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2010 DIGILAW 831 (MAD)

M. K. S. Balasubramanian v. The Kancheepuram Central Co-operative Bank Limited

2010-02-25

ELIPE DHARMA RAO, N.PAUL VASANTHAKUMAR, VASANTHAKUMAR

body2010
Judgment :- N. Paul Vasanthakumar, J 1. The Writ Appeal is directed against the order of the learned Single Judge in disposing of the Writ Petition filed by the appellant herein with a direction to the Respondent-Bank to retain a sum of Rs.2,69,938/- towards interest in respect of the alleged loss that occasioned to the Bank. In the Writ Petition the appellant prayed to quash the portion of the order of the respondent dated 33. 2005 reserving its right to continue the disciplinary proceedings after permitting the appellant to retire from his service. 2. The case of the appellant is that the appellant joined the service of the respondent-Bank in the year 1963 as a Clerk and he was promoted as Supervisor and further promoted as Assistant Manager. The appellant worked in the Branches of Tiruthatni, Kunrathur and Porur and he retired from service as on 33. 2005 after his 42 years of service. While the appellant was in service, a charge was framed on 27. 2004 alleging that he failed to discharge his duties as tow loans became overdue and failed to collect the loan amounts. 3. The appellant filed his explanation on 22. 2005 and stated that in respect of one loan he initiated action and the borrower filed Writ Petition and Suit and prevented from taking action for recovery proceedings and in respect of other loan an arbitration claim was filed and the same was decreed. It was also stated that these loans were sanctioned after getting full securities and as such the amounts are realizable. After the receipt of the explanation no order was passed by the respondent. On 23. 2005 just seven days prior to his retirement further charges were alleged stating that the acceptance of payment of Rs.1,83,669/- by a borrower by name P. Vaidyalingam on 26. 2002 under the One Time Settlement scheme then in force. The appellant immediately sent a proposal to the Head Office on 26. 2002 itself requesting the approval of the Head Office to extend the benefit of the scheme to the borrower. The Head Office did not act immediately on his proposal. In the mean time, the borrower made a further payment of Rs.5,68,100/- under One Time Settlement scheme and closed the loan account and altogether he paid a total sum of Rs.7,51,769/- against the loan amount of Rs.5,00,000/- received by him. The Head Office did not act immediately on his proposal. In the mean time, the borrower made a further payment of Rs.5,68,100/- under One Time Settlement scheme and closed the loan account and altogether he paid a total sum of Rs.7,51,769/- against the loan amount of Rs.5,00,000/- received by him. Therefore, no financial loss had been caused to the Bank. The appellant further stated that the Bank made some technical objections, which is not legally sustainable and refused to extend the benefits to the borrower. The borrower filed a Writ Petition No.40576/02 challenging the communication in this regard dated 19. 2002 of the Bank and the said Writ Petition is pending. The Bank has to file a counter. The borrower was found to be a chronic defaulter and he failed to repay the loan even after due date. Hence, the proposal of One Time Settlement was the only way to collect the amount from him. The appellant was permitted to retire from service from 33. 2005 without prejudice to the disciplinary proceedings, by order dated 33. 2005 and he is not paid the retirement benefits. The said order is challenged before the learned Single Judge contending that Rule 149 of Tamil Nadu Co-operative Societies Rules 1988 or in the bye-laws of the Bank no power is vested to continue the disciplinary proceedings after retiring an employee of Co-operative Society and also on the ground of delay in-issuing the charge memo on 27. 2004 for the loan sanctioned in the year 1996 that is after a delay of 8 years and the Bank also not sustained any loss by proposing One Time Settlement and the Heard Office failed to accept the Bank’s proposal for which the appellant cannot be blamed. 4. Therespondent-Bank filed a counter affidavit stating that the service conditions of the respondent-Bank is covered by bye-laws and necessary amendment to service conditions were made enabling the Bank to continue the disciplinary proceedings even after permitting to retire an employee if the right to continue disciplinary proceedings is reserved and this amended bye-law was brought into force by G.O.Ms.No.231, Co-operation Food and Consumer Protection Department with effect from 33. 2004 and the Employees Union challenged the Government Order as well as the amended bye-laws in W.P. No.5259/2005 and 4874/2005 respectively and obtained stay of its implementation from this Court and hence there is a provision, to continue the disciplinary proceedings after allowing the appellant to retire from service. 5. The learned Single Judge considering the facts and circumstances of the case held that the appellant having been allowed to retire and the amount accrued towards terminal benefits come to he tune of Rs.4,83,348/- and the loss alleged to have been sustained by the at of the appellant being Rs.2,69,983/- directed the retention, of the said amount and to disburse the remaining amount to the appellant. Aggrieved by the order of the learned Single Judge, the appellant filed this Appeal. 6. We have heard the submissions made by the learned counsel appearing on either side and also perused the materials available on record. 7. The learned counsel appearing for the appellant submits that there was no Rule or Regulation either in Co-operative Societies Act or Rules made thereunder or in the bye-Law of the society for continuing disciplinary proceedings after the retirement of an employee and as such the respondent has got no power or jurisdiction to continue the disciplinary proceedings beyond the date of retirement. Further, the respondent has no power to impose a condition that the appellant was permitted to retire from service subject to the disciplinary proceedings. 8. The learned counsel for the appellant has also cited a decision reported in N. Kunnai Gowder v. The Coirnbatore District Co-operative Milk Producers’ Union Ltd., 2007 (5) CTC 491 , and an unreported judgment of a Division Bench of this Court made in W.A.No.4108 of 2003 dated 9. 2006. In the said decisions it is held that the Co-operative Bank cannot proceed with the disciplinary proceedings against an employee beyond his retirement and the said decision squarely apply to this case and consequently the respondent-Bank should settle the retirement benefits to the appellant. The said position is not disputed by the learned counsel for the Respondent. 