H.Rajasekar v. The Deputy Registrar of Cooperative Societies

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 17.04.2009C O R A MTHE HONOURABLE Mr.JUSTICE S.NAGAMUTHUWrit Petition No.22558, 23558 & 23559 of 2008andM.P.Nos.1 & 2, 1 & 2 and 1 & 2 of 2008H.Rajasekar ..Petitioner in W.P.22558/08G.Prabakaran ..Petitioner in W.P.23558/08K.Mallesh ..Petitioner in W.P.23559/08 -Vs-1.The Deputy Registrar of Cooperative Societies, Krishnagiri Circle, Krishnagiri District.2. K.Somasundaram 3. Tmt.Shanti4. The Special Officer, S.1945, Madagondapalli primary Agricultural Co-operative Bank ltd., Madagondapalli, Hosur Taluk, Krishnagiri District. The 4th respondent impleaded as per theorder of this Court dated 17.04.2009 madein M.P.Nos. 1 + 1 + 1 of 2009 in WritPetition Nos. 22558, 23558 and 23559 of2008... Respondents in all W.Ps https://hcservices.ecourts.gov.in/hcservices/ Petitions filed under Article 226 of the Constitution ofIndia praying for the issuance of a writ of certiorari to call forthe records relating to the impugned proceedings in Thanda TheervaiNo.3/2008/Sa.Pa. dated 01.08.2008 issued by the first respondentand the enquiry report dated 18.08.2006 submitted by the secondrespondent herein and quash the same. . . . For petitioner in all W.P.s : Mr. T.Sundaravadanam For respondents in all W.ps : Mrs.Malarvizhi Udhayakumar, Spl.Govt.Pleader(R1) Mr.M.S.Palaniswamy (R4) No appearance for R-2 and R-3 . . . C O M M O N O R D E R Whether the time limit provided in first proviso toSection 87(1) of the Tamil Nadu Co-operative Societies Act, 1983 isimperative or only directory is the question which needs to beanswered in these writ petitions. 2. An enquiry under Section 81 of the Tamil Nadu Co-operative Societies Act, 1983 (hereinafter referred to as "theAct") was ordered in respect of monetary loss said to have beencaused by the petitioners herein, who were the employees of theFourth Respondent Society. The Enquiry Officer submitted a Reporton 18.08.2006 holding that the petitioners are responsible for theloss caused to the Society. Based on the said Report, on anapplication filed by the fourth respondent, a proceeding underSection 87(1) of the Act was initiated by the first respondent inPenal Assessment No.33/2008/Sa.Pa dated 01.08.2008 against thepetitioners. Challenging the said proceeding on the ground that itis barred by limitation as provided in the first proviso to Section87(1) of the Act, the petitioners are now before this Court. Tothe contrary, the contention of the respondents is that the timelimit provided therein is not mandatory and the same is onlydirectory and therefore, the impugned proceeding is not barred bylimitation, warranting interference at the hands of this Court. https://hcservices.ecourts.gov.in/hcservices/

3. In order to appreciate the legal plea taken by eitherside, it would be, at the outset, useful to refer to Section 87(1)of the Act, which reads as follows:-"87. Surcharge:- (1) Where in the course of anaudit under Section 80 or an inquiry under Section81 or an inspection or investigation under Section82 or inspection of books under Section 83 or thewinding-up of a society,it appears that any personwho is or was entrusted with the organisation ormanagement of the society or any past or presentofficer or servant of the society hasmisappropriated or fraudulently retained any moneyor other property or been guilty of breach of trustin relation to the society or has caused anydeficiency in the assets of the society by breachof trust or wilful negligence or has made anypayment which is not in accordance with this Act,the Rules or the bye-laws, the Registrar himself orany person specially authorised by him in thisbehalf, of his own motion or on the application ofthe board, liquidatory or any creditor orcontributory may frame charges against such personor officer or servant and after giving a reasonableopportunity to the person concerned and in the caseof a deceased person, to the representative whoinherits his estate, to answer the charges, make anorder requiring him to repay or restore the money orproperty or any part thereof with interest at suchrate as the Registrar or the person authorised asaforesaid thinks just or to contribute such sum tothe assets of the society by way of compensation inrespect of the misappropriation, mis-application offunds, fraudulent retainer, breach of tr5ust orwilful negligence or payments which are not inaccordance with this Act, the Rules or the bye-lawsas the Registrar or the person authorised asaforesaid thinks just.First Proviso to Section 87(1) of the Act readsas follows:-Provided that no action shall be commencedunder this sub-section after the expiry of sevenyears from the date of any act or omission referredto in this sub-section".4. A plain reading of the above proviso to Section 87(1)of the Act, at the first glimpse, would give an unambiguousimpression that the time limit provided therein is mandatory. But,the learned counsel for the respondents would submit that similar https://hcservices.ecourts.gov.in/hcservices/ time limits provided in second proviso to Section 87(1) and Section81(4) of the Act have been held to be only directory by this Courtand so, applying the same yardstick, the first proviso to Section87(1) of the Act should also be construed to be only directory andnot mandatory. 