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S. Venkataraman Vs. the Deputy Registrar of Co-operative Societies and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Reported in(1978)1MLJ284
AppellantS. Venkataraman
RespondentThe Deputy Registrar of Co-operative Societies and ors.
Cases ReferredSoundaram v. Entertainment Tax Officer
Excerpt:
.....given by him, the order of surcharge came to be passed, and the petitioner at that stage was called upon to state the documents which he wanted to peruse. merely because the petitioner did not specify the documents which he wanted to peruse, it will not mean that it will cure the failure to afford an opportunity. the materials collected by the department behind the back of the assessee may well be used by the department to initiate proceedings, but cannot be used, in such proceedings, to the prejudice of the assessee unless he has been given a proper and reasonable opportunity of answering such materials......of natural justice.4. section 65 of the act contemplates an enquiry into the affairs of the society. when an enquiry takes place under that section, it would reveal the loss sustained by the society. in order to fix the individual liability to surcharge, section 71 will have to be resorted to by the departmental officials. whether a further enquiry under section 71 will have to be conducted or not is not a point which calls for my decision in view of my following finding about the violation of the principles of natural justice. in the instant case, a show cause notice was issued. no doubt, in reply to that notice, the petitioner contended that statements obtained behind his back should not be used against him without his being given an opportunity to question the correctness of.....
Judgment:
ORDER

S. Mohan, J.

1. This writ petition is filed to quash the order of the first respondent (Deputy Registrar of Co-operative Societies, Thanjavur) made in R.C. No. 16758/68-E dated 3rd April, 1970 as confirmed by the second respondent (The Co-operative Tribunal (District Judge), West Thanjavur) in C.M.A. No. 1 of 1971 dated 15th October, 1974.

2. The petitioner herein is the Cooperative Sub-Registrar and he was serving in that capacity during the period from 25th December, 1965 to 21st January, 1968 in the third respondent society. Under Section 65 of the Tamil Nadu Co-operative Societies Act (here in after referred to as the Act), an enquiry was conducted into the affairs of the Society. On 19th September, 1969 the first respondent issued a notice under Section 71(1) of the Act calling upon the petitioner to show cause why an order of surcharge should not be passed against him for the loss of Rs. 26,000 and odd. The petitioner submitted an explanation on 29th November, 1969 contending that the person in charge of the assets and other stocks, cash etc., of the Society was the President. But one of the foremost contentions was that the Department was not entitled to place reliance upon the statements obtained from the various persons behind the back of the petitioner. An order was passed on 3rd April, 1970 surcharging him to the tune of Rs. 26,552.92 with a direction to pay interest at 12 per cent per annum. Aggrieved by the said order, the petitioner preferred C.M.A. No. 1 of 1971 before the second respondent and that appeal was also dismissed by the judgment dated 15th October, 1974. It is under these circumstances, the present writ petition has been filed.

3. The main ground of attack though several grounds have been raised attacking the order of the second respondent urged by Mr. R. Krishnamurthi learned Counsel for the petitioner is that under Section 71 of the Act when the liability is sought to be fixed as against the petitioner, who was no other than the Secretary to the tune of Rs. 26,000 and odd, there ought to have been an enquiry. At any rate, it was submitted, that when the petitioner in his reply to the show cause notice made it specifically clear that the ex parte statements obtained against him from the various persons should not be used against him and in so far as they were used against the petitioner in passing the order of surcharge, there is a clear violation of the principles of natural justice and on this ground alone the order is liable to be set aside. The learned Government Pleader would contend that Section 71 by itself does not contemplate any enquiry. The basis for taking action under Section 71 is the report under Section 65 of the Act, and in the instant case a show cause notice was issued against the petitioner and not being satisfied with the explanation given by him, the order of surcharge came to be passed, and the petitioner at that stage was called upon to state the documents which he wanted to peruse. But he did not avail himself of the opportunity and therefore it is not correct to contend that it is a violation of the principles of natural justice.

4. Section 65 of the Act contemplates an enquiry into the affairs of the Society. When an enquiry takes place under that section, it would reveal the loss sustained by the Society. In order to fix the individual liability to surcharge, Section 71 will have to be resorted to by the departmental officials. Whether a further enquiry under Section 71 will have to be conducted or not is not a point which calls for my decision in view of my following finding about the violation of the principles of natural justice. In the instant case, a show cause notice was issued. No doubt, in reply to that notice, the petitioner contended that statements obtained behind his back should not be used against him without his being given an opportunity to question the correctness of that statement. Nevertheless, it is conceded by the learned Counsel appearing for the department that those ex parte statements were used against the petitioner when passing ultimately the order of surcharge. Undoubtedly if a liability is sought to be fastened to the petitioner on the basis of certain statements, he should be given an opportunity to cross-examine those witnesses. But no such opportunity was ever afforded to the petitioner. Merely because the petitioner did not specify the documents which he wanted to peruse, it will not mean that it will cure the failure to afford an opportunity. So also, the fact that he had a remedy by way of appeal to the Co-operative Tribunal is no substitute for not affording an opportunity since the same handicap which was prevailing before the original authority would continue to prevail. In this connection, a reference may be made usefully to the decision of a bench of this Court in Soundaram v. Entertainment Tax Officer : (1969)2MLJ6 . The head-note of the said decision reads thus:

The materials collected by the Department behind the back of the assessee may well be used by the Department to initiate proceedings, but cannot be used, in such proceedings, to the prejudice of the assessee unless he has been given a proper and reasonable opportunity of answering such materials. The assessee can do so only if he was fully informed of the materials which the Department proposed to use against him, and given a reasonable time to think out his defence and make his objections. Therefore, it has to be held that there was infraction of natural justice.

5. In the result, on the simple ground of violation of the principles of natural justice, the writ petition is allowed and the impugned order is quashed. There will be no order as to costs in this petition . It is however made clear that notwithstanding the writ petition being allowed, the department is not in any way precluded from proceeding with the petitioner in any manner known to law.


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