharge proceedings under two counts regarding the payment to Secretary Govindarajan and Vaidyanathan which was stated to have been found out in the audit of the year 1995-1996 and therefore, the excess amount of Rs.35,661.45/- was stated to have been detected. Likewise, the appointment of Thirumalavan and Basha was found to be against the Rule 149 of the Tamil Nadu Co- operative Societies Rules and excess amount of Rs.1,34,369.50 has been paid towards their salary. 18.The first respondent in the surcharge order in this regard has found that regarding the pay fixation and regularisation of services, the same were found to be against the circulars of the registrar, dated 09.03.1995 and 02.12.1993 and therefore, the 12 (3) settlement itself is opposed to the said circulars and found that the petitioner is liable towards his share as stated above. 19.Section 82(4) of the Tamil Nadu Co-operative Societies Act which is as follows: "82(4)The inspection or investigation shall be completed within a period of three months from the date of ordering the inspection or investigation or such further period of periods not exceeding three months at a time as the next higher authority may permit, provided that such extended periods shall not exceed six months in the aggregate", https://hcservices.ecourts.gov.in/hcservices/ contemplates the completion of enquiry within a period of three months from the date of ordering of inspection which may be extended by another three months so as to see that the aggregate total period does not exceed six months. 20.Rule 104(4) of the Tamil Nadu Co-operative Societies Rules, 1988 in that regard enumerates as follows: "104(4)Where an inquiry or inspection or investigation under section 81 or section 82 is not or could not be completed within the period of three months from the date of ordering the inquiry or inspection or investigation, the person holding the inquiry or conducting the inspection or investigation (hereinafter called the Enquiry Officer, or the Inspecting Officer or the Investigating Officer) shall make an application to his next higher authority requesting extension of time detailing the action taken to complete the inquiry or inspection or investigation within the specified time, the reasons for non completion within that time, the further steps taken or proposed to be taken for the completion of the inquiry or inspection or investigation and the period within which it will be completed. An application for further extension of time shall state also the reason for non completion within the extension of time already granted". 21.The term 'shall' as it is found in Section 81(4) of the Act is imparimateria, the same as that of the term under Section 82 also, came to be considered by the Hon'ble First Bench of this Court as to whether the same is mandatory in S.V.K.Sahasramam Vs.Deputy Registrar of Co-operative Societies, Tiruvannmalai Circle, Tiruvannamalai and others reported in 2008 (8) MLJ 231. It was held that the said expression shall not be taken as a decisive of the matter and various other materials are to be taken into consideration. It was also held that the enquiry contemplated under the Tamil Nadu Co-operative Societies Act is in public interest and such enquiry cannot be compared to an enquiry against an