High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 20.07.2007CORAMTHE HONOURABLE MR.JUSTICE V. DHANAPALANW.P. No.7326 of 2003 & W.P.M.P. No.9447 of 2003M. GurunathanPetitioner-Vs-1The Special Tribunal for Cooperative CasesVellore2The Deputy Registrar of Cooperative SocietiesVellore3Vellore District Central Cooperative Bankrepresented by its Special OfficerVelloreRespondentsWrit Petition filed under Article 226 of The Constitution ofIndia praying for issuance of a Writ of certiorari as statedtherein. For PetitionerMr. Arumugamfor M/s. Aiyar & DoliaFor 2nd respondentMr. A. Shanmugam, Govt. AdvocateFor 3rd respondentMr. Vijay Narayan, Senior Counselfor Mr. R. ParthibanORDERQuestioning the legality of the order dated 26.09.2002 passedby the first respondent Tribunal in C.T.A. No.10 of 1995 in and bywhich the order dated 20.01.1995 passed by the second respondentin S.C. No.32/93-94 was confirmed, the petitioner has filed thiswrit petition.2The case of the petitioner, in nutshell, is as under:The petitioner is an Assistant Manager in the thirdrespondent Bank and his job includes passing of cheques,maintenance of accounts, etc. On 20.05.1989 (Saturday),the Branch Manager left at 2:30 p.m. and came back tooffice and after verifying the cash balance, signed inthe register concerned and kept the cash in the cashchest along with the Cashier, who is the joint custodian https://hcservices.ecourts.gov.in/hcservices/ of cash. On 22.05.1989 (Monday), when the cash safe wasfound open, the police investigated and found that a sumof Rs.4,35,000/- was missing. Consequently, surchargeproceedings were initiated against the petitioner,Branch Manager and Cashier on 31.12.1993 and the secondrespondent passed an order in the said surchargeproceedings on 20.01.1995 holding that all the three areresponsible to make good the sum of Rs.4,35,000/-. Inthe appeal filed by these three before the firstrespondent Tribunal challenging the order of the secondrespondent, the order of the second respondent wasconfirmed. Aggrieved by the order of the firstrespondent Tribunal, petitioner alone has come out withthe present writ petition .3The main contentions of Mr. Arumugam, learned counselfor the petitioner are that (i) the Branch Manager had notobtained prior approval from the Head Office to leave the Bankearly and there was no instruction from the Head Office to thepetitioner to act in the absence of the Branch Manager; and (ii)the second respondent who had issued the surcharge notice on31.12.1993 ought to have completed the surcharge proceedingswithin six months from thereon as per the second proviso toSection 87 of the Tamil Nadu Cooperative Societies Act, 1983 (inshort "the Act") and instead, it was completed only on 31.12.1994and hence, the order passed by the first respondent Tribunalconfirming the order of the second respondent, is liable to bequashed and the writ petition to be allowed.4In support of his contention that non-compliance ofsecond proviso to Section 87 of the Act would attract quashing ofthe order passed by the first respondent Tribunal, the learnedcounsel for the petitioner has relied on a judgment of this Courtreported in 2000 (II) CTC 659 in the matter of T.V. Ekambaram andtwo others vs. The Cooperative Tribunal cum District Judge,Madurai & 2 others in which para 6 reads as under:". . .Under the circumstances, it has toheld that the second proviso to Section 87 ofthe present Act of 1983 is mandatory in natureand the proviso also stated that the action"shall be" completed within a period of sixmonths and if it exceeds beyond the period ofsix months, there must be an extension fromthe higher authority. As the secondrespondent has not obtained the extension fromthe higher authority, the action initiated hasto be held to be non-est in the eye of law.The second respondent has not followed thesecond proviso to Section 87 (1) of thepresent Act of 1983 which is mandatory. Asthe impugned order has been passed withoutfollowing second proviso to Section 87 of theAct of 1983, the same is quashed. . ." https://hcservices.ecourts.gov.in/hcservices/ 5On his above contention, further reliance has beenplaced by the learned counsel for the petitioner on a judgment ofthis Court reported in 2003 (3) CTC 23 in the matter of Gabrielvs. The Deputy Registrar (Housing), Cuddalore and another in whichthe learned Single Judge, by relying on the judgment referred toabove, has held that the second proviso to Section 87 is mandatoryand holding so, has quashed the order impugned therein as a time-barred one.6Per contra, Mr. Vijay Narayan, learned Senior Counselappearing for the third respondent Cooperative Bank has