CE.17 DHARAPURAM PUBLIC SERVANTS vs S.SUKUMAR,
- Court
- Madras High Court
2026:MHC:3666
W.A.NO.2639 OF 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 02.09.2026
CORAM
THE HON’BLE MR.JUSTICE S.M.SUBRAMANIAM
AND
THE HON’BLE MR.JUSTICE KRISHNASWAMY GOVINDARAJAN
W.A.NO.2639 OF 2023
AND
CMP NO.22214 OF 2023
CE.17, Dharapuram Public Servants’
Co-operative Thrift and Credit Society Ltd.,
Rep. By its President
No.50, Alangiam Road,
Dharapuram – 638 656.
Tiruppur District. … Appellant
Vs.
1.S.Sukumar
2.The Addl. Registrar of Co-operative Societies
(Marketing, Planning & Development)
No.170, E.V.R. Periyar High Road,
Kilpauk, Chennai – 600 010.
3.The Addl. Registrar of Co-operative Societies
(Finance & Banking)
No.170, E.V.R. Periyar High Road,
Kilpauk, Chennai – 600 010.
4.The Joint Registrar of Co-op. Societies
Erode Region,
Erode – 638 003.
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5.The Joint Registrar of Co-op. Societies
Tiruppur Region,
No.377, Kamarajar Salai,
Palladam Road, Tiruppur – 641 604. … Respondents
PRAYER : Writ Appeal filed under Clause 15 of the Letters Patent,
praying to set aside the order dated 19.04.2023 passed in W.P.No.18557
of 2015.
For Appellant : Mr.M.S.Palaniswamy
For Respondent - 1 : Mr.S.Sathiaseelan
For Respondents - 2 to 5: Ms.R.K.Sekina Reshma
Additional Government Pleader
J U D G M E N T
(Judgment of the Court was made by S.M.Subramaniam, J.)
Under assail is the writ order dated 19.04.2023 passed in
W.P.No.18557 of 2015. Dharapuram Public Servants’ Co-operative Thrift
and Credit Society Ltd., is the appellant before this Court. The first
respondent instituted the writ petition challenging the order of
termination, confirmed by the Revisional Authority under Section 153 of
the Tamil Nadu Co-operative Societies Act, 1983, in Proceedings dated
29.05.2015.
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FACTS IN BRIEF
2.The appellant is a Co-operative Society registered under
the provisions of the Tamil Nadu Co-operative Societies Act, 1983
(hereinafter referred to as the “Act”). A statutory inspection under Section
82 of the Act was conducted by the Competent Authority of the Co-
operative Society. Certain irregularities and allegations relating to
misappropriation of funds of the appellant Society during the year 1995-
1997 was identified by the Inquiry Authority in their report dated
23.12.2005. Based on the inspection report under Section 82 of the Act,
departmental disciplinary proceedings were initiated and a Charge
Memorandum was issued on 12.02.2011. In between, the first
respondent / employee of the appellant Society approached the High
Court seeking copies of the enquiry / statutory reports submitted under
Sections 81 and 82 of the Act. In the said writ proceedings, interim orders
were passed and after disposal of the said writ proceedings, Charge
Memorandum was issued on 12.02.2011.
2.1.A domestic enquiry was conducted and the first
respondent participated in the process of enquiry and defended his case.
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The Inquiry Officer submitted his final report on 13.07.2011. Along with
the enquiry report, a show cause notice was issued to the first
respondent, seeking further explanation as to why he should not be
terminated from service. The first respondent submitted his explanation.
The misappropriation of the funds along with interest calculated at
Rs.1,22,876.30 was repaid by the first respondent. However, accepting
the findings of the enquiry report that the charges are held proved
against the first respondent, an order of dismissal from service was
issued by the Special Officer / Disciplinary Authority vide Proceedings
dated 11.08.2011. Simultaneously, a criminal case was also registered in
Crime No.3 of 2011 on the file of the Inspector of Police, District Crime
Branch, Tiruppur. The criminal case registered is still pending.
