IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28 -9-2011 CORAM: THE HONOURABLE MR.JUSTICE T.RAJA W.P.No.43639 of 2002 1.R.Rajalakshmi 2.Vanaja 3.Mythili 4.Vijaya 5.Punitha ... Petitioners Versus 1.The Registrar of Co-operative Societies Kilpauk Chennai 10. 2. The Deputy Registrar of Co-operative Societies Mayiladuthurai. ... Respondents Prayer: Writ Petition filed under Article 226 of the Constitution of India for the relief of issuance of writ of certiorari to call for the records of the second respondent made in Na.Ka.2413 of 2002 surcharge case No.1/2002 dated 19.11.2002 and quash the same. For Petitioner :- Mr.R.Balakrishnan For Respondents :- Mr.S.V.Durai Solaimalai Addl.Govt.Pleader O R D E R The present writ petition was filed in the year 2002 by the legal heirs of one late G.Ramachandran, challenging the surcharge proceedings initiated by the second respondent the Deputy Registrar of Co-operative Societies, Mayiladuthurai in Na.Ka.No. 2413 of 2002 surcharge case No.1 of 2002 and to quash the same as barred by Section 87(1) of the Tamil Nadu Cooperative Societies Act 1983. 2. Learned counsel appearing for the petitioners submits that the first petitioner is the wife of said G.Ramachandran and the other petitioners 2 to 4 are his daughters. One late G.Ramachandran was working as the President of the elected Board of Mayiladuthurai Co-operative Land Development Bank Ltd., Mayiladuthurai from 10.1.1990 to 26.7.1991. Before the Board took over the Management of the Bank, legal proceedings were https://hcservices.ecourts.gov.in/hcservices/ pending between the Bank and one of its employees viz., T.V.Nadanasabapathy, accountant of the Land Development Bank Ltd., who was dismissed from service on the charges of misappropriation. On the said Nadanasabapathy making representation to the elected Board, the Board had agreed to reinstate him in service on condition that he should withdraw all the cases pending before the Civil Court as well as Labour Courts. In pursuance of the said compromise, the said Nadanasabapathy was reinstated as Accountant in the Mayiladuthurai Co-operative Land Development Bank Ltd. From 1.6.1991. After some time, the second respondent, the Deputy Registrar of Co-operative Societies, Mayiladuthurai made investigation under Section 82 of the Tamil Nadu Co-operative Societies Act against reinstatement of the said employee T.V.Nadanasabapathy. After the said investigation, a notice was issued by the second respondent to the Board of Directors for having reinstated the said employee against the Act and Rules and thereby the Board was directed to reimburse the salary and other allowances amounting to Rs.5,332.50, which was paid to the delinquent employee from 1.6.1991 to 30.6.1991. In view of the said notice, the first petitioner's husband late Ramachandran being the President of the elected Board remitted the said sum of Rs.5,332.50 on 22.6.1992. In the meanwhile, the Government of Tamil Nadu issued an Ordinance 5/1991 which came into force from 27.7.1991, whereby the Ordinance has superseded all the elected Boards that were functioning from 10.1.1990 to 26.7.1991. In the place of elected Boards, the special Officers were appointed and the Mayiladuthurai Co-operative Land Development Bank came under the control of the Special Officer from 27.7.1991. As a result, the elected Board ceased to function from 27.7.1991, in view of the ordinance issued by the Government, which also subsequently became an Act. 3. The learned counsel further submitted that while the matter stood as above, the said Nadanasabapathy apprehending termination of his service also filed a writ petition in W.P.No.11405 of 1991 and obtained an order of interim injunction in W.M.P.No. 17234 of 1991 on 14.8.1991 restraining the Mayilauthurai Co-operative Land Development Bank from terminating his service. The said order of interim injunction was in force from 14.8.1991 to 24.11.1994. But subsequently on 24.11.1994, the said injunction was vacated by this court. Thereafter, the second respondent issued surcharge notice against the legal representatives of the deceased G.Ramachandran, the elected President of the Board, demanding a sum of Rs. 1,98,991.20 being the alleged salaries, allowances, leave salary and travelling allowance etc., paid by the Land Development Bank to the said employee T.V.Nadanasabapathy being the deficiency of assets caused to the Bank. Challenging the said surcharge notice dated 19.11.2002 as illegal since the elected Board was superseded by the Special Officer, the present writ petition is filed. 4. While developing his argument, the learned counsel for the petitioner submitted that as per the first proviso to Section 87 of the Tamil Nadu Co-operative Societies Act, no action shall https://hcservices.ecourts.gov.in/hcservices/ be commenced under sub-section (1) of Section 87 after the expiry of seven years from the date of any act or omission referred to in the sub-section. After the alleged act of deficiency by the Board was caused in the year 1991, action cannot be taken after lapse of 7 years from the date of any act or omission because it is barred by the first proviso to Section 87 of the Act. Even though a stand was taken in order to get over the limitation under Section 87 by the second respondent citing the pendency of the writ petition in W.P.No. 11405 of 1991 which was dismissed on 15.2.1999, during the pendency of the writ petition, at the instance of the Special Tahsildar, Mayiladuthurai Co-operative Land Development Bank , even the interim injunction obtained by the said T.V.Nadanasabapathy was also vacated as early as on 24.11.1994 itself. Therefore, by looking at the proceedings from any angle, the surcharge proceedings initiated by the second respondent is clearly barred by limitation. 