9. It is an admitted case of the respondent that the bye-law though provided for a right to continue the Bank to proceed with disciplinary proceedings after allowing the appellant to retire the said amendment is stayed by this Court and the said stay order is still in force. 9. It is an admitted case of the respondent that the bye-law though provided for a right to continue the Bank to proceed with disciplinary proceedings after allowing the appellant to retire the said amendment is stayed by this Court and the said stay order is still in force. Hence, the said amendment cannot be relied on by the respondent to sustain the order retaining the power to proceed with Disciplinary Proceedings after permitting the appellant to retire. 10. In the decisions reported in 2008(2) MLJ 585 and F. Muthusamy v. Tamil Nadu Cements Corporation Ltd., 2006 (4) MLJ 504 , it is held that disciplinary proceedings cannot continue after retirement unless the service rules provides for such right to continue. 11. In the decision, reported in Bhagsrathi Jena v. Board of Directors, O.S.F.C., and others, 1999 (3) SCC 666 , in a similar matter in para 7 it is held thus: “In view of the absence of such a provision in the above said regulations, it must be held that the Corporation had no legal authority to make any reduction in the retiral benefits of the appellant. There is also no provision for conducting a disciplinary enquiry after retirement of the appellant and nor any provision stating that in case misconduct is established, a deduction could be made from retiral benefits. Once the appellant had retired from service on 30.6.1995, there was no authority vested in the Corporation for continuing the departmental enquiry even for the purpose of imposing any reduction in the retiral benefits payable to the appellant. In the absence of such an authority, it must be held that the enquiry had lapsed and the appellant was entitled to full retiral benefits on retirement.” 12. Thus, the respondent is not justified in imposing the condition namely reserving its right to proceed disciplinary proceedings while allowing the appellant to retire from his service on 33. 2005. The direction given by the learned Single Judge to the respondent to retain the amount of Rs.2,69,933/- from terminal benefits payable to the appellant is perfectly justified as the respondent can effect recovery of the loss sustained after initiating surcharge proceedings under Section 87 of Tamil Nadu Co-operative Societies Act, 1983, which is extracted hereunder: “87. 2005. The direction given by the learned Single Judge to the respondent to retain the amount of Rs.2,69,933/- from terminal benefits payable to the appellant is perfectly justified as the respondent can effect recovery of the loss sustained after initiating surcharge proceedings under Section 87 of Tamil Nadu Co-operative Societies Act, 1983, which is extracted hereunder: “87. Surcharge.- (1) Where in the course of an audit under Section 80 or an inquiry under Section 81 or an inspection or investigation under Section 82 or inspection of books under Section 83 or the winding-up of a society, it appears that any person who is or was entrusted with the organisation or management of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made any payment which is not in himself or any person specially authorised by him in this behalf, of his own motion or on the application of the board, liquidator or any creditor or contributory may frame charges against such person or officer or servant and after giving a reasonable opportunity to the person concerned and in the case of a deceased person, to his representative who inherits his estate, to answer the charges, make an order requiring him to repay or restore the money or property or any part thereof with interest at such rate as the Registrar or the person authorised as aforesaid thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, misapplication of funds, fraudulent retainer, breach of trust or wilful negligence or payments which are not in accordance with this Act, the rules or the bye-laws as the Registrar or the person authorised as aforesaid thinks just: ….” The above provision empowers to proceed against a person whether he was an officer or a servant, either past or present and even if the person is dead recovery can be made from the legal heir of the said person if he inherited the property. In the decision reported in U.P. State Sugar Co-operation Ltd. and others v. Kamal Swaroop Tondon, 2008 (2) SCC 41 , it is held that a retired employee could be proceeded to recover the loss caused by him and amount could be recovered from the retirement benefits. In para 40 it is held thus: “……in our considered opinion, the High Court was wrong in holding that the proceedings were initiated after the respondent retired and there was no power, authority or jurisdiction with the Corporation to take any action against the writ petitioner and in setting aside the orders passed against him. In our judgment, proceedings could have been taken for the recovery of financial loss suffered by the Corporation due to negligence and carelessness attributable to the respondent employee. The impugned action, therefore, cannot be said to be illegal or without jurisdiction and the High Court was net right in quashing the proceedings as also the orders issued by the Corporation. The Appeal, therefore, deserves to be allowed by setting aside the order of the High Court.” 13. A Division Bench of this Court in W.A. Nos.256 and 257 of 2008 analyzed various judgments on this issue in its judgment dated 210. 2009 and upheld the right of the society in so far as initiation of surcharge proceedings under Section 87 of the Tamil Nadu Co-operative Societies Act, 1983 even though the respondent in those greases also retired from service in so far as the loss sustained to the society. We are in entire agreement with the above said judgment. 14. In view of the above findings, the order o the learned Single Judge is modified holding that the condition to continue the disciplinary proceedings after retirement against the appellant is set aside and the respondent is granted liberty to proceed with the surcharge proceedings to be initiated under Section 87 of the Tamil Nadu Co-operative Societies Act, 1983 for the alleged loss. The amount as ordered by the learned Single Judge is permitted to be withheld and the balance shall be paid to the appellant within four weeks from the date of receipt of this order. The Writ Appeal is disposed of accordingly. No order as to costs.