Muruganandam v. The Principal District Court, Chingleput, Kancheepuram District

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED 30.10.2009CORAMTHE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMW.P.No.9901 OF 1999Muruganandam ... PetitionerVs1.The Principal District Court,Chingleput,Kancheepuram District.2.The Assistant Director ofSugar (Projects),E.V.R. Maligai, Nandanam,Chennai – 600 035.3.The Administrator,Tiruttani Co-operative Sugar Mills Ltd.,Tiruvelangadu – 631 210.Thiruvallur District.4.V. Sheshadiri5.K. Natarajan6.S. Natarajan7.S. Kuppusamy ... RespondentsWrit petition filed under Article 226 of the Constitution ofIndia praying for a writ of Certiorari after calling for the recordsrelating to the order dt.18.01.1999 of the 1st respondent in CivilMiscellaneous Appeal(Co.op) No.32/97 confirming the orderdt.15.02.1997 of the 2nd respondent in SC-1/96-97.For Petitioner: Mr.R. Krishnaswamy for Mr.V.Ajoy KhoseFor Respondents: Mrs.G. Thilagavathi for R-3 O R D E RThe petitioner has filed the above writ petition to quash theorder passed by the first respondent in CMA (Co.op.)No.32/97dt.18.01.1999 confirming the order passed by the second respondentdt.15.02.1997. https://hcservices.ecourts.gov.in/hcservices/

2. The matter arises under the provision of Tamilnadu Co-operative Society Act 1983. The issue relates to surchargeproceedings, which were initiated against the petitioner who is anemployee of the third respondent's Co-operative Sugar Mills. 3. The facts leading to the filing of the writ petitioner areas follows;The petitioner was working as an Assistant Stores Keeper inthe third respondent's society from June'1988. During the relevantperiod, the fourth respondent herein was the store keeper andaccording to the petitioner, the store keeper was the solelyresponsible for the goods in the stores. Since the mill was runningon shifts and since the stores department was kept open only duringthe general shift and therefore, during the night and earlier hoursof first shift, the material used to be issued to the engineer forrunning the mill. Therefore, it is submitted that the store keeperalone knows about the issue of materials and the petitioner is noway responsible for any discrepancy in the stocks kept in the store.4. It is submitted that the store keeper is the fourthrespondent herein, was issued a charge memo and was placed undersuspension from 11.01.1991. Subsequently, he was also dismissed fromservice and the fourth respondent has not challenged the order of thedismissal. After the dismissal of the fourth respondent, the post ofstore keeper was kept vacant and on 12.03.1998, the petitioner waspromoted as store keeper. It is further submitted that the reasonfor dismissing the fourth respondent was based on an Audit report,which was submitted after conducting the audit for the period of1990-1991 and certified the deficit in the stock. In thedepartmental proceeding initiated against the fourth respondent, thepetitioner was cited as a witness on behalf of the management, andthe entire allegation was on the fourth respondent. After thepetitioner was promoted as a Store Keeper, a charge memo came to beissued to the petitioner, dated 28.04.1993, containing two articlesof charges which are as follows;(i)Thiru S. Muruganandham, as Assistant Store Keeper inthe Stores in collusion with the other staff of thestores has caused to the mills monetary loss ofRs.2,01,595.57, which is a misconduct within the meaningof Clause 70 of Order 19 of the certified standingorders of the Mills.(ii)Thiru S. Muruganandham, as Assistant Store Keeper inthe stores in collusion with the other staff of thestores has acted fraudulently and dishonestly in respectof the Mills' property worth Rs.2,01,595.57, which is a https://hcservices.ecourts.gov.in/hcservices/ misconduct withint he meaning of Clause 3 of Order 90 ofthe certified standing orders of this Mills.It is further submitted that, on 25.05.1993 enquiry officer wasappointed to conduct a domestic enquiry on the above charges. Theenquiry officer conducted the enquiry and submitted a report dated15.09.1993 holding that the charges are not proved, thereafter, nofurther proceedings were initiated and the matter was kept pending.After the lapse of nearly three years, a notice was issued to thepetitioner under section 87 of the Tamilnadu Co-operative SocietyAct, and the petitioner was called upon to show cause why the deficitstores amount should not be recovered from the petitioner and othersand they were given liberty to submit their written explanation. Itwas stated that in the course of the final audit conducted undersection 80 of the Tamilnadu Co-operative Society Act for theaccounting year 1990-1991, the Co-operative Audit Officer found therewere discrepancies between the book stock and actual stock of thestores and requested to initiate necessary action against the personsresponsible to recover a sum of Rs.4,34,772.85/- being the deficit instock of stores and the excess stock of Rs.1,34,101.76 noticed.Subsequently, during the stock verification for the year ended31.03.1992, it was found that in respect of certain materials deficitnoticed was incorrect and the deficits were adjusted in 1991-1992accounts and the actual stock deficit as on 31.03.1991 was arrived atRs.3,57,215.10/- and their statements were also recorded. Asrequested by the petitioner and