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Judgment
G. Rajasuria, J.—This Writ petition is focussed to get, issued a Writ of Certiorari calling for the records relating to the impugned notice ref.
Na.Ka. No. 5209/2003, Sapa.Tha.Thi.4/2005 dated 1.7.2005 and quash the same.
Broadly, but briefly, precisely, but narratively, the case of the petitioners as stood exposited from the petition could be portrayed and parodied
thus:
The petitioners who are ten in number, are indubitably and indisputably, the members of the Paramakudi Co-Op, Urban Bank Ltd., Paramakudi,
Ramnad District. While so, they borrowed loans from the said Co-op., Bank. However, according to the respondents, the petitioners availed
those loans by fraudulent means, so to say, by colluding with the officers and furnishing the lesser security. Subsequently, the respondents have
chosen to initiate surcharge proceedings by invoking Section 87 of the Tamil Nadu Co-operative Societies Act as according to them, they came to
know of such alleged fraudulent act from the enquiry report u/s 81 of the said Act. The grievance of the petitioners is that as per Section 87 of the
Act, surcharge proceedings could be initiated only as against the paid servants and officers and Directors both past and present and none else.
Accordingly, they prayed for quashment of the surcharge proceedings.
Per contra, denying and disputing, challenging and impugning the allegations/averments in the writ petition, the second respondent filed the
counter with the averments which would run thus:
The petitioners are not third parties to the Bank or to the transactions referred to in the writ petition. They are the members of the Bank and they
borrowed a sum of Rs. 119 lakhs by fraudulent means to wit, by colluding with the officers and furnishing lesser security grossly disproportionate
to the amount availed as loans by them. u/s 87 of the said Act, if a member indulges in fraudulent act and avails loan and thereby caused loss to the
Society, certainly as against him, surcharge proceedings can be initiated. Based on the enquiry report of the officer concerned, u/s 81 of the said
Act, further steps have been taken which cannot be found fault with by filing a writ petition in the manner in which the petitioner has done in this
case.
The petitioners who being the members availed loan, are in a way entrusted with the management of the organisation also. Inasmuch as they
caused loss by fraudulent means, surcharge proceedings can be proceeded against them. Accordingly, he prayed for the dismissal of the writ
petition.
Heard both sides in entirety.
The point for consideration is as to whether surcharge proceedings contemplated u/s 87 of the Act, can be pressed into service as against the
petitioners who are admittedly mere members who borrowed loans and not office bearers or servants of the Society.
The learned Counsel for the petitioners placing reliance on the words ""any person who is or was entrusted with the organisation or management
of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or
been guilty of breach of trust in relation to the society..."" would develop his argument to the effect that ex facie and prima facie, the members who
allegedly availed loan fraudulently by colluding with the officers, cannot be termed as persons contemplated u/s 87 of the Act.
The learned Counsel for the petitioners would lay stress upon the phrase namely ""entrusted with the organisation or management"". According to
him, he would submit that if at all, the surcharge proceedings should be initiated as against any person, that person should have been entrusted with
the organisation or management of the society. But, the members who are the petitioners herein, were not entrusted with such entrustment of the
organisation or management of the society of the second respondent.
Per contra, the learned Counsel for the second respondent as well as the learned Government Pleader for the first respondent, in unison and in
one voice would express and expatiate, argue and contend that such a narrow interpretation as advanced by the learned Counsel for the
petitioners, should not be entertained for the foregoing reasons. The Tamil Nadu Co-operative Societies Act is a benevolent legislation intended to
further the co-operative movement. It is mainly for benefiting the members. If the members in collusion with the officials indulge in decipating the
very wealth, or the capital of the society itself, then u/s 87 of the Act, surcharge proceedings should be pressed into service as otherwise, the very
purpose of Section 87 would be rendered otiose. According to them, a member may not be an officer bearer, but the ambit of Section 87 of the
said Act is not that the members should be allowed to indulge in fraudulent acts and go scot-free leaving the Bank high and dry.
Hence, in this factual matrix, I would like to recollect the famous adage that penal statute should be construed narrowly in favour of the person
proceeded against.
The learned Counsel for the second respondent as well as the Government Pleader for the first respondent would submit that no doubt,
surcharge proceedings includes some punitive measures also being taken as against the defaulting officials. They placing reliance on the very same
interpretation, would try to justify the action taken u/s 87 of the Act by developing their arguments to the effect that under the Penal Law, if one
person perpetrates an offence and another persons abets it, the perpetrator and the abettor could be joined together and proceeded against; so
much so, here also, when the law contemplates that rigorous measures should be taken as against the perpetrators namely the officials of the
Society, then the members who were in collusion with such perpetrators should also be proceeded against under the surcharge proceedings. In
other words, they would try to justify the surcharge proceedings as against the members by pointing out that it is not that surcharge proceedings are
taken only as against the members leaving the officials, but the officials also are proceeded against u/s 87 of the Act. While taking surcharge
proceedings as against the office bearers, the members who colluded with the officials are also roped in and accordingly, they are proceeding.
