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P.K. Misra, J.—Petitioner who was appointed as Junior Supervisor on 20.10.1977 was posted as Secretary of Kurunthancode Agricultural Service Co-operative Society (hereinafter called as ''third Respondent'' and he joined the said post on 26.5.1987. The Petitioner was given additional charge of Charal Depot. One S. Chellathurai was the salesman-cum-clerk of the said Charal Depot. A criminal case was initiated against the aforesaid salesman-cum-clerk as well as the Petitioner on the allegation that offences under Sections 477-A and 408 R/w 34 I.P.C. had been committed by them. It was alleged that the aforesaid salesman-cum-clerk had submitted false vouchers regarding purchase of kerosene and money had been paid eventhough no actual purchase had been made. It. was alleged that the aforesaid offence had been committed in connivance with the present Petitioner, who was the supervising authority. The, trial Court convicted both the accused persons and the appeal preferred by the present Petitioner was allowed and he was acquitted of the charges on the findings inter alia that he had no mens rea and there was no common intention.
Even before initiation of criminal proceedings, a surcharge proceedings u/s 65 of the Tamil Nadu Co-operative Societies Act had been initiated against the Petitioner as well as the salesman-cum-clerk and by memo issued in 1989, the Petitioner was called upon to submit explanation as to why a sum of Rs. 5,124.57 should not be recovered. The Petitioner had submitted his explanation stating that he was not responsible for the action of the concerned clerk and he had no role in the matter. Enquiry in the surcharge proceedings commenced on 7.2.1989 and on 21.8.1989, an extension was granted for three months and subsequent extension was granted on 22.11.1989. Ultimately the Petitioner and the salesman-cum-clerk were found liable for the entire amount jointly and severally by an order passed on 5.2.1990. Being unsuccessful in appeal before the statutory authority, the present writ petition has been filed.
learned Counsel appearing for the Petitioner has first submitted that as per the provisions contained in Section 87 of the Tamil Nadu Co-operative Societies Act (hereinafter referred to as "the Act"), enquiry having not been completed within a period of six months and the extension subsequently granted beyond the period of six months by the authority, cannot be sustained. It is further submitted that at any rate there being no finding nor any evidence to show any wilful negligence on the part of the present Petitioner, direction to recover amount from the Petitioner is unfair. In order to deal with the contentions raised by the counsel for the Petitioner, it is necessary to go through the provisions of Section 87 of the Act.
Section 87 reads as follows: "87. Surcharge:(1) Where in the course of an audit u/s 80 or an inquiry u/s 81 or an inspection or investigation u/s 82 or inspection of books u/s 83 or the winding-up of a society, it appears that any person who is or was entrusted with the organisation or management of the society or any past or present office or servant of the society has misappropriated or fradulently retained any money or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made any payment which is not in accordance with this Act, the rules or the bye-laws the Registrar him! elf or any person specially authorised by him in this behalf, of his own motion or on the application of the Board, Liquidator or my creditor or contributory may frame charges against such person or officer or servant and after giving a reasonable opportunity to the person concerned and in the case of a deceased person, to his representative who inherits his estate, to answer the charges, make any order requiring him to repay or restore the money or property or any part thereof with interest at such rate as the Registrar or the person authorised as aforesaid thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, misapplication of funds, fradulent retainer, breach of trust or wilful negligence or payments which are not in accordance with this Act, the rules or the bye-laws as the Registrar or the person authorised as aforesaid thinks just;
Provided that no action shall be commenced under this Sub-section after the expiry of seven years from the date of any act or omission referred to in this Sub-section;
Provided further that the action commenced under this Sub-section shall be completed within a period of six months from the date of such commencement or such further period or periods as the next higher authority may permit but such period or periods shall not exceed six months in the aggregate.
(2) Without prejudice to any other mode of recovery which is being taken or may be taken under this Act or any other law for the time being in force, any sum ordered under this section to be repaid to a registered society or recovered as a contribution to its assets may be recovered as if it were an arrear of land revenue and for the purpose of such recovery the Registrar shall have the powers of a Collector under the Tamil Nadu Revenue Recovery Act, 1864 (Tamil Nadu Act 11 of 1864.)