others, the engineers namely K. Mani,Mr. Suryamoorthy, G. Lakshmanan, G. Virmalanathan and K.Senthilathipan were also summoned and their statements were recorded.Further, Mr.S. Ramadoss, Chief Accountant, Mr.S. Jagadeeswaran,Superintendent and the petitioner was also asked to give statementsin respect of the stock deficit. In the statement given by thefourth respondent, he has blamed that the petitioner as being thesole reason for the stock deficit. In the statement of thepetitioner, he has blamed the fourth respondent, who was working tillthe store closed and as to how the stocks are given when the storesdepartment is closed during the night shift and early first shift.He would further state that deficit noticed in the stock verificationhave been consumed in the mills without getting stores requisitionslip from the store clerks. He has produced 40 indents, which havenot been posed in the cardex to the value of Rs.1,09,513.63. Onthese grounds, the petitioner requested him to be exonerated from allthe proceedings. The petitioner also placed reliance on the enquiryofficer report dated 15.09.1993 conducted by the Co-operativeSociety, where the enquiry officer held that the charges are notproved against the petitioner. The second respondent afterconducting the enquiry in respect of the petitioner and others by anorder dated 15.02.1997, found the stock deficit to the tune ofRs.2,26,995.42/- and held that the petitioner and the respondent 4 to7 have willfully neglected to maintain proper accounts for receipt https://hcservices.ecourts.gov.in/hcservices/ and issues of stores materials and failed to produce the same beforethe stock verification officers and thereby they have committedbreach of trust and caused deficiency in the assets of the TiruttaniCo-operative Sugar Mills and are bound to recoup the loss along withinterest. Accordingly, the second respondent directed the petitionerto pay a sum of Rs.47,669.15/-. This order passed under section 87of the Act was challenged by the petitioner by filing an appealbefore the second respondent under section 152 of the Act. The firstrespondent, after a fullfledged hearing, dismissed the appeal by anorder dated 18.01.1999. Aggrieved by that said order, the petitionerhas filed the present writ petition.5. Mr.R. Krishnaswamy, learned counsel for the petitioner wouldassail the correctness of the order on the ground that the storekeeper, the fourth respondent was responsible for maintenance of thestock and he has been dismissed from the service and in thesubsequent enquiry which was conducted against the petitioner, theenquiry officer has given a report on 15.09.1993 mentioning that thecharges are not proved. In such circumstances, after inordinatedelay of more than two years proceedings under section 87 of the Acthave been initiated and that it is not sufficient to establishnegligence on the part of the petitioner, but it is necessary toestablish willful negligence. The learned counsel further contendedthat, from the impugned orders, it is clear that there is no recordto show that there is any willful negligence on the part of thepetitioner. Further, the report of the enquiry officer dated15.09.1993 could be considered as a material to come to a conclusionthat there is no willful negligence on the part of the petitioner andit is not a case of misappropriation, when there is no finding of anyloss caused to the third respondent mill and both the secondrespondent as well as the Tribunal failed to take into considerationall the above facts. The learned counsel also submitted thatsurcharge notice was issued on 23.07.1996, for which the petitionersubmitted his reply on 05.08.1996 and as per second proviso toSection 87 (1) of the Act, proceedings have to be completed beforesix months in aggregate, however the period of limitation expired on23.01.1997 and the impugned order was passed only on 15.02.1997.Therefore, the learned counsel would contend that the entireproceedings are barred by limitation. Further, the learned counselcontended that there is no clear finding about misappropriation byboth the authorities and the basis, on which such amount has beenordered to be recovered has not been stated and even if it is inproportion to the security deposit furnished each one at the time ofjoining service, it cannot be a yardstick for determining the amountpayable. On all the above grounds, the learned counsel submittedthat the writ petition deserved to be allowed.6. Mrs.G. Thilagavathi, learned counsel for the respondent 2 and3 would contend that the question of limitation does not arise in a https://hcservices.ecourts.gov.in/hcservices/ proceedings under Section 87 of the Act by relying upon the Judgmentof the Hon'ble Division Bench of this Court in the case of S.V.K.Sahasraman v. Dy. Registrar of Co-op. Societies reported in (2008) 8MLJ 231, wherein it has been held that expression used in the section87 (1) that action commenced under the said sub section shall becompleted within the period of six months from the date of saidcommencement cannot be constituted to be mandatory and mereexpression of the word "shall" alone is not decisive of the matter.The Hon'ble Division Bench of this Court, while considering theperiod of limitation prescribed under Sections 81, 81(4) and 87 heldas follows;"10. Before the learned Judge of the Writ Court, theappellant relied on two