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P.Ilango IAS Retd v. the Administrator

Madras HC4 Apr 2014WA/1686/2013

Case brief

AI extract

What is this about?

The High Court set aside a single judge order that had restored surcharge proceedings against a cooperative society administrator. The court held that without proof of wilful negligence or deliberate dereliction of duty, surcharge proceedings cannot be sustained, even if the administrator failed to follow strict budget norms during an emergency.

What did the court decide?

The order dated 30.08.2011 in W.P. No. 6362 of 2009 is set aside, and the tribunal order in C.M.A. No. 39 of 2001 is restored. No costs.

P.Ilango IAS Retd Vs the Administrator — Corruption | Madras HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 04.04.2014

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CORAM

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THE HONOURABLE MR. JUSTICE N.PAUL VASANTHAKUMAR

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and

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THE HONOURABLE MR. JUSTICE M.SATHYANARAYANAN

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Writ Appeal No.1686 of 2013

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and

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M.P.No.1 of 2013

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P.Elango, IAS., (Retd.) ... Appellant/4th Respondent

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vs 1. The Administrator, M.R.K. Co-operative Sugar Mills, Sethiathope, Chidambaram Taluk, Cuddalore District. ... Respondent/Writ Petitioner 2. The Appellate Authority, Co-operative Tribunal, Principal District Judge, Cuddalore.

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Administrator/Joint Registrar, Chengalrayan Co-op. Sugar Mills, Pepriyasevalai-607 209.

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The Commissioner of Sugar, Office of the Commissioner of Sugar, 690, Anna Salai, Nandanam, Chennai-35. 5. G.Sundaramurthy 6. K.Kalimuthu 7. Pandurangan ... Respondents/Respondents

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Prayer:- Writ appeal filed under Clause 15 of the Letters Patent, against the order, dated 30.08.2011, made in W.P.No. 6362 of 2009. Writ petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of cwertiorari calling for the records of the 1st respondent culminating in the passing of the order dated 20.09.2007, 01.11.2007 and 20.09.2007 made in CMA Nos.33, 39 and 34/2001 respectively on the file of the first respondent herein quash and the same.

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For Appellant :Mr.S.Ramesh For Respondents :Mrs.G.Thilagavathi for R1 R-2 - Tribunal No appearance for R3 to R7

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J U D G M E N T (Judgment of the Court was delivered by M.SATHYANARAYANAN,J.)

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By consent, the writ appeal is taken up for final disposal.

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2.The respondent No.4 in W.P.No.6362 of 2009, is the appellant.

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3.As against the fourth respondent, who was the Administrator of M.R.K. Co-operative Sugar Mills, Sethiathope, Chidambaram Taluk, Cuddalore District, and other employees of the said Mill, surcharge proceedings were initiated alleging that there has been a loss on account of running of tractor for removal of bagasse amounting to a sum of Rs.4,96,665/- and though a monetary limit of Rs.5,00,000/- has been fixed, by engaging the tractor and fixing a sum of Rs.250/- per hour, additional sum of Rs.1,36,750/- has been paid and on account of the said act, loss has been caused to the said Mill.

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4.It is further alleged that the excess amount of Rs.1,36,750/spent on account of hiring the tractor has also been not ratified from the Higher Authority, viz., Commissioner of Sugar Department.

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5.The Original Authority has decided that there was negligence in spending the said amount by passing a common order dated 30.03.2001 and challenging the legality of the same, the appellant herein as well as others preferred Co-operative Miscellaneous Appeals before the Co-operation Tribunal(Principal District Judge), Cuddalore, in C.M.A.Nos.33, 39 and 34 of 2001. The appellant herein has filed C.M.A.No.39 of 2001 before the said Tribunal. The Tribunal has taken into consideration the materials placed before it and found that the obtaining of the budget approval is not in connection with of the duty of the appellant, who was the Administrator and more over, the charges found in the notice issued under Section 18 of the Co-operative Societies Act and the basic details were also contradictory. The Tribunal further found that much quantity of bagasse got stored in the sugar mill and it should be removed in time by the Tamil Nadu Paper Mills Limited and in order to get over the difficulty only, tractors came to be engaged and a large quantity of bagassee has been removed from the premises of the Mill and in the light of the reasons assigned and also on the ground of limitation, set aside the order passed by the Original Authority, vide orders, dated 20.09.2007, 20.09.2007 and 01.11.2007 respectively in C.M.A.Nos.33, 34 and 39 of 2001.