5. To appreciate the said argument, it is necessary torefer to second proviso to Section 87(1) and Section 81(4) of theAct, which read as follows:-"Second Proviso to Section 87(1) of the Act:-Provided further that the action commencedunder this sub-Section shall be completed within aperiod of six months from the date of suchcommencement or such further period or periods asthe next higher authority may permit but suchextended period or periods shall not exceed sixmonths in the aggregate.81.Inquiry:-(4) The inquiry shall becompleted within a period of three months from thedate of ordering the inquiry or such further periodor periods not exceeding three months at a time asthe next higher authority may permit, provided thatsuch extended periods shall not exceed six months inthe aggregate."6. While interpreting Section 81(4) of the Act inW.P.No.20310 of 2007, it was contended before me that the period oflimitation provided in Section 81(4) of the Act is mandatory. But,after analysing two previous judgments of this Court as well as fewJudgments of the Hon'ble Supreme Court, I held that the said periodprovided in Section 81(4) of the Act is only directory and notmandatory. The affirmative language employed in Section 81(4) ofthe Act was given due appreciation. Challenging the said order, anappeal was preferred in W.A.No.949 of 2008 in which a DivisionBench of this Court approved the view that the period of limitationprovided under Section 81(4) of the Act is only directory and notmandatory. (Vide S.V.K.SAHASRAMAM ..VS.. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES (2008 (8) M.L.J. 231)). The Division Benchfurther held that the period of limitation provided in secondproviso to Section 87(1) of the Act is also directory and notmandatory. 7. It is based on the said view taken by me and theDivision Bench, it is contended by the learned counsel for thefourth respondent that the period of limitation provided in thefirst proviso to Section 87(1) should also be construed to be onlydirectory and not mandatory. In my considered opinion, the saidcontention of the learned counsel cannot be countenanced for thereasons that follow. https://hcservices.ecourts.gov.in/hcservices/

8. A cursory perusal of the first proviso to Section 87(1) of the Act on one side, Section 81(4) of the Act and secondproviso to Section 87(1)of the Act on the other, would go a longway to indicate that in the former, the language employed isaffirmative in nature, whereas it is negative in the later twoprovisions. From this, it could be understood that the Legislaturehad intended to draw a distinction between the first proviso toSection 87(1) of the Act and the other two provisions stated above.Had it been the intention of the Legislature that the first provisoto Section 87(1) of the Act should also be meant to be onlydirectory, nothing would have prevented the Legislature to usesimilar affirmative language in the first proviso also. But, theLegislature has deliberately used negative language in the saidproviso, which would go to clearly indicate the different intentionof the Legislature. Therefore, the interpretation made to Section81(4) and second proviso to Section 87(1) of the Act cannot beimported to first proviso to Section 87(1) of the Act. 9. At this juncture, let me analyse the Rule ofInterpretation in the context of the language used in a statute. Ingeneral, the question as to whether a statute is mandatory ordirectory, of course, depends upon the intent of the legislatureand not upon the language in which the intent is clothed. Themeaning and intention of the legislature must govern, and these areto be ascertained, not only from the phraseology of the provision,but also by considering its nature, its design, and theconsequences which would follow from construing it the one way orthe other. (Vide State of U.P. ..Vs.. Manbodhan Lal Srivastava(A.I.R. 1957 S.C. 912)). 10. Thus, it is not only the language employed, but theintent of the Legislature which makes a particular provision in aStatue either imperative or directory.A mode of showing a clearintention that the provision enacted is mandatory, is by clothingthe command in a negative form. Prohibitive or negative words canrarely, if ever, be directory. And this is so even though thestatute provides no penalty for disobedience. (Vide HaridwarSingh ..Vs.. Bagun Sumbrui and Others (A.I.R. 1972 S.C. 1242)).Negative words are clearly prohibitory and are ordinarily used as alegislative device to make a statute imperative. (Vide SUBBARAO, J.in M. Pentiah ..Vs.. Muddala Veeramallappa (A.I.R. 1961 S.C.1107)). 