learned single Bench judgments of thisCourt rendered in the case of T.V.Ekambaram v. Co-operativeTribunal-cum-District Judge, Madurai 2000 (2) CTC 659 and inthe case of Gabriel v. Deputy Registrar (Housing), Cuddalore(2003) 2 MLJ 624: 2003 (3) CTC 23. In both these twojudgments, the provisions of Section 87 of the said Act whichrelate to surcharge proceedings were examined and the learnedJudges in both the aforesaid judgments constructed thefollowing proviso to Section 87."Provided further that the actioncommenced under this sub-section shall becompleted within a period of six months from thedate of such commencement or such further periodor periods as the next higher authority may permitbut such extended period or periods shall notexceed six months in the aggregate."11. We are constrained to hold that even though no appealhas been taken to us from the said judgments, yet havingregard to the well settled legal position which has beenreferred to hereinabove, the finding of the learned Judges inthese two judgments that the period of six months in thesecond proviso to Section 87 of the said Act is mandatory isnot a correct finding in law. We find that even though beforethe learned Judge of the writ Court those two judgments of thelearned single Bench were cited, the learned Judge of the writCourt was not swayed by those two decisions and came to acorrect finding, relying upon the well settled propositon laiddown by the Supreme Court as pointed above hereinabove.12. We, therefore, affirm the order of the learned singleJudge in this case. We are of the view that in a case wherethere are allegations of embezzlement and misappropriation ofpublic funds, the members of general public who have beencheated have no control over those who hold the enquiry in https://hcservices.ecourts.gov.in/hcservices/ respect of the time limit. To hold that such an enquiry whichhas been continued beyond the time limit bad would case greatinjustice.13. Therefore, if such enquiry is continued beyond thetime limit mentioned in the relevant statute, the said timecannot be held to be mandatory in view of the principles laiddown in Montreal Street Railway Company v. Normandi (supra),which has been affirmed by the Supreme Court.Therefore, the learned counsel for the respondent would submit thatproceedings initiated against the petitioner are not barred bylimitation. On the other grounds raised by the learned counsel forthe petitioner, the learned counsel for the respondent would submitthat the findings of the enquiry officer in the domestice enquiry isunsustainable and the same is not binding upon the officersexercising powers under Section 87 of Act. The enquiry under Section87 of the Act is an independent proceeding and such enquiry is beingconducted in public interest and in the interest of the respondentsociety. Therefore, the finding rendered by any enquiry officercannot be made binding upon the officer conducting surchargeproceedings, that apart the learned counsel would submit that nofurther action had been taken after the Enquiry officer's reportdated 15.09.1993 and the petitioner cannot rely upon such enquiryreport. The learned counsel would further submit that the reasoninggiven by the respondents are based on sustainable materials andrecords and after affording full opportunity to the petitioner to bepresent for the enquiry conducted by the officer. The enquiryofficer while exercising his power under Section 87 of the Act tookinto consideration that the indent given by the petitioner, whichwere not accounted and after giving credit to the same determinedamount, which was recoverable. Therefore, the learned counsel wouldsubmit that all the points raised by the petitioner had beencarefully scrutinized before the second respondent and passed such anorder. The learned counsel would submit that the duties andresponsibilities of the staff in the stores department are verysensitive and are bound to be very vigilant and any negligence ontheir part to account for material has to be treated as breach trustand confidence reposed upon them by the management and endeavor acause of willful negligence. Therefore, the learned counsel wouldsubmit that all the officers of the stores were subjected toproceedings under Section 87 and thereafter only the order has beenpassed. Further, the learned counsel would submit that the dutiesand responsibilities have been assigned for each post and thesurcharge proceedings have been concluded after following theprocedure established by law and there is no error and the writpetition is liable to be dismissed. https://hcservices.ecourts.gov.in/hcservices/