2.2.The first respondent preferred a Revision Petition under
Section 153 of the Act challenging the order of dismissal dated
11.08.2011. The Joint Registrar of Co-operative Societies, Tiruppur
Region, vide order dated 03.05.2013 remanded the matter back to the
appellant Society with a direction to issue a fresh show cause notice on
the findings of the domestic Inquiry Officer and afford opportunity to the
first respondent and thereafter, pass appropriate orders within a period of
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two months. The first respondent was reinstated into the appellant
Society subject to the outcome of the pending departmental disciplinary
proceedings. A show cause notice was issued in pursuance of the order
of the Joint Registrar of Co-operative Societies, Tiruppur Region. The
first respondent submitted his explanation. Final order was passed
imposing the penalty of increment cut by two years by Board Resolution
dated 28.09.2013.
2.3.Not accepting the Resolution of the Board, some of the
Board of Directors raised a serious complaint against the conduct of the
departmental disciplinary proceedings and the irregularities committed by
the President of the Board. They have urged the Registrar of Co-
operative Societies to initiate suo motu revision under Section 153 of the
Act, against the order of reinstatement and imposing the penalty of cut in
increment for two years, by the Board of the appellant Society.
2.4.The Registrar of Co-operative Societies considered the
allegations raised by the Board of Directors and passed an order vide
Proceedings dated 04.12.2014 directing the Joint Registrar, Erode
Region to conduct an enquiry under Section 153 of the Act by initiating
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suo motu action and by affording opportunity to the parties, pass final
orders on merits and in accordance with law. In other words, the
Registrar of Co-operative Societies directed the Joint Registrar,
Erode Region to initiate suo motu action under Section 153 of the Act
and conduct an enquiry and pass orders on merits and in accordance
with law.
2.5.In pursuance to the orders of the Registrar of Co-
operative Societies, the Joint Registrar, Erode Region has initiated suo
motu action and conducted an independent enquiry, by affording
opportunity to the first respondent. The first respondent also participated
in the process of enquiry and defended his case. Final order was passed
by the Joint Registrar of Co-operative Societies, Erode Region, on
29.05.2015 confirming the original order of termination issued by the
appellant Society vide Proceedings dated 11.08.2011.
2.6.The above said order came to be challenged by way of a
writ petition in W.P.No.18557 of 2015, by the first respondent. The writ
court allowed the writ petition mainly on the ground that rules of natural
justice have not been complied with. Secondly, there was an enormous
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delay in initiation of departmental disciplinary proceedings against the
first respondent. The alleged incident occurred in between the years
1995-1997. But the Charge Memorandum came to be issued in the year
2011. Taking into consideration the long delay in framing the charges,
the writ court allowed the writ petition. Thus, the Management of the Co-
operative Society preferred this intra-court appeal under Clause 15 of the
Letters Patent.
ARGUMENTS MADE ON BEHALF OF THE APPELLANT
3.The learned counsel Mr.M.S.Palaniswamy appearing on
behalf of the appellant would mainly contend that both the grounds
relating to non-compliance of rules of natural justice and delay in initiation
of revision petition / departmental disciplinary proceedings relied on by
the writ court are incorrect. Rules of natural justice have been followed by
affording sufficient opportunities to the first respondent and he also
participated in the process of enquiry and defended his case. At every
stage, opportunity had been afforded to the first respondent. The
Registrar of Co-operative Societies, on perusal of the serious complaint
sent by the Board of Directors, ordered for suo motu initiation of revision
petition under Section 153 of the Act, by the Regional Joint Registrar,
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Erode Region and directed him to conduct an enquiry and pass
appropriate orders on merits. The first order passed by the Joint
Registrar of Co-operative Societies, Tiruppur Region, was only an order
of remand, and no final decision was taken on the merits and in
accordance with law.
3.1.The Joint Registrar, Tiruppur, directed the Management
to issue a show-cause notice based on the enquiry report and, after
affording an opportunity to the parties, to take a decision in accordance
with law. The erstwhile President has hurriedly reinstated the first
respondent despite the fact that criminal case was pending against him
and the allegations against him was misappropriation of funds of the
Co-operative Societies. That apart, the President of the appellant
Society, without issuing any show cause notice and conducting a fresh
deliberation on merits, imposed the penalty of cut in increment for two
years. The punishment imposed is not in proportionate with the gravity of
the proved charges of misappropriation of funds and opposed by the
other Board of Directors. The Board of Directors, registered a complaint
before the Registrar of Co-operative Societies, who in turn, considering
the seriousness of the allegations, directed the Joint Registrar, Erode
Region to initiate suo motu revision under Section 153 of the Act and
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thereafter also, opportunity was afforded to the first respondent. Thus, at
any stage, opportunity was afforded to the first respondent and he
availed the opportunities and thus, the order of the writ court impugned is
infirm.