(3) This section shall apply notwithstanding that such person or officer or servant may have incurred criminal liability by his act.
(4) The Registrar or the person authorised by him shall, when acting under this section, have all the powers of a Civil Court while trying a suit under the Code of Civil Procedure, 1908 (Central Act V of 1908) in respect of the following matters, namely:
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of any documents;
(c) reception of evidence on affidavits;
(d) requisitioning any public record from any court or office;
(e) issuing commission for examining of witnesses.
Relying upon the second proviso of Section 87, it has been contended that since enquiry commenced on 7.2.1989 and enquiry had not been completed with six months, i.e., on 6.8.1989, the subsequent extension granted on 21.8.1989 and again on 22.11.1989 were of no consequence. learned Counsel has emphasised on the expression contained in the proviso that the action commenced shall be completed within a period of six months. He has contended that even though further extension/extensions can be given a for further period of six months in aggregate, such extension must be given before expiry of the period of six months within which enquiry is supposed to be completed. He has emphasised that such provision is mandatory because expression ''shall'' has been utilised in the provision.
There is no dispute that final order was passed on 5.2.1990, i.e., within a period of one year from the date of commencement of the enquiry, on 7.2.1989. Six months obviously expired on 6.8.1989 and the first extension was given on 21.8.1989 giving an extension for a further period of three months. It has been contended that this extension given on 21.8.1989 was beyond the initial period of six months contemplated under the Proviso and the subsequent extension dated 22.11.1989 was of no help to the third Respondent society.
The question as to whether the total period of one year contemplated under the Proviso for completion of the enquiry is mandatory or not, need not be considered in the present writ petition, as admittedly final order was passed within a period of one year. However, it is to be considered as to whether the extension given on 21.8.1989 after the expiry of the initial period of six months from the date of commencement of enquiry is over permissible. Even though the expression "shall" has been used, I am not inclined to accept the contention of the learned Counsel for the Petitioner that time limit of six months as incorporated in the first part of the proviso is mandatory. Even though a duty has been cast on the enquiry officer to complete the proceedings within six months from the date of commencement, a provision has been made that further extension can be granted by the next higher authority, but such extension shall not exceed six months in aggregate. The very fact that there is a provision for granting extension itself indicates that initial period of six months as contemplated in the first part of the proviso is directory and not mandatory. The provision is akin to the provision relating to extension of time as contemplated u/s 149 of the Code of Civil Procedure. By now it is fairly well settled that there can be extension of time u/s 149 CPC even after the expiry of the period originally granted by a court and such extension granted after expiry of the period is not ipso facto invalid. Similar principle would be applicable to the provision contained in Section 87. In other words, competent authority can subsequently give extension even though the original period of six months had expire. It cannot be said that unless extension is granted within a period of six months from the date of commencement, such subsequent extension given by the higher authority would be void. First contention raised by the learned Counsel for the Petitioner is therefore not sustainable.
learned Counsel for the Petitioner appears to be in firmer footing so far as his second contention is concerned. He has submitted that a direction regarding recovery can be made under the main provisions contained in Section 87(1) only if it is found that the person concerned has misappropriated money or misplaced funds or fraudulently retained such fund or committed breach of trust or guilty of wilful negligence for payments which are not in accordance with the Act and Rules or bye-laws. It is not the case of the third Respondent that the present Petitioner had misappropriated any money nor had he committed other actions contemplated in Section 87(1) of the Act. It is obvious that liability of the Petitioner was sought to be fixed on the ground of wilful negligence for the payments made pursuant to the false vouchers submitted by the salesman-cum-clerk. It is obvious that the authorities who have fixed the liability of the Petitioner have not come to any conclusion that there is any wilful negligence on the part of the Petitioner, nor there are any other materials available on record to fix wilful negligence. learned Counsel appearing for the third Respondent has also not combated this submission that there is no finding with regard to alleged wilful negligence of the Petitioner.