mainlyargued on the point that Section 87 of the Act is only directoryin nature and not mandatory and hence, non-compliance of the samewill not lead to quashing of the orders of the first and secondrespondents. In support of this contention of his, he has placedreliance on:i.the judgment of the Supreme Court reported in AIR 1965SC 895 (V 52 C 141) in the case of Raza Buland Sugar Co. Ltd. vs.The Municipal Board, Rampur (para 7)"The question whether a particularprovision of a statute which on the fact of itappears mandatory – inasmuch as it uses theword "shall" as in the present case – or ismerely directory cannot be resolved by layingdown any general rule and depends upon thefacts of each case and for that purpose, theobject of the statute in making the provisionis the determining factor. The purpose forwhich the provision has been made and itsnature, the intention of the Legislature inmaking the provision, the serious generalinconvenience or injustice to personsresulting from whether the provision is readone way or the other, the relation of theparticular provision to other provisionsdealing with the same subject and otherconsiderations which may arise on the facts ofa particular case including the language ofthe provision , have all to be taken intoaccount in arriving at the conclusion whethera particular provision is mandatory ordirectory."ii.yet another judgment of the Supreme Court reported in(2004) 8 SCC 402 in the matter of U.P. State Electricity Board vs.Shiv Mohan Singh and another:"Now, coming to the question that theexpression appearing in sub-section (4) ofSection 4, "shall" should be interpreted asmandatory. It depends upon the context inwhich such expression appears. In order to https://hcservices.ecourts.gov.in/hcservices/ interpret the word "shall" appearing in anyenactment, one has to see the context in whichit appears and the effect thereof. . . In thatcontext, their Lordships referred to anearlier catena of decisions and observed: (SCCp.500)"Where a statutory functionaryis asked to perform a statutory dutywithin the time prescribed therefor,the same would be directory and notmandatory. Furthermore, a provisionin a statute which is procedural innature although employs the word"shall" may not be held to bemandatory if thereby no prejudice iscaused. The Court cannot supply"casus omissus."7I have given careful consideration to the submissionsmade by the learned counsel for the parties and the judgmentsrelied on by them in support of their arguments.8The points emerging for consideration in this petitionare as to whether the first and second respondents are correct infixing the responsibility on the petitioner also and whether thesecond proviso to Section 87 of the Act is mandatory or onlydirectory.9Coming to the first point, it is seen from the recordsthat only the Cashier has been stated to be the accused in theFirst Information Report on the file of the Vellore (South) PoliceStation. That apart, the Enquiry Officer, in his report, hascategorically held that the Cashier alone is responsible for theloss of Rs.4.35 lakhs. Lastly, there is nothing on record tosuggest that the petitioner was entrusted with the responsibilityto safeguard the cash balance of the bank. It is also to be notedthat the second respondent himself has very clearly held inparagraph 7 of his finding that the Cashier himself would havekept open the cash box a little open in order to make othersbelieve as if there was a theft. Thus, in view of all thesereasons, it has to be naturally held that the petitioner could nothave been at fault and accordingly, the first point forconsideration is answered in favour of the petitioner.10As regards the second point for consideration, it wouldbe useful to refer to the provisos to Section 87 of the Act whichread as under:"Provided that no action shallbe commenced under this sub-sectionafter the expiry of seven years fromthe date of any act or omissionreferred to in this sub-section;Provided further that the https://hcservices.ecourts.gov.in/hcservices/ action commenced under this sub-section shall be completed within aperiod of six months from the dateof such commencement or such furtherperiod or periods as the next higherauthority may permit but suchextended period or periods shall notexceed six months in the aggregate."11Admittedly, in the instant case, the surchargeproceedings have not been completed within the time-frame norapproval of the higher authorities sought for extension of time tocomplete the surcharge proceedings, as mandated in the provisoextracted above. Of course, in the judgments of the Supreme Courtrelied on by the learned Senior Counsel for the third respondentBank, though it has has been categorically held that where astatutory functionary is asked to perform a statutory duty withinthe time prescribed therefor, the same would be directory and notmandatory, one should not lose sight of the fact that it has alsobeen categorically held by the Supreme Court that it all dependson facts and circumstances of each case and no general principleor a strait-jacket formula can be laid down in this regard. Aboveall, what is to be borne in mind is the legislative intent andalso the object and purpose of the Legislature. 