@JUDGMENTTAG-ORDER
T.S. Sivagnanam, J.@mdashThe petitioner, the erstwhile President of the third respondent Society, has filed this writ petition, challenging the surcharge proceedings initiated against him and directing payment of Rs. 15,832.09/- alleging the same to be the loss caused to the Society. The facts or the case lie in a narrow campus:
When the petitioner was President of the third respondent Society, a resolution was passed by the Board appointing one Mr. P. Raghupathy, who was the Secretary of the society authorising him to deal with the affairs relating to the Bank and to take charge of all cash transactions of the third respondent Society. During September 1982, it came to the notice of the petitioner that the Secretary was not accounting the receipts properly and therefore, he was placed under suspension and by letter dated 7.10.1982, he was made liable, to pay a sum of Rs. 28,561.98/-. However, the Secretary had (sic) absconded after about two months he submitted a letter, admitting his liability and agreeing to return the money to the Society. When these matters came to the notice of the officials, namely the Inspecting Officers of the Society deputed by the Department, they directed the petitioner by letter dated 29.9.1982, to take action against the Secretary. Once again, the secretary gave another letter on 14.10.1982, admitting his liability. This petitioner also lodged a police complaint against the Secretary on 3.11.1982.
2. It is further stated that the Secretary while absconding, locked the office room of the Society and took away the keys and only on 4.6.1983, the wife of the said secretary handed over the keys to the Society and promptly the police were informed and in their presence, the room was opened and all documents were seized by the Police and an inventory was prepared on 11.8.1984. In the meantime, the Deputy Registrar of Co-operative Society issued a notice to the petitioner u/s 71 of the Tamil Nadu Co-operative Societies Act, 1961, (1961 Act) calling upon the petitioner as well as the other employees of the society as to why action should not be taken for the loss of Rs. 29,591.95, caused to the Society. Such show cause notice was not only to the petitioner and the Secretary but also the Salesmen of the Society. The petitioner submitted his explanation on 20.9.1984.
3. Thereupon, the Deputy Registrar by order dated 5.11.1985, fixed responsibility on the petitioner by directing the petitioner to pay a sum of Rs. 15,832.09 ps. In the meantime, criminal cases were also filed against the then Secretary, Salesman as well as the petitioner in C.C. No. 124 of 1985 to 130 of 1985 and C.C. No. 143 of 1986 to 149 of 1986 and C.C. No. 410 of 1986. The Secretary was convicted in the criminal case and the petitioner who was arrayed as an accused in C.C. No. 144, 143 of 1986, 146 of 1986 and 147 of 1986 and 410 of 1986 was acquitted by the Judicial Magistrate Court, Ponneri. The petitioner being aggrieved by the order passed u/s 71 of the 1961 Act, preferred an appeal before the Tribunal for Co-operative cases, the second respondent herein in Appeal No. 15 of 1998. The Tribunal by its judgment and decree dated 16.6.1999 confirmed the order passed by the Deputy Registrar, challenging the same, this writ petition has been filed.
4. Mr. R. Thiyagarajan, learned senior counsel appearing for the petitioner submitted that the Deputy Registrar as well as the Tribunal failed to take note of the resolution passed by the Society on 13.2.1981 by which, three resolutions were passed, namely, the petitioner who was a Secretary was designated as a General Manager with monthly remuneration of Rs. 300/-, the Secretary was empowered to deal with all financial transactions, banking transactions of the Society. After the petitioner came to know that the Secretary was not functioning properly, he was placed under suspension and action was initiated against him and the Secretary admitted his liability in writing by submitting letters dated 7.10.1982 and 14.10.1982. Therefore, it is submitted that the petitioner who was only the President of the Society cannot be held responsible for the misdemeanor committed by the Secretary, especially in the light of the resolution which was passed as well as Bylaw No. 28, of the Bylaws of the society. Further, it is submitted that the petitioner also gave a police complaint against the Secretary and in the police complaint given by the department, case was registered against the Secretary and he was convicted. Insofar as the criminal cases, filed against the petitioner all of them ended in acquittal. Therefore, it is submitted by the learned senior counsel that in terms of Section 71 of the 1961 Act which is in pari materia to Section 87 of the Tamil Nadu Co-operative Societies Act, (1983 Act) unless a person is willfully negligent, he cannot be proceeded against and surcharge proceedings cannot be initiated. In support of the said contention, the learned senior counsel placed reliance on the decision of the Hon''ble Supreme Court in
5. Heard the learned counsel appearing for the respondent on the above submission.
6. The only question which has to be decided in the instant case is as to whether the petitioner who was the erstwhile President of the third respondent Society was willfully negligent in discharging his duties and whether he had caused any deficiencies in the assets of the society by breach of trust or acting contrary to the Act, rules or the Bylaws. The Hon''ble Supreme Court in State of Orissa v. Md. Illiyas (supra), held that the term willful would mean intentional, conscious and deliberate and such expression, excludes, casual, accidental, bonafide or unintentional act or genuine inability. The Hon''ble Division Bench of this Court in P. Karuppiah v. The Deputy Registrar of Co-operative Societies (supra), was dealing with a the case of an appellant who was the secretary in-charge of a Co-operative Society and action was initiated u/s 71 against him. The Hon''ble Division Bench held that it must be first established that there were duties and obligations specifically cast on the appellant of which he committed breach and such acts and omissions should be of willful negligence. It was further held that there should be concrete material and it cannot be on presumptions and assumptions.