It has been contended by the learned Counsel appearing for the Petitioner that in the absence of any finding or material that there is any wilful negligence on the part of the Petitioner, the direction regarding recovery of the amount from the Petitioner cannot be sustained. learned Counsel for the Petitioner has placed reliance upon several decisions of this Court interpreting similar provisions contained in Section 71(1) of the Tamil Nadu Co-operative Societies Act, 1969 (which has been repealed by the present Act) to the effect that in the absence of any finding with regard to wilful negligence, surcharge proceedings would not be maintainable against the person concerned.
In the decision reported in Sathyamangalam Co-operative Urban Bank, Limited Vs. The Deputy Registrar of Co-operative Society and Another, ) Justice Ratnavel Pandian (as His Lordship then was) has observed as follows:
The degree of negligence that is contemplated u/s 71(1) of the Act is not a mere negligence, but wilful negligence. The word ''wilful'' has not been defined in the Act. "The word ''wilfulness'' or ''wantonness'' imports pre-meditation or knowledge and consciousness that an inquiry or loss is likely to result from the act done or from the omission to act. Thus, the term imports a constructive intention as to the consequences which, entering into the wilful act, the law imputes to the offender and in this way a charge, which otherwise would be mere negligence, becomes, by reason of a reckless disregard of probable consequences, a wilful wrong. In other words, the conduct of a person, to amount to ''wilful negligence'', must be something more than ordinary negligence, To constitute wilful negligence, the act done or omitted to be done must be intended or must involve such reckless disregard of security and right as to imply bad faith. The wilful or intentional negligence is something distinct from mere carelessness or inattention, however gross, and consists of a wilful and intentional failure or neglect to perform a duty necessary to protect from harm or loss to any person or property of another. In examining whether there is wilful negligence, it has to be seen first whether the person concerned is guilty of negligence and if so, whether that negligence is wilful and secondly, whether the said wilful negligence is the proximate cause of the injury or loss sustained.
After referring to several other provisions and decisions, His Lordship ultimately concluded that
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 Go-operative 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 circumstances, that is to say, not caring what the result of his carelessness would be. To make it explicit, it may be stated that he should have acted in breach of legal obligation 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 more recent times, similar views have been expressed by Hon''ble Justice P. Sathasivam in the decision reported in P.N. Chockappan and Others Vs. The Special Tribunal for Co-operative Cases, High Court Campus and Others, I am in respectful agreement with the views expressed in the above decisions.
In view of the legal position indicated above there cannot be any doubt that the impugned order directing recovery from the present Petitioner in the absence of any categorical finding that the Petitioner was wilfully negligent in the matter relating to payment made on the basis of false vouchers submitted by the salesman-cum-clerk cannot be sustained. There is nothing to indicate that the Petitioner was hand in glove with the salesman-cum-clerk. As a matter of fact the Petitioner had joined duty only five days earlier to the alleged date of incident. The fact that he has been subsequently acquitted from the criminal case cannot be lost sight of in the peculiar facts and circumstances of the present case. Even though it can be said that he had not supervised properly, it cannot be said that he was wilfully negligent in the matter.
learned Counsel for the Respondents has submitted that the decision rendered by Justice Ratnavel Pandian was relating to Directors of the Society and not to the Secretary, who is supposed to be directly in charge of the management. I do not think that the principle laid down in the decision can be distinguished merely on such ground.
It appears that during pendency of the writ petition, by an order dated 5.7.1995, the Petitioner had been called upon to deposit the amount sought to be recovered in surcharge proceedings and the said amount has been deposited in this Court. Since the Petitioner is now exonerated from the liability, the amount deposited by the Petitioner should be refunded to him along | with accrued interest, if any.
For the aforesaid reasons, the writ petition is allowed. It is however made clear that this decision will not affect the liability of the salesman-cum-clerk unless the said liability is successfully challenged in any other writ petition or proceedings. No cost. Consequently, connected W.M.P. No. 3718 of 1995 is closed.