K. GOPALAN MANAGER, INTERNAL AUDIT NILGIRIS DISTRICT CENTRALCO-OPERATIVE BANK Vs. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES UDHAGAMANDALAM CIRCLE

JUDGEMENT

(1.) THE petitioners seek to quash the order dated 27.03.2014 of the first respondent, by which, the first respondent initiated proceedings under Section 87 (1) of the Tamil Nadu Cooperative Societies Act, 1983 (hereinafter called as The Act) on the basis of the report under Section 81 of the Act, and called upon the petitioners to submit their explanation to such proceedings within a period of seven days.

(2.) THE petitioners are employees of the second respondent bank, except the second petitioner in this writ petition, who has already retired from his service. According to the petitioners, the second respondent bank has its own Board of Directors, Officers, Staff, Employees and Members and they are governed by their own Rules and Regulations, including service rules. Similarly, the third respondent society is also a separate and independent cooperative society having its own Board of Directors, Officers, Staff and Members. Further, the members of the third respondent society are teachers and non -teaching staff of the Government and aided High Schools and Higher Secondary Schools in the Nilgiris District. The third respondent has its own method of selecting members and procedure for giving loan facility to their members. Therefore, according to the petitioners, the second respondent bank and the third respondent society are different entities and they have no nexus or connection with each other, whatsoever. Merely because the petitioners are working in the second respondent bank and had sanctioned medium term loan to the third respondent society, it cannot be said that there is an administrative relationship between the second respondent bank and third respondent society. While so, during July 2013, in connection with the enquiry contemplated under Section 81 of the Act in connection with the affairs of the third respondent society, the petitioners were called upon by the enquiry officer as witnesses. The petitioners also appeared before the enquiry officer, gave evidence stating that they had no knowledge on the day to day administrative functioning of the third respondent society. In other words, the petitioners have deposed regarding the circumstances under which few of the cheques and withdrawal slips relating to the third respondent society has been entertained and the payments made thereof. The petitioners have deposed that they have no other personal knowledge relating to the day to day transaction or administrative affairs of the third respondent society. While so, by the impugned proceedings dated 27.03.2014, the petitioners were called upon to submit their explanations as to why surcharge proceedings should not be initiated against them under Section 87 of the Act for recovery of a sum of Rs.47,63,743/ - jointly and severally along with one Mr. D. Sathyamoorthy.

(3.) ON the other hand, the learned Special Government Pleader appearing for the respondents, relying on the counter affidavit filed by the first respondent, would vehemently opposed of the maintainability writ petition especially when the proceedings impugned in this writ petition is only in the nature of a show cause notice calling upon the petitioners to submit their explanation. According to the learned Special Government Pleader for the respondents, the second respondent bank caters to the various financial needs of the banks affiliated to it, including the third respondent society. As regards the third respondent society, whenever loan applications are received from it's members, they would submit a consolidated loan application to the second respondent bank, which in turn scrutinises the loan applications of the members of the third respondent society through its field supervisors, Managers etc., and credits the loan amount to the savings bank account of the third respondent society held with the Head Office or the Branches of the second respondent bank as the case may be. When once the amount of loan sanctioned by the second respondent bank is credited to the savings bank account of the third respondent society, the proceeds of the loan become the property of the third respondent society and is indebted to the second respondent bank. Therefore, the second respondent bank has administrative control over the affairs and also has a direct involvement with the day to day functioning of the third respondent society.