11. Based on the above rules of interpretation, from thenegative language employed, the Hon'ble Supreme Court has held thatSection 80 of the Code of Civil Procedure, 1908 (Vide Bhagchand ..Vs.. Secretary for State (A.I.R. 1927 PC 176)), Section 87-B of the https://hcservices.ecourts.gov.in/hcservices/ Code of Civil Procedure, 1908 (Vide Gaekwar Baroda State Railway ..Vs.. Hafiz Habib-ul-Haq (A.I.R. 1938 PC 165)), Section 77 of theRailways Act, 1890 (Vide G.G. in Council ..Vs.. Masaddi Lal (A.I.R.1961 SC 725)), Section 15 of the Bombay Rent Act, 1947 (Vide WamanShriniwas ..Vs.. Ratilal Bhagwandas & Co., (A.I.R. 1959 S.C. 689)),Section 213 of the Succession Act, 1925 (Vide Hem Nolini Judah ..Vs. Isolyne Sarojabashini Bose (A.I.R. 1962 S.C. 1471)), Section 5-A of the Prevention of Corruption Act, 1947 (Vide H.N.Rishbud ..Vs.. State of Delhi (A.I.R.1955 S.C. 196)), Section 7 of the StampAct, 1899(Vide Suraj Mull Nagoremull ..Vs.. Tritorn Ins.Co.,(A.I.R.1925 PC 83)), Section 108 of the Companies Act, 1956 (VideMannalal Khetan ..Vs. Kedarnath Khetan (A.I.R. 1977 S.C. 536)),Section 20(1) of the Prevention of Food Adulteration Act, 1954(Vide A.K.Roy ..Vs.. State of Punjab (A.I.R. 1986 S.C. 2160)) andSection 55 of the Wild Life Protection Act, 1972 (Vide State ofBihar ..Vs.. Murad Ali Khan (A.I.R. 1989 SC 1)) as mandatory.Recently, while analysing the negative language employed to theproviso to Section 33(2)(b) of the Industrial Disputes Act, 1947,the Hon'ble Supreme Court has held that it is mandatory. (VideJaipur Zila Sahakari Bhoomi Vikas Bank Ltd., ..Vs.. Ram GopalSharma and others (A.I.R. 2002 S.C. 643)). 12. Applying the above principle laid down by the Hon'bleSupreme Court in various judgments cited supra, if the deliberatenegative language employed in the first proviso to Section 87(1) ofthe Act is analysed in the light of the affirmative languageemployed in Section 84(1) and second proviso to Section 87(1) ofthe Act, the intent of the Legislature could be perceived that theLegislature has prescribed the time limit only as mandatory. 13. In the case on hand, admittedly, the proceeding underSection 87(1) of the Act was initiated after the expiry of sevenyears period of limitation provided. The learned counsel for thefourth respondent would further submit that the proceeding underSection 87(1) of the Act should be construed to be a continuationof the enquiry held under Section 81 of the Act and therefore, itwould be suffice if the enquiry under Section 81 of the Act iscommenced within a period of seven years from the date of thecommission or omission. I find it very hard to persuade myself toaccept the said argument. Section 81 and 87(1) of the Act operateon different spheres in different angles. An enquiry under Section81 of the Act is held only to find out the truth in respect ofcertain matters enumerated therein pertaining to the society, wherethere is no adjudication between the parties in respect of anydisputed question. But, a proceeding under Section 87(1) of the Actis quasi Judicial in nature where there is adjudicatory processundertaken; ultimate award binds the parties to the proceeding andthe award is executable. Thus, these provisions are totallydissimilar and they operate on different areas. So, a proceeding https://hcservices.ecourts.gov.in/hcservices/ under Section 87(1) of the Act is only a follow up act and not acontinuation of Section 81 of the Act. 14. Thus, looking at the legal issues from any angle,applying the well settled principles of interpretation asenumerated above, I hold that the first proviso to Section 87(1) ofthe Act prescribes a period of limitation, which is mandatory.Consequently, the impugned proceedings are liable to be quashed asbarred by limitation. 15. In the result, these writ petitions are allowed andthe impugned proceedings of the first respondent dated 01.08.2008are quashed. Connected miscellaneous petitions are closed. Nocosts. Pal / Dpn/-Sd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1.The Deputy Registrar of Cooperative Societies, Krishnagiri Circle, Krishnagiri District.2. The Special Officer, S.1945, Madagondapalli primary Agricultural Co-operative Bank ltd., Madagondapalli, Hosur Taluk, Krishnagiri District + 2 ccs to Mr. M. S. Palaniswamy, Advocate, SR No.14974, 14975+ 2 ccs to Mr. T. Sundaravadanam, Advocate, SR No.15347. 15348+ 1 cc to the Government Pleader, SR No.15413PUR(CO)SR/20.7.2009 W.P.Nos.22558, 23558 & 23559 of 2008