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6.The Administrator of the Mill, aggrieved by the above said

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orders passed by the Co-operative Special Tribunal, has filed W.P.Nos.6361 to 6363 of 2009. The learned Judge found that the Tribunal largely carried away by the fact that the surcharge order was hit by limitation and the findings regarding the merits of the case was only incidental and the Tribunal did not take note of all the relevant facts and therefore, set aside the order passed by the Tribunal and restored the order passed by the Original Authority and aggrieved by the same, the present writ appeal is filed by the appellant in C.M.A.No.39 of 2001.

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7.The learned counsel appearing for the appellant would contend that more than 10,000 tons of bagasse was produced and got stored in the Mill premises, which necessitated removal and though the budget estimate for engaging tractor to remove the bagasse is fixed at Rs.5,00,000/-, due to sudden influx of sugarcane and production of huge quantity of bagasse, it necessitated immediate and urgent removal and accordingly, tender was quoted and six persons have participated in the process and it was awarded to a person, who has made lesser offer and there was a negotiation and thereafter, the amount was reduced and rent was fixed at Rs.250/- per hour.

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8.it is further contended by the learned counsel for the appellant that it is not the case of the Administrator/writ petitioner that retrospective sanction cannot be granted in compliance of budget estimate and even as per the stand taken by the writ petitioner, there was no wilful negligence on the part of the appellant herein and the allegation against him is that he has failed to exercise due diligence for engaging tractor for removal of bagasse, being the Administrator of the Mill and the said fact has been rightly taken into consideration by the Tribunal and set aside the order passed by the Original Authority and also on the ground of limitation and hence, prays for quashment of the impugned order passed in the writ petition.

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9.Per contra, Mrs.G.Thilakavathi, learned counsel appearing for the first respondent, has vehemently contended that the appellant, being the Administrator, was expected to exercise due diligence and caution while spending the money and though the budget estimate was Rs.5,00,000/-, he has spent excess amount of Rs.1,36,750/- by engaging the tractor and for removal of bagasse and in any event, ought to have obtained post facto approval from the higher authority viz., the Commissioner of Sugar Department and he has failed to do so and therefore, the order passed in the surcharge proceedings is in accordance with law and the same has been rightly restored by the learned single Judge.

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10.This Court, after carefully considering the rival submissions and taking note of the materials available on record, is of the considered view that the impugned order passed in W.P.No.6362 of 2009 Is liable to be set aside for the following reasons:-

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11.It is an admitted fact that on account of extraordinary influx of sugarcane and production of sugar, large quantity of bagasse, viz., more than 10,000 tons got accumulated in the premises and it requires immediate removal from the premises of the Mill for its smooth and proper functioning. The budget estimate for engaging tractor to remove the bagasse was Rs.5,00,000/- and in view of the urgency, necessary steps have been taken to remove the bagasse and therefore, the tender was quoted and six persons have participated and out of them, one person has quoted the lowest tender and he was called upon and negotiation was also done and the rent was fixed at Rs.250/- per hour. Even as per the stand taken by the first respondent that the appellant has failed to exercise due care and caution while awarding contract, there was no allegation that he was wilfully negligent to perform his duty.

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12.Similar issue arose for consideration in the decision rendered by a learned single Judge of this Court (N.Paul Vasanthakumar, J.) reported in (2009) 6 MLJ 1051 [A.Janakiraman and another -vs- Deputy Registrar of Co-operative Societies and another), wherein the learned single Judge has referred to all the earlier decisions on that point and held as follows:-

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"In surcharge proceedings, the first respondent is duty bound to prove that there was wilful dereliction of duty like criminal case. The criminal Court having found that the petitioners are not guilty, the said findings are definitely in favour of the petitioners. The words used under Section 87(1) are "wilful negligence". The said issue was considered in series of decisions of this Court

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(a)In Sathyamangalam Co-operative Urban Bank Limited v. Deputy Registrar of Co-operative Society and Another (1980) 2 MLJ 17, this Court considered the scope of earlier Section viz., Section 71 of the Tamil Nadu Co-operative Societies Act, 1961, which is analogous to Section 87 of the Act, 1983 and held that mere negligence is not sufficient to initiate surcharge proceedings.

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(b)A Division Bench of this Court in P.Karuppiah v. Deputy Registrar of Co-operative Societies (1989) WLR 272 considered the very same aspect and in paragraph 3 held as follows:

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"3.The second aspect canvassed by the learned counsel for the appellant is that, assuming that the petitioner was cast with specific responsibility or obligation or duty with reference to the remittances and withdrawals yet, the alleged acts and omissions with which the appellant was charged could not be said to have been tainted with 'wilful negligence' which has

