G. Kumarasekaran vs Deputy Registrar of Cooperative Societies and Others

R. Banumathi, J.—The Petitioner challenges the order of the Principal District Judge/ Cooperative Tribunal, Chengalpat, made in C.M.A.

No. 19/1995 [dated 30.11.1998], confirming the surcharge order of the first Respondent.

The relevant facts could be stated thus - The Petitioner was appointed as a Clerk in the Second Respondent society in 1984. one G.C.

Subramaniam was the Secretary and was in charge of the administration of the Society. On noticing irregularities in the management of the second

Respondent Society, the first Respondent ordered statutory enquiry u/s 81 of the Tamil Nadu Cooperative Societies Act, 1983 [for short, TNCS

Act]. Surcharge proceedings revealed that there were irregularities committed by writing false accounts to the tune of Rs. 41,190.14, jointly both

by the Writ Petitioner and the then Secretary Subramaniam, who died subsequently. The Respondents 3 to 5 are the Legal Heirs of the deceased

Subramaniam. In the surcharge proceedings, final order was passed on 30.07.1992 holding both the Writ Petitioner and the deceased jointly and

severally liable for the loss sustained by the second Respondent Society and directing them to pay Rs. 86,045.31 with interest at 18% p.a. The

Petitioner is said to have paid an amount of Rs. 815.02.

Challenging the surcharge order, C.M.A. Nos. 15 and 19 of 1995 were filed. By a common order dated 30.11.1998, the Cooperative

Tribunal/PDJ, Chengalpat, confirming the surcharge order, dismissed both the C.M.A.s, which is now challenged in this Writ Petition.

Raising strong contention of the violation of the Principles of Natural Justice, the learned Counsel for the Petitioner inter alia raised the following

contentions:

The Petitioner had acted only as per the direction of the Secretary and there was no wilful negligence on the part of the Petitioner;

During surcharge proceedings, no opportunity was given to the Petitioner to cross-examine the witnesses and there is gross violation of the

Principles of Natural Justice, causing prejudice to the Petitioner and the same was not considered by the Tribunal;

Surcharge proceedings had been initiated nearly six years after the alleged commission, just at the closure of the limitation period of seven years.

Drawing the attention of the court to various dates of the surcharge hearing, the learned Government Advocate has submitted that sufficient

opportunity was afforded to the Petitioner. It was further submitted that the Petitioner who was in-charge of writing accounts had committed wilful

negligence in writing false accounts and was rightly surcharged, which was confirmed by the Tribunal.

The findings and the surcharge are challenged mainly on the ground that the Respondent has acted arbitrarily and that mere negligence will not

constitute wilful negligence. To appreciate this contention, the nature of the allegations levelled against the Petitioner is to be considered. The

Petitioner, who was a Clerk, was in-charge of writing the accounts and ledgers. The main charge against the Petitioner is, while writing the opening

balance, the Petitioner deliberately wrote lesser amount and caused loss to the Society. At least six such instances have been noted, causing loss to

the tune of Rs. 25,883. Other instances of writing false accounts were also noticed. On 20.05.1986, the Society had received Rs. 385.44 and the

Petitioner had signed in the shop chitta. While writing the account on 24.05.1986, instead of writing the total of Rs. 980.14, the Petitioner had

written as Rs. 504.70 and misappropriated Rs. 385.44. There were several other instances or irregularities in writing the false accounts,

deliberately showing lesser amount. The total loss caused to the Society was arrived at Rs. 40,948.40.

Onbehalf of the Petitioner, it was contended that the Petitioner was only a Clerk and that he acted as per the instructions of the then Secretary.

Writing of false accounts was not confined to a a few instances, but persisted and spread out for a length of time. In a Cooperative Society, which

is constituted for the benefit of its members, good conduct and honesty are the in-built essentials of the employees thereon. Though the Petitioner

was appointed as Clerk, by the Secretary, the Society has reposed confidence in him. In a Cooperative Society dealing with money transactions,

honesty and integrity are inseparable from the nature of the duty. Only then the interest of the members of the Society could be promoted. The

contention of the Petitioner that he acted only on the instructions of the Secretary cannot be countenanced.

Onbehalf of the Petitioner, the main contention urged is that mere failure to write correct accounts would not amount to wilful negligence and that

the Petitioner could be surcharged only if had there been wilful negligence and reckless disregard of duties. In support of his contention, the learned

Counsel for the Petitioner relied upon 1981 (2) MLJ 9 [Ramachandran v. Deputy Registrar, Dairying, Trichy], where it was held that the mere

failure by itself cannot come with the expression ''wilful negligence'' which has been construed as meaning something done either by commission or

omission in a deliberate and reprehensible manner, with reckless callousness and with a supine indifference [but not by accident or inadvertence,

without taking due care and precaution ordinarily expected from a reasonable prudent man under the existing circumstances.