5. On this basis, it was further submitted that the initiation of surcharge proceedings by the second respondent is totally against the Rules and Acts. More particularly, Section 87(1) contemplates initiation of surcharge proceedings within seven years only, from the date of any act or omission. Admittedly, the omission even according to the second respondent has happened on 1.7.1991 and the seven years of period was over on 30.6.1998 . Therefore, they should have initiated the surcharge proceedings, if at all they were aggrieved by the omission on or before 1.7.1998. As against that, initiation of present surcharge proceedings on 19.4.2002 with 11 years delay, the surcharge notice issued under Section 87 on 19.4.2002 is beyond the period of 7 years. In this context the learned counsel has also relied upon a judgment of this court in R.GANAPATHY VS. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES (HOUSING) (2009 (6) MLJ 1066) to contend that any surcharge proceedings initiated beyond the period of 7 years is barred by limitation and therefore no surcharge action shall be commenced under sub-section 1 of Section 87. 6. No counter affidavit was filed by the respondents , however a list of dates and events accompanied by some official documents was filed. 7. The only argument advanced by the learned Additional Government Pleader in support of issuance of impugned notice for surcharge proceedings dated 19.11.2002 is the pendency of a writ petition in W.P.No.11405 of 1991 filed by one Nadanasabapathy who came to be dismissed on 15.2.1999. 8. This submission taking shelter behind the pendency of the writ petition in W.P.No. 11405 of 1991 does not support the case of the respondents. The deceased G.Ramachandran was the President of the elected Board of Mayiladuthurai Co-operative Land Development Bank Ltd. Before the elected Board was superseded by the Special Officer, there was some legal proceedings initiated by one T.V.Nadanasabapthy, an Accountant who was dismissed from https://hcservices.ecourts.gov.in/hcservices/ the service of the Bank on the charges of misappropriation of funds. On his representation, a compromise was reached between the Board and the said Nadanasabapathy that he should withdraw all the cases pending before the Civil and Labour Courts filed by him against Mayiladuthurai Co-op. Land Development Bank on condition of his reinstatement. Accepting the written understanding reached under Section 25(1) of the Industrial Disputes Act, the said T.V.Nadanasabapathy was reinstated in service by the Board from 1.6.1991. Immediately after his reinstatement the Board ceased to function from 27.7.1991 and the Special Officer took over the Management of the Board on 27.7.1991. Therefore, the second respondent has made an investigation under Section 82 of the Tamil Nadu Co-operative Societies Act 1983 against the reinstatement and issued notice to the Board stating that reinstatement of the said Nadanasabapathy was against Act and Rules and on that basis the second respondent directed the Board to reimburse his salary and allowances amounting to Rs.5,332.50 that was paid to the said employee T.V.Nadanasabapathy from 1.6.1991 to 30.6.1991. Accepting the said direction, the Board had remitted the said amount on 22.6.1992. In the meanwhile, the Government of Tamil Nadu had passed the Ordinance 5/1991 which came into effect on 27.7.1991 and subsequently the ordinance became an Act. 9. In view of the Special Officer taking over charge of the Management of the Bank, the said Nadanasabapathy apprehending dismissal from service filed a writ petition against the Special Officer of the Bank in W.P.No.11405 of 1991 and obtained an order of interim injunction in W.M.P.No.17234 of 1991 on 14.8.1991. That order was vacated on 24.11.1994 in W.M.P.No.2996 of 1994 filed by the Special Officer of the Bank. In pursuant to the vacation of the interim order T.V.Nadanasabapathy was also dismissed from service with effect from 25.2.1995 and the writ petition was dismissed. Thus, thereafter there was no order of injunction against the Bank. By taking note of the said omission said to have taken place in the year 1991, since Section 87 of the Act provides only seven years to initiate surcharge proceedings, they could have initiated surcharge proceedings on or before 1.7.1998 viz., till 30.6.1998. As they have not done so by initiating Section 87 proceedings, the impugned surcharge notice issued under Section 87 on 19.4.2002 is beyond the period of seven years. Therefore, the ratio laid down by this court in R.Ganesan Vs. Deputy Registrar of Co-operative Societies (Housing) reported in 2009 (6) MLJ 1066 settling the law on Section 87 proviso of the Tamil Nadu Co-operative Societies Act stating that no surcharge action shall be commenced under Sub-section (1) of Section 87 after seven years from the date of any act or omission referred to in the said sub-section will govern the petitioner herein also. Admittedly, the omission in the present case is said to have taken place on 1.7.1991. If 1.7.1991 is the date of commission or omission as rightly contended by the learned counsel for the petitioner, Section 87 contemplates initiation of surcharge proceedings within 7 years from the date of any act or omission and the period of 7 years was admittedly over as https://hcservices.ecourts.gov.in/hcservices/ early as on 30.6.1998. Therefore, the surcharge notice issued under Section 87 on 19.11.2002 is beyond the period of seven years. 10. In view of the above stated reasons, the impugned surcharge notice issued on 19.11.2002 is quashed and the writ petition stands allowed but without any orders as to costs. krr/ Sd/ Assistant Registrar /True Copy/ Sub Assistant Registrar To 1.The Registrar of Co-operative Societies Kilpauk Chennai 10. 2. The Deputy Registrar of Co-operative Societies Mayiladuthurai. +1cc to Mr.R.Balakrishnan Advocate Sr.60678 +1cc to the Government Pleader Sr.60874 Order in W.P.No.43639 of 2002 MS(CO) rvr 29/10/2011 https://hcservices.ecourts.gov.in/hcservices/