3.2.Regarding delay in initiation of departmental disciplinary
proceedings, Mr.M.S.Palaniswamy, submits that the said ground has not
been raised before the writ court. Thus, in the absence of any ground to
that effect, the writ court ought not to have considered the ground of
delay.
ARGUMENTS MADE ON BEHALF OF THE FIRST RESPONDENT
4.Mr.S.Sathiaseelan, learned counsel for the first respondent
would strenuously oppose by stating that the order of the writ court is
based on the grounds of delay in initiation of departmental disciplinary
proceedings. In this regard, he would rely on a judgment of the Hon’ble
Supreme Court of India in the case of P.V.Mahadevan Vs. MD, T.N.
Housing Board, reported in (2005) 6 SCC 636 wherein the Hon’ble
Supreme Court of India quashed the Charge Memorandum on the
ground of delay in initiation. Secondly, he would state that two show
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cause notices are mandatory for conclusion of the enquiry proceedings
by the Inquiry Officer. One show cause notice must be issued calling
upon the employee to show cause as to why the proposed penalty
should not be imposed. The second show cause notice must be issued
seeking his / her further explanation on the findings of the Inquiry Officer.
However, in the present case, such a procedure has not been followed
and thus, the order impugned is in violation of principles of natural justice
and the writ court considering these two grounds, allowed the writ
petition.
4.1.Mr.S.Sathiaseelan, would further contend that the
alleged amount of misappropriation was deposited along with interest.
The Management has modified the punishment of termination into that of
cut in increment for two years with cumulative effect. Once the
Management had taken a decision to reduce the punishment, the
complaint given by the Board of Directors ought not to have been
entertained by the Registrar. That apart, the Registrar, instead of
relegating the jurisdictional Joint Registrar, directed the Joint Registrar,
Erode Region to initiate suo motu revision to conduct enquiry under
Section 153 of the Act. Such a decision taken by the Registrar is also
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infirm.
4.2.Regarding violation of rules of natural justice,
Mr.S.Sathiaseelan relied on a judgment of the Constitutional Bench of
the Hon’ble Supreme Court in the case of Managing Director, ECIL,
Hyderabad and Others Vs. B.Karunakar and Others, reported in
(1993) 4 SCC 727. Relying on paragraph 25 of the said judgment,
learned counsel for the first respondent would reiterate that two show-
cause notices are required to be issued after the conclusion of the
enquiry proceedings and submission of the enquiry report. He would
further urge this Court by contending that the punishment of termination
is not proportionate with the gravity of the charges proved. The alleged
misappropriation amount along with interest has been repaid by the first
respondent. Considering the said aspect, the Management reduced the
punishment from termination to stoppage of increment for two years with
cumulative effect. Therefore, the order of the Joint Registrar, Erode,
confirming the order of termination, is not in consonance with the doctrine
of proportionality in the imposition of punishment.
DISCUSSION
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5.The facts presented between the parties, as stated above,
are not seriously disputed and are based on the documents placed
before this Court. The question to be considered is whether the
punishment of termination imposed on the first respondent is in
proportionate with the gravity of the proved charges. Secondly, whether
the Rules of natural justice have been complied with or not by following
the established principles in the matter of conduct of departmental
disciplinary proceedings against the employees of the Co-operative
Societies. Thirdly, the powers of the Registrar, Regional Joint Registrars
to initiate suo motu revision under Section 153 of the Act as well as the
powers of the Registrar under the Act. Fourthly, the delay in initiating the
departmental disciplinary proceedings, in the present case, would vitiate
the entire departmental disciplinary proceedings and the order of
punishment or not.