7. I have considered the submission made by the learned counselon either side and perused the material available on record.8. On the question of limitation, as rightly contended by thelearned counsel for the respondents, the Hon'ble Division Bench ofthis Court was considering the correctness of the decision made in awrit petition, where this Court refused to quash the report submittedby the enquiry officer under section 81 of the Co-operative SocietyAct. Sheet anchor of the arguments in the said case was that undersection 81 and 81(4), it is necessary to complete the enquiry withina period of three months or such further period or periods notexceeding three months at a time, provided that such extended periodshall not exceed six months in aggregate. Therefore, it wascontended that the report submitted beyond the period stipulatedunder the Act cannot be held to be valid. The Hon'ble Division Benchof this Court, after elaborately considering the issue, held thatword "shall" used under Section 81, 81(4) should be construed asdirectory and it should not be taken to be as mandatory. In para 10of the judgment, a reference has been made to an earlier decision ofthis court reported in (2003) 2 MLJ 624:2003 (3) CTC 23, whichrelated to a proceedings under Section 87 of the Act as in theinstant case. The Hon'ble Division Bench of this Court held thateven though no appeal has been filed from the said judgment, observedthat the period of six months contained in Section 87 of the Actcannot be held to be mandatory. In view of the finding rendered inthe said judgment, the contention raised by the learned counsel forthe petitioner that the proceedings are barred by limitation isliable to be rejected. 9. Coming to the other submissions of the learned counsel forthe petitioner, it is to be noted that the enquiry under Section 87of the Act, it is statutory a enquiry. This enquiry has been orderedpursuant to a final audit conducted under Section 80 of the Act whereit was found there were discrepancies between the book stock andactual stock of the stores and therefore action was directed to beinitiated. Therefore, such enquiry undoubtedly is of much largescale and the purpose of such enquiry is to protect the asset of thesociety and to prevent any misappropriation or fraudulent action orbreach of trust. Therefore, a domestic enquiry, which was conductedby the society and the report submitted by the enquriy officer on15.09.1993 cannot be treated to have any bearing for the purpose of astatutory enquiry under Section 80 and further enquiry under Section87. Therefore, the contention of the learned counsel that theenquiry report ought to have considered is not sustainable. Further,it is to be noted that after the enquiry report, the society has notinitiated any disciplinary proceedings against the petitioner andabandoned the charge. In such circumstances, the petitioner cannotbe allowed to utilize such report and state that the said report canbe used to prove that there was no willful negligence. In my view, https://hcservices.ecourts.gov.in/hcservices/ the said report of the enquiry officer cannot be relied upon, sinceno disciplinary action or further proceedings have been taken on thedepartmental charge. On perusal of the order passed by the secondrespondent would amply illustrate that the same has been made afterrecording the statements given by the petitioner as well as therespondents 4 to 7, and the statements of the Engineers who are saidto have taken the material during the various shifts. Further it isseen that 40 indents and other materials were taken intoconsideration by the second respondent and the same were givencredit. Therefore, I find that the reasoning given in the orderpassed by the second respondent is after careful consideration of theentire oral and documentary evidence. These reasonings are neitherperverse nor arbitrary and the same cannot be interfered in aproceeding under Article 226 of the Constitution. Likewise, theorder passed by the first respondent/Tribunal has been made afterindependently considering the oral and documentary evidence. In myview, the Tribunal has carefully considered the evidence and alsotaken note of the various statements recorded from the officers.Therefore, I am of the view that the impugned orders do not call forany interference for the reason that:i.Finding rendered by the enquiry officer on 15.09.93, in adomestic enquiry ordered by the management is not binding uponthe statutory enquiry contended by the second respondent underSection 87 of the Act, especially when no further action wastaken by the Management after the submission of the enquiryreport.ii.From the evidence on record as well as the statement recordedfrom the petitioner, the respondents 4 to 7 and other Engineers,it is clearly established that there has been a willfulnegligence and breach of trust on the part of the petitioner,who was one of the officer in the stores department and thefinding rendered by the respondents 1 and 2 calls for nointerference. iii.In view of the Judgment of the Hon'ble Division Bench of thisCourt in the case of S.V.K. Sahasraman as referred above, theproceedings under Section 87 of the Act initiated against thepetitioner is not barred by limitation.iv.Apportionment of the amount recoverable from each of theemployees in the stores department is based upon their dutiesand responsibilities and there is sufficient logic to effectthat the recovery is based on the amount of security depositwhich has been deposited by the employees at the time of joiningthe employment. https://hcservices.ecourts.gov.in/hcservices/

10. In view of the above, the writ petition is dismissed. NoCosts. Sd/- Asst.Registrar/true copy/ Sub Asst.Registrarrkm To1.The Principal District Court,Chingleput,Kancheepuram District.2.The Assistant Director ofSugar (Projects),E.V.R. Maligai, Nandanam,Chennai – 600 035.3. The Administrator,Tiruttani Co-operative Sugar Mills Ltd.,Tiruvelangadu – 631 210. Thiruvallur District.+1 cc to Mr.V.Ajoy Khose, Advocate, SR.No.57589+1 cc to M/s.G.Thilakavathi, Advocate, SR.No.57594 W.P.No.9901 OF 1999CKN {CO}TP/5.11.2009.