What is contemplated u/s 87 of TNCS Act is wilful negligence. In 1980 (2) MLJ 17, this Court has elaborately examined the expressions ""wilful

negligence"" and held thus:

Having regard to the interpretations and discussions in respect of the term ''wilful'' appearing in various enactments, as found in the case-law

decided by the learned English and Indian Judges which serve as a guide to the construction of the term ''wilful'' used in Section 71(1) of the Act, in

order to pass a surcharge order under that Section against a person entrusted with the organisation and management of a cooperative society or an

officer or servant thereof, such person should have done an actionable wrong, either by commission or omission, in a deliberate and reprehensible

manner, with reckless callousness and with a supine indifference [but not by accident or inadvertence], without taking due care and precaution

ordinarily expected from a reasonable and prudent man under those existing circumstance, that is to say, not caring what the result of this

carelessness would be. To make it explicit, it may be stated that he should have acted in breach of legal obligations or in conscious disregard of

duty or with an intentional failure to perform the manifest duty, in the performance of which the public have an interest, and that such commission or

omission should be the proximate cause of the loss or deficiency in question.

In the light of the above, when the conduct of the Petitioner is viewed, it is clear that there was a violation of duty in writing proper accounts.

There had been deliberation in writing the accounts and ledger in his own handwriting. Clearly there is failure to discharge the duties as was

expected of a prudent man. The contention that there had been no wilful negligence has no force.

Placing reliance upon S. Venkataraman Vs. The Deputy Registrar of Co-operative Societies and Others, , the learned Counsel for the

Petitioner submitted that no opportunity was given to the Petitioner to cross-examine the witnesses. It was further submitted that the witnesses

were examined and the Petitioner was not given opportunity to cross examine them. It was further submitted that, as held in the aforesaid decision,

if a liability is sought to be fastened to the Petitioner on the basis of certain statements, the Petitioner ought to have been given an opportunity to

cross-examine those witnesses and the surcharge proceedings is vitiated for violation of the Principles of Natural Justice.

The above contention is to be analyzed only in the light of the proceedings. It is seen from the records that a Show Cause Notice dated

02.04.1992 was served on the Writ Petitioner on 18.04.1993 and the Petitioner has submitted that his explanation both on 30.04.1992 and

15.06.1992. Subsequently, the Enquiry Proceedings was initiated on 14.05.1992. At the request of the Petitioner, the enquiry was adjourned to

15.06.1992 and to various dates. Only on the date when the statement of witnesses were recorded, the Petitioner''s deposition was also adduced.

Thereafter, the matter was adjourned to a number of hearings and the final order was made on 30.07.1992. On most of the dates of hearing, the

Petitioner is stated to have been present and the Petitioner had sufficient opportunity. In the instant case, the surcharge proceedings are not merely

based upon the statement of the witnesses. Besides the statement of the witnesses, the accounts are eloquent enough, bringing home the false

writing of the accounts. When all the relevant facts and circumstances are taken into consideration, this Court is of the view that there is no

violation of the Principles of Natural Justice. The Petitioner is not right in contending that this aspect was not considered by the Cooperative

Society. In paragraph No. 11 of its order, the Cooperative Tribunal has adverted to this aspect.

Pointing out that the criminal cases filed against the Petitioner and Secretary Subramani in C.C. Nos. 4/1994 to 8/1994 [on the file of Chief

Judicial Magistrate, Kanchipuram], had ended in acquittal, the learned Counsel for the Petitioner has submitted that when the criminal case has

ended in acquittal, there cannot be surcharge against the Petitioner. This contention does not merit acceptance. In criminal case, the standard of

proof is ""proof beyond reasonable doubt"". But u/s 81 of TNCS Act, the essence of surcharge proceedings lies in misappropriation of any money

or property of the Society by fraudulent intention or wilful negligence. When link is established between the wilful negligence and loss to the Bank

in surcharge proceedings, the Registrar has the power to direct the delinquent person to pay the amount. Standard of proof in the surcharge

proceedings is not so rigorous as that of the criminal case. Hence the Petitioner cannot take advantage of the acquittal of the criminal case filed

against him. Yet another contention was raised that the surcharge proceedings has been initiated belatedly. In the Proviso to Section 87, no

surcharge action shall be commenced after the expiry of seven years from the date of any act or commission referred to in Section 87. The alleged

case of misappropriation was in 1986 and the surcharge proceedings was initiated in 1992, well within the period of limitation.

Exercising the writ jurisdiction, this Court would not act as a Court of Appeal, reassessing the matter and analyzing the adequacy or

insufficiency of the materials. It is stated that in his explanation dated 30.04.1992 and 15.06.1992, the Petitioner has admitted to writing incorrect

accounts, but however, has stated that he acted on the instructions of the Secretary. No valid grounds are made out for interference in the

surcharge order, confirmed by the Cooperative Tribunal.

In the result, the Writ Petition is dismissed. No costs. Consequently, W.M.P. No. 762 of 2001 is also dismissed.