Even though I could appreciate the endeavour of the learned Government Pleader for the first respondent and the learned Counsel for the
second respondent in arguing in multifarious ways so as to justify the action of the Department, yet I cannot countenance their argument. The
primary rule of interpretation is the literal construction. An excerpt from famous treatise ""Maxwell on The Interpretation of Statutes"", Twelfth
Edition by P. St. J. Langan, Chapter 2, page 28, would run thus:
The first and most elementary rule of construction is that it is to be assumed that the words and phrases of technical legislation are used in their
technical meaning if they have acquired one, and otherwise in their ordinary meaning, and the second is that the phrases and sentences are to be
construed according to the rules of grammar. ""The length and detail of modern legislation,"" wrote Lord Evershed M.R., ""has undoubtedly
reinforced the claim of literal construction as the only safe rule."" If there is nothing to modify, alter or qualify the language which the statue contains,
it must be construed in the ordinary and natural meaning of the words and sentences. ""The safer and more correct course of dealing with a question
of construction is to take the words themselves and arrive if possible at their meaning without, in the first instance, reference to cases.
A mere perusal of the aforesaid excerpt, would show that if the letter of the law conveys a particular meaning, that should be understood as the
intention of the legislation and one cannot read anything a new into it unless Heydon''s Rule/Mischief Rule/Golden Rule can be pressed into in the
given facts and circumstances of a case.
So, I would like to refer to the Heydon Rule/Mischief Rule/Golden Rule and it is extracted hereunder from the famous treatise ""Maxwell on
The Interpretation of Statutes"" � Twelfth Edition by P. St. J. Langan, for ready reference:
In Heydon''s Case, in 1584, it was resolved by the Barons of the Exchequer ""that for the sure and true interpretation of all statues in general (be
they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered:(1st). What was the common
law before the making of the Act. (2nd) What was the mischief and defect for which the common law did not provide. (3rd) What remedy the
Parliament hath resolved and appointed to cure the disease of the commonwealth. And, (4th). The true reason of the remedy; and then the office of
all the Judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and
evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent
of the makers of the Act, pro bono publico."" In 1898, Lindley M.R said: ""In order properly to interpret any statue it is as necessary now as it was
when Lord Coke reported Heydon''s Case to consider how the law stood when the statute to be construed was passed, what the mischief was for
which the old law did not provide, and the remedy provided by the statute to cure that mischief."" Although judges are unlikely to propound
formally in their judgments the four questions in Heydon''s Case, consideration of the ""mischief"" or object of the enactment is common, and will
often provide the solution to a problem of interpretation.
The perusal of the concept envisaged in the Hyden Rule that if the mischief sought to be suppressed itself, if not found suppressed by the bare
reading of the provisions of law, then in that case alone, the Court could interpret in such a way to suppress the mischief which the law wants to
suppress. Here, no such predicament has arisen as in the same enactment, Section 90 contemplates about the resolving of dispute between the
Society and the member and Rule 107 clearly contemplates the recovery procedures which are effective in nature also.
In such a case, it is not as though the mischief committed to the Society is left uncared for by the law, but effectively the legislators made
provisions for curbing such mischief by invoking Section 90 of the Act read with Rule 107 of the Tamil Nadu Co-operative Societies Rules, 1988.
When such is a position, I am at a loss to understand as to why the Government and the Co-operative Society should try to strain the provisions of
Section 87 of the Act and make it elastic and try to apply even as against the members. In case, if there is no effective remedy in the Act or Rules
itself, as against such persons, then at least there would be some justification for applying the words and phrases, to wit, ""any person who is or was
entrusted with the organisation or management of the society or any past or present officer or servant of the society has misappropriated or
fraudulently retained any money or other property or been guilty of breach of trust in relation to the society..."" in the existing Section 87 of the Act,
and interpreting them in such a manner so as to suppress the mischief, but that is absolutely not required in the facts and circumstances of this case
and I am of the considered view that a mere reading of Section 87 of the Act, more specifically, the words and phrases already referred to supra,
would not include ''members''.
I would like to refer to the following maxims also:
(i) Expressio unius, exclusio alterius. {The express mention of one thing implies the exclusion of another.}
(ii) Expressum facit cessare tacitum. {Mention of one or more things of a particular class may be regarded as silently excluding other members of
the class.}
(iii) Generalia specialibus non derogant. {Generalities do not derogate from special provisions.}
These are sister maxims. It is therefore clear from the aforesaid maxims that when effective remedy is contemplated under a specific section of the
statute, there is no necessity to rely upon some other section of the same statute which does not directly deal with the subject.
In these circumstances, the action initiated by the second respondent as against the members u/s 87 of the act, in my opinion is not correct and
it has to be quashed.
In the result, by allowing this writ petition, the impugned notice ref. Na.Ka. No. 5209/2003, Sapa.Tha.Thi.4/2005 dated 1.7.2005 is quashed.
However, irrespective of the quashment, the Society is at liberty to proceed as against the erring members u/s 90 of the Act read with Rule 107 of
the Tamil Nadu Co-operative Societies Rules, 1988 and/or by invoking such other legal remedies under the law by excluding the time taken in
processing the matter u/s 87 of the Act and the time taken during this writ proceeding. Consequently, connected Miscellaneous Petitions are also
closed.