7. As aforesaid, the only question to be considered is as to whether there has been any willful negligence on the part of the petitioner for making him liable for the said surcharge amount. The Tribunal in its judgment did not address this question, but held that the petitioner is attempting to escape by relying upon the resolution which they passed empowering the Secretary to carry out entire financial transaction of the Society. Likewise, the Deputy Registrar in his order dated 5.11.1985, passed a common order for the petitioner, the delinquent Secretary and the salesmen. The Deputy Registrar made the petitioner liable by stating that when the Secretary admitted his liability and paid certain amount leaving a balance of Rs. 15,942.48/-, after deducting the amount which were remitted by the Secretary, the petitioner was required to make good the loss.
8. It is not in dispute that under Bylaw No. 28, there is enough power for the Managing Board to empower either the President or the Secretary to deal with the accounts of the Society. It has not been disputed that the Society passed a resolution empowering the Secretary, Mr. Raghupathy to carry on all the financial transaction of the Society. Therefore, if such power has been vested with the Board of the Society, it cannot be stated that the delegation given in favour of the secretary is either unauthorized or illegal. Therefore, the petitioner has not acted contrary to the Bylaws.
9. The Hon''ble Division Bench in the case of K. Ajay Kumar Gosh and Others v. Tribunal for Co-operative Cases (2009) 4 MLJ 992 was considering an appeal filed against a writ petition, which was dismissed, declining to quash the surcharge proceedings. The Hon''ble Division Bench after taking note of the various earlier decisions held that to pass surcharge order u/s 87 of the 1983 Act, the appellant therein should have done an actionable wrong either by commission or omission in a deliberate and reprehensible manner with reckless and callousness and with supine indifference, without taking due care and caution ordinarily expected from a reasonable prudent man under those existing circumstances. At this stage, it would be beneficial to refer to the relevant portion of the judgment
15. Reliance has also been placed on a judgment rendered by one of us (P. JYOTHIMANI, J.) in S. Marimuthu and Another v. Deputy Registrar of Cooperative Societies (Housing) Madurai Circle and Another, (2006) 4 MLJ 86 wherein it has been held that in surcharge proceedings, the condition precedent is that liability can be fixed on the employees of the cooperative societies only when it is found that they were intentionally committing the same mistake and negligence. More so, when there is nothing to show that appointment was made by the petitioners on their own accord but were only implementing the orders of the Registrar of Cooperative Societies, responsibility cannot be fined on the appellants for such appointments. In the present case it is not in dispute that the impugned acts were done by the appellants only in order to implement the settlement arrived at between the society and the employees u/s 12(3) of the Act to avoid any penalty being imposed upon them for non-implementing the settlement.
16. As regards the main contention put forth by Mr. S. Subbiah, the learned counsel for the appellants that there was no willful or deliberate misconduct on the part of the appellants, catena of decisions referred by the learned counsel has to be gone into.
17. In
18. Reliance was also placed on
In order to pass a surcharge order u/s 71(1) of the Act against a person entrusted with management of a cooperative society or an officer or a 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, without taking due care and caution ordinarily expected from a reasonable end prudent man under those existing circumstances. In the absence of such categorical finding by the second respondent, it is not possible to mulct the petitioners with the loss caused to the Society
19. A detailed discussion has been made by making reference to various judgments on this aspect in another judgment in
The degree of negligence that is contemplated u/s 71(1) of the Tamil Nadu Cooperative Societies Act is not mere negligence, but wilful negligence. The word ''wilful'' has not been defined in the Act. Wilfulness or ''wantonness'' imports pre-mediation or knowledge and consciousness that an injury or loss is likely to result from the act done or from the omission to act. It 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. 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. 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 the said wilful negligence is the proximate cause of the injury or loss sustained.
20. In the light of the decisions referred to above, it is clear that to pass surcharge order u/s 87 of the Act, appellants 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, without taking due care and caution ordinarily expected from a reasonable and prudent man under those existing circumstances. In the absence of such categorical finding by the respondents, it is not possible to mulct the appellants with the loss caused to the society.
10. On a careful reading of the orders passed by the Deputy Registrar as confirmed by the Tribunal, it is evidently clear that the order of surcharge does not satisfy the test laid down by the Hon''ble Division Bench in K. Ajay Kumar Gosh v. Tribunal for Co-operative Cases (supra). In view of the factual details mentioned above, the case on hand is not a case where it can be stated that the petitioner had been willfully negligent in the matter for being proceeded u/s 71 of the 1961 Act. For all the above reasons, the writ petition is allowed and impugned orders are quashed. No costs.