6.The fact remains that departmental disciplinary proceedings
were initiated and a criminal case was registered for the allegations of
misappropriation of funds of the Co-operative Societies. Action was
initiated based on the inspection report under Section 82 of the Act. The
departmental disciplinary proceedings was conducted by issuing a
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Charge Memorandum vide Proceedings dated 12.02.2011. Opening
paragraphs of the Charge Memorandum would show that the first
respondent was placed under suspension and he was reinstated into
service. At that stage, the first respondent approached the High Court of
Madras seeking the copies of the statutory reports submitted under
Sections 81 and 82 of the Act. Since an interim order had been passed
by this Court, and the statutory report was connected with the allegations
of misappropriation against the first respondent, the departmental
disciplinary proceedings were kept in abeyance. After the disposal of
those cases before the High Court, the charge memorandum was issued
in the year 2011.
7.Pertinently, the writ petition filed by the first respondent in
W.P.No.25317 of 2007 was dismissed by this Court on 07.12.2009.
Thereafter, the Charge Memorandum came to be issued. 14 charges
were framed against the first respondent. An Inquiry Officer was
appointed. Inquiry Officer conducted a detailed enquiry by examining the
witnesses and the first respondent participated in the process of enquiry
and defended his case. The Inquiry Officer submitted his final report,
holding that the charges of misappropriation were proved. The findings of
the Enquiry Officer was accepted by the Disciplinary Authority / Special
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Officer. During the relevant point of time, the Special Officer was
exercising the powers of the Board under the provisions of the Act. The
Special Officer / Board passed final orders in the departmental
disciplinary proceedings on 11.08.2011 and imposed the punishment of
termination from service. Show-cause notice enclosing the Inquiry
Officer’s report was issued to the first respondent. He submitted his
explanation to the findings recorded in the Inquiry Officer’s report.
Considering the findings of the Inquiry Officer and the explanation
submitted by the first respondent, the penalty of termination was
imposed.
8.The first respondent preferred a Revision Petition under
Section 153 of the Act, before the Joint Registrar, Tiruppur Region. The
Revision Petition was disposed of vide Proceedings dated 03.05.2013
remanding the matter back to the Management for issuance of fresh
show cause notice based on the enquiry report and pass final orders, on
merits and in accordance with law, within a period of two months. By that
time, the President and Board of Directors were elected and the post of
Special Officer was dispensed with. The elected Board reinstated the first
respondent in service on 24.08.2013. Further action was initiated in
pursuance to the order of the Joint Registrar, Tiruppur Region dated
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03.05.2013. Further, a show cause notice was issued. The first
respondent submitted his explanation on 21.09.2013. Considering the
explanations submitted by the first respondent, the punishment of
stoppage of increment for two years with cumulative effect was issued by
the Board on 28.09.2013.
9.At this juncture, some of the elected Board of Directors
sent a complaint to the Registrar of Co-operative Societies, alleging that
the President had committed serious irregularities in reinstating the
employee, who had been involved in the misappropriation of the funds of
the Society. The reduction of the punishment was also questioned by the
Board of Directors in the said complaint. The Registrar, independently
considering the complaint, passed an order vide Proceedings dated
04.12.2024, directing the Regional Joint Registrar, Erode Region, to
initiate suo motu revision under Section 153 of the Act, conduct an
enquiry, and pass appropriate orders on merits and in accordance with
law.
10.Regarding the validity of the order, it is necessary to
examine the provisions of the Act. Section 153 of the Act contemplates
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revision, which reads as under:
“153.Revision.
(1) The Registrar may, of his own motion or
on application, call for and examine the record of any
officer subordinate to him or of the board or any
officer of a registered society or of the competent
authority constituted under sub-section (3) of section
75 and the Government may, of their own motion or
on application, call for and examine the record of the
Registrar, in respect of any proceedings under this
Act or the Rules or the bye-laws not being a
proceeding in respect of which an appeal to the
Tribunal is provided by subsection (1) of section 152
to satisfy himself or themselves as to the regularity of
such proceedings, or the correctness, legality or
propriety of any decision passed or order made
therein; and, if in any case, it appears to the
Registrar or the Government that any such decision
or order should be modified, annulled, reversed or
remitted for reconsideration, he or they may pass
orders accordingly:
Provided that every application to the
Registrar or the Government for the exercise of the
powers under this section shall be preferred within
ninety days from the date on which the proceedings,
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decision or order to which the application relates was
communicated to the applicant.