12In the case on hand, when the second proviso to Section87 of the Act specifically mandates that surcharge proceedingshave to be completed within a period of six months from the dateof their commencement and extension of time for completion of suchproceedings is subject to the approval of the higher authority, itis the bounden duty of the officer concerned to ensure that thesurcharge proceedings are completed within the stipulated time andif not, genuine reasons for non-completion of the surchargeproceedings in time have to be assigned before the higherauthority and his approval obtained for extension of time tocomplete the surcharge proceedings . Admittedly, when that is notthe case here, I am afraid that the judgments of the Supreme Courtrelied on by the learned Senior Counsel cannot supplement hisargument that the second proviso to Section 87 of the Act is onlydirectory and not mandatory. Furthermore, the Acts which fell forconsideration before the Supreme Court in the judgments relied onby the learned Senior Counsel for the third respondent Bank arethe Apprentices Act, 1961 and the Uttar Pradesh MunicipalitiesAct, (2 of 1916) and not the Tamil Nadu Cooperative Societies Act.Since law is settled that a function, whether to be calledmandatory or directory, depends on the purport, object and thelegislative intent of the Act, the rulings of the Supreme Courtrelied on by the learned Senior Counsel cannot be said to beapplicable to the case on hand. Apart from this, this Court, onquite a few occasions, as relied on by the counsel for thepetitioner, has categorically held that the second proviso toSection 87 of the Act is mandatory and has quashed the orderspassed in violation of this Section. In such a view of thematter and taking into account the rulings of the Supreme Court https://hcservices.ecourts.gov.in/hcservices/ which state that it is only the facts in each case which woulddetermine as to whether a particular function is mandatory ordirectory, I am in complete agreement with the stand taken by thelearned Single Judges of this Court that the second proviso toSection 87 of the Act is mandatory. Accordingly, since the thirdrespondent Bank has failed in its endeavour in completing thesurcharge proceedings within the stipulated time of six months,this Court quashes the order passed by the first respondentTribunal confirming the order of the second respondent, insofar asthe petitioner is concerned and the second point for considerationtoo is answered favouring the petitioner.13Before parting with the matter, I am to make it clearthat I am conscious of the legislative intent of the Act and atthe same time, as rightly argued by the learned Senior Counsel, itshould also be borne in mind that the financial interest of thecooperative bank also has to be given its due regard. Justbecause there is no provision in the Act as to what will be thefurther course of action if surcharge proceedings are notcompleted within a period of six months from the date of itscommencement and permission of the higher authorities not soughtfor extension, the cooperative bank cannot be made to bear thefinancial loss in view of the fact that such a loophole in the Actwill defeat the very object of the Act. In that view of thematter and bearing in mind the consistent rulings of this Court incases of this nature, this Court suggests the respondents to takeevery possible step to liaise with the authorities concerned inthe State Government to bring out a suitable amendment in the Actas to what will be the further course of action in the event ofthe second proviso to Section 87 of the Act, not being compliedwith.In the result, the writ petition stands allowed with theabove suggestion for amendment of the Act. No costs.Consequently, connected W.P.M.P. is closed.cadSd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1The Special Tribunal for Cooperative Cases, Vellore2The Deputy Registrar of Cooperative Societies, Vellore3The Special OfficerVellore District Central Cooperative Bank, VelloreMA(CO)SR/2.8.2007 order inW.P. No.7326 of 2003