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been construed by pronouncements of the Court as meaning something done either by commission or omission, in a deliberate and reprehensible manner, with reckless callousness and with a supine indifference, and not by accident or inadvertence without taking due care and precaution ordinarily expected form a reasonable and prudent man under the existing circumstances. Learned counsel for the appellant took the trouble of citing before us pronouncements of a number of single Judges of this Court. Learned counsel for the appellant would submit that even in the field of inference, there is no possibility of characterising the alleged acts and omissions on the part of the appellant as tainted with 'wilful negligence'. We would have gone into this question, but we find that the answer given by us with regard to the first contention in favour of the appellant has served his purpose and we are of the view that for the present case we need not trouble ourselves with regard to this aspect. The learned single Judge, we find, has omitted to take note of the crucial aspect with regard to the casting of specific responsibility or duty or obligation on the appellant with regard to remittances and withdrawals. As we have already pointed out, there is no material evidence exposed in this case, showing that position. In the absence of the said position being made out against the appellant it is not possible to sustain the proceedings which culminated in the mulcting of the liability on the appellant. Taking note of this feature, we are obliged to interfere in writ appeal and accordingly, the writ appeal is allowed, the order of the learned single Judge is set aside and the writ petition W.P.No.1955 of 1978 is allowed. We make no order as to costs both in the writ petition and in the writ appeal."

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(c)The above decision was followed in the decisions Chockappan v. Special Tribunal for Co-operative Cases (1999) 1 MLJ 587 and M.Sambandam v. Deputy Registrar (Credit) Coopeartive Societies, Mylapore, Madras.

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(d)In M.Chella Nadar v. Deputy Registrar of Cooperative Societies, Thuckalai and post, K.K.District (2002) WLR 198, the very same issue of scope of Section 87 (1) was considered and similar surcharge proceedings was quashed.

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(e)The above decisions are followed in the decision in S.Marimuthu v. Deputy Registrar of Co-operative Societies (Housing), Madurai Circle (2006) 4 MLJ 86.

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(f)Recently, a Division Bench of this Court in the decision in K.Ajay Kumar Gosh v. Tribunal for Co-operative Cases, Nagercoil (2009) 4 MLJ 992, set aside the order of surcharge and in paragraph 20 held thus at p.996 of MLJ:

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"20.In the light of the decisions referred to above, it is clear that, to pass surcharge order under Section 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".

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14.In the light of the above decisions of this Court and having regard to the fact that the first respondent failed to establish the furnishing of copy of Section 81 Enquiry report before initiating surcharge proceedings and the wilful dereliction of duty having not been established, I hold that the recovery proceedings initiated against the petitioners cannot be sustained.

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13.Though the above said decision was rendered by one of us (N.Paul Vasanthakumar, J.), the learned Judge has referred to and followed the judgment rendered by the Division Bench and in the considered opinion of this Court, the ratio laid down is squarely applicable to the facts of this case.

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14.This Court has also gone through the order passed by the Original Authority and there was no finding that there was wilful negligence on the part of the appellant herein and even as per the stand taken by the Administrator/writ petitioner in the writ petition that the appellant has failed to exercise due diligence and caution, there was no allegation that he has wilfully negligent to perform his duty.

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15.Therefore, in the light of the above facts and circumstances, especially the fact that only on account of urgency, which necessitated to remove huge quantity of bagasse and only after following due process of law, i.e, quoting tender and allotting work to the bidder, who offered the lowest price, and only after negotiation, the rate which was fixed at Rs.250/- per hour. In the

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above facts and circumstances, it cannot be said that the appellant was guilty of wilful negligence or motivated act on his part to cause alleged loss to the mill. Therefore, the impugned order is liable to be set aside.

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16.In the result, the writ appeal is allowed. The order, dated 30.08.2011, made in W.P.No.6362 of 2009 is set aside and consequently, the order passed by the tribunal in C.M.A.No.39 of 2001 stands restored. Connected Miscellaneous Petition is closed. No costs.

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Sd/-
Assistant Registrar(CS-V)
Dated: 15.04.2014
//True Copy//
Sub Assistant Registrar
To
1. The Administrator, M.R.K. Co-operative Sugar Mills,
Sethiathope, Chidambaram Taluk, Cuddalore District.
2. The Appellate Authority, Co-operative Tribunal,
Principal District Judge, Cuddalore.
3. Administrator/Joint Registrar,
Chengalrayan Co-op. Sugar Mills, Pepriyasevalai-607 209.
4. The Commissioner of Sugar,
Office of the Commissioner of Sugar, 690, Anna Salai, Nandanam,
Chennai-35.
1 CC to Mr.S.Ramesh, Advocate SR.No.16482
1 CC to Mrs.G.Thilagavathi, Advocate SR.No.16347
W.A.No.1686 of 2013
SCD(CO)
JJM (15.04.2014)

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P.Ilango IAS Retd v. the Administrator

Case brief

What is this about?

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P.Ilango IAS Retd v. the Administrator

Case brief

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