(2)No order prejudicial to any person shall be
passed under sub-section (1) unless such person
has been given an opportunity of making Iris
representations.
(3)The Registrar or the Government, as the
case may be, may' suspend the execution of the
decision or order pending the exercise of his or their
power under sub-section (1) in respect thereof.
(4)The Registrar or the Government may
award costs in any proceedings under this section to
be paid either out of the funds of the society or by
such party to the application for revision as the
Registrar or the Government may deem fit.”
11.Next question that arises is, when a revision petition
under Section 153 of the Act was decided by the Regional Joint
Registrar, Tiruppur Region, the Registrar of Co-operative Societies could
once again direct the Joint Registrar, Erode Region, to initiate suo motu
revision under Section 153 of the Act.
12.In this context, Section 181 of the Act will come to the aid
of the Registrar. Section 181 of the Act provides powers of Registrar to
give directions in the public interest, etc. Section 181 of the Act reads as
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under:
“ 181.Power of Registrar to give directions
in the public interest, etc.
(1)Where the Registrar is satisfied that in the
public interest or for the purpose of securing proper
implementation of co-operative production and other
development programmes approved or undertaken
by the Government or to secure the proper
management of the business of any class of
registered societies generally, or for preventing the
affairs of any registered society being conducted in a
manner detrimental to the interests of the members,
or of the depositors or the creditors thereof, it is
necessary to issue directions to any' class of
registered societies generally or to any-registered
society or registered societies in particular, he may,
by order issue directions to them, from time to time,
and all registered societies or the registered society
concerned, as the case may be, shall be bound to
comply with such directions.
(2)The Registrar may, by order, modify or
cancel any directions issued under sub-section (1)
and in modifying or cancelling such directions may
impose such conditions as he may deem fit.”
13.In the present case, the revision order passed by the
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Joint Registrar, Tiruppur Region is only an order of remand, remanding
the matter back to the Management for issuance of show cause notice
and to pass final orders. The allegation raised by the Board of Directors
are that the elected President and Board passed a Resolution, reinstated
the employee and reduced the punishment without considering the
gravity of the proved allegations of misappropriation of funds. In those
circumstances, the Registrar of Co-operative Societies, who is the
Authority under the Act is empowered to invoke Section 181 of the Act
and issue directions in the interest of the Management / Society.
Therefore, the order relegating the Joint Registrar of Co-operative
Societies, Erode Region, to conduct an enquiry and pass appropriate
orders is only intended to ensure that a fair enquiry is conducted by
affording adequate opportunity to the parties concerned. Thus, the order
of the Registrar dated 04.12.2014 was issued in the interest of the
Management of the Society and to ensure that the rules of natural justice
have been complied with.
14.In compliance with the orders of Registrar dated
04.12.2014, the Joint Registrar, Erode Region, initiated suo motu action,
issued notice to all the parties, conducted an enquiry and passed final
orders vide Proceedings dated 29.05.2015, confirming the order of
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termination of service imposed by the Management in Proceedings dated
11.08.2011.
15.Regarding delay in initiation of departmental disciplinary
proceedings, the answer is made available in the Charge Memorandum
itself. The first respondent filed a writ petition seeking the copies of the
statutory report filed under Section 82 of the Act. In the said writ petition,
an interim order was passed by this Court. Only after disposal of the writ
petition, further action was initiated and Charge Memorandum was
issued in the year 2011. Therefore, the delay cannot be attributed against
the Management of the appellant Co-operative Society for initiation of
departmental disciplinary proceedings.
16.Mere delay per se would not be sufficient to quash the
entire charge memorandum in all cases. Each case has to be decided by
considering the facts, the nature of the allegations, the mitigating
circumstances, and the cause for the delay in initiating the departmental
disciplinary proceedings. For example, certain instances of
misappropriation of funds are identified or traced out at a later point of
time. Certain misappropriation of funds are hided by the employees and it
came out only after few years. In those circumstances, delay cannot be a
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ground to quash the entire Charge Memorandum. The period during
which the inspection was conducted and the misappropriation of funds of
the Society was identified are relevant factors to be considered in
determining the delay in initiating departmental disciplinary proceedings.
17.Perusal of the revision order passed by the Joint
Registrar, Erode, dated 29.05.2015, would show that the first respondent
had been continuously involved in several irregularities relating to
dealings with the funds of the Society from the year 1995-1996 onwards.
It was also observed that the first respondent had been habitually
committing such offences. Several opportunities were granted to the first
respondent to deposit the misappropriated amount. But the first
respondent failed to avail the opportunities. The Inquiry Officer found that
the charges were proved. Based on the proved charges, the then Special
Officer issued a second show-cause notice dated 19.07.2011, calling
upon the first respondent to show cause as to why the punishment of
termination should not be imposed and the first respondent submitted his
further explanation to the said show cause notice. On that also, the first
respondent did not submit his explanation immediately and instead
deposited the alleged misappropriated amount, along with interest to the
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tune of Rs.1,22,876.30. The Joint Registrar has further recorded that the
said amount was deposited at that point of time only to escape from the
clutches of the major penalty of termination from service. However, the
Disciplinary Authority found that the order of termination will be the
appropriate punishment, since the allegations of misappropriation of
funds are held proved. Considering the previous conduct of the first
respondent in the Society and considering the findings of the Inquiry
Officer that the allegations of misappropriations are held proved, the
punishment of termination from service, imposed by the Management of
the Society was confirmed by the Regional Joint Registrar, Erode, vide
Proceedings dated 29.05.2015.
18.Perusal of the entire documents would show that
sufficient opportunities were afforded to the first respondent to defend his
case. The Rules of natural justice had been followed and fair opportunity
is afforded to the employee to defend his case. It is not about issuance of
two show cause notices to be issued, but whether a fair opportunity was
afforded to the delinquent officer. The test to be applied is whether the
principles of natural justice has been complied with by affording a fair
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opportunity to the delinquent officer.
19.In the present case, at every stage, opportunity was
afforded to the first respondent and pertinently, the first respondent
availed all the opportunities and submitted his explanations and
defended his case. That being the factum, the grounds relating to rules of
natural justice raised by the first respondent is untenable. The delay in
initiation of departmental disciplinary proceedings cannot be attributed
against the appellant Management since the first respondent filed a writ
petition, in which, an interim order was passed, which resulted in
issuance of Charge Memorandum in the year 2011.
20.Pertinently, the Joint Registrar has stated that the
allegations relating to misappropriation of funds were happening in the
Society from the year 1995-1996 onwards. Therefore, an inspection was
ordered under Section 82 of the Act and based on the report, further
actions were initiated.
DECISION
21.In view of the discussions made in the aforementioned
paragraphs, this Court has no hesitation in arriving at the conclusion that
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W.A.NO.2639 OF 2023
the impugned order passed by the Writ Court cannot be sustained.
Consequently, the impugned order dated 19.04.2023 passed in
W.P.No.18557 of 2015 is set aside and the writ appeal is allowed. No
costs. Consequently, connected civil miscellaneous petition is closed.
[S.M.S., J.] [K.G.R., J.]
02.09.2026
Index : Yes
Speaking Order : Yes
Neutral Citation : Yes
TK
To
1.The Addl. Registrar of Co-operative Societies
(Marketing, Planning & Development)
No.170, E.V.R. Periyar High Road,
Kilpauk, Chennai – 600 010.
2.The Addl. Registrar of Co-operative Societies
(Finance & Banking)
No.170, E.V.R. Periyar High Road,
Kilpauk, Chennai – 600 010.
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W.A.NO.2639 OF 2023
3.The Joint Registrar of Co-op. Societies
Erode Region,
Erode – 638 003.
4.The Joint Registrar of Co-op. Societies
Tiruppur Region,
No.377, Kamarajar Salai,
Palladam Road, Tiruppur – 641 604.
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W.A.NO.2639 OF 2023
S.M.SUBRAMANIAM, J.
AND
KRISHNASWAMY GOVINDARAJAN, J.
TK
W.A.NO.2639 OF 2023
02.09.2026
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