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Judgment
Honourable Mr. Justice K.N. Basha
The challenge in this writ petition is to the order passed by the third respondent herein dated 10.01.2008 in C.A.No.36/2004 with a prayer to
quash the same.
Mr. J. Raja Kalifulla, learned counsel appearing for the petitioner contended that the impugned order was passed by the third
respondent/Tribunal, setting aside the surcharge order of the second respondent dated 19.01.2004 mainly on the ground of limitation, holding that
as per sub-section to Section 87 of the Tamilnadu Cooperative Societies Act, 1983 (hereinafter referred to as ''Act''), the said surcharge
proceedings shall be completed within 6 months or within the further period of 6 months extended by the competent authority and the same having
been completed beyond the period specified in the section, the impugned order is legally vitiated. It is contended that the Tribunal has held that the
said second proviso to Section 87 is mandatory in nature and the non-observance of the time schedule as specified in the same i.e., 6 months from
the date of commencement or within further period of 6 months extended by the competent authority renders the surcharge order to be
unenforceable. The learned counsel for the petitioner pointed out that the Tribunal placed reliance on the decisions of the learned Single Judges of
this Court for giving such a finding holding that the proviso to Section 87 of the Act is mandatory. It is contended by the learned counsel for the
petitioner that the First Bench of this Court, in S.V.K. Sahasramam v. Deputy Registrar of Co-operative Societies reported in (2008) 8 MLJ 231,
has held that the said provision is not mandatory by merely using the word ""shall''. It is pointed out by the learned counsel for the petitioner that
earlier decisions of the learned Single Judges of this Court relied by the learned counsel for the appellant in that matter is held to be not a correct
finding in law by the First Bench of this Court. Therefore, it is contended that the impugned order is liable to be set aside and the matter may be
remitted back for fresh consideration on merits.
Mr. P. Anbarasan, learned counsel appearing for the first respondent, on the other hand, submitted that the Tribunal has passed the order only
on the ground of limitation, though the first respondent is having other points on merits. It is submitted that the first respondent may be given
opportunity to agitate all those points on merits.
This Court carefully considered the submissions made by both sides and perused the entire materials available on record including the impugned
order passed by the third respondent herein.
At the outset, it is to be stated that the impugned order was passed by the third respondent, by setting aside the order of surcharge proceedings
of the second respondent dated 19.01.2004, is solely on the basis of the ground of limitation, holding that sub-section to Section 87 of the Act is
mandatory and the said proceeding ought to have been completed within the prescribed period of 6 months or within the extended further period
of 6 months by the higher authorities and in the instant case, the proceedings initiated and commenced on 27.04.2000 and completed only on
19.01.2004 and as such, the said order is unenforceable. Mr. J. Raja Kalifulla, learned counsel for the petitioner, rightly placed reliance on the
decision of the First Bench of this Court in S.V.K. Sahasramam v. Deputy Registrar of Co-operative Societies reported in (2008) 8 MLJ 231,
holding that the said proviso to Section 87 of the Act is not mandatory and even the finding rendered by the learned Single Judges of this Court in
two cases held to be not a correct finding in law. It is worthwhile to refer the relevant portion of the decisions rendered in the decision cited supra
as hereunder:
It is well settled that the question whether an expression used in a section is mandatory or not has to be decided on various factors and the mere
expression of the word ""shall"" alone is not decisive of the matter. This question came up for consideration before the Privy Council in the
celebrated case of Montreal Street Railway Company vs. Normandin reported in AIR 1917 PC 142. Sir Arthur Channel, speaking for the Judicial
Committee of the Privy Council, clarified the position at page 144 of the report as follows :-
The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no
general rule can be laid down, and that in every case the object of the statutes must be looked at.
The learned Judge relied on Maxwell on ""The Interpretation of Statutes"" and the portion on which reliance was placed is set out herein below:
where the prescription of a statute relate to the performance of a public duty and where the invalidation of acts done in neglect of them would work
serious general inconvenience or injustice to persons who have no control over those entrusted with the duty without promoting the essential aims
of the legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and government of those on whom the
duty is imposed, or, in other words, as directory only. The neglect of them may be penal, indeed, but it does not affect the validity of the act done
in disregard of them.
The aforesaid principles have been followed by the Constitution Bench of the Supreme Court in the case of State of U.P. vs. Manbodhan Lal
(supra), wherein paragraphs 10 and 11 at pages 917 and 918 of the report are relevant and they are extracted hereunder:-
The question may be looked at from another point of view. Does the Constitution provide for the contingency as to what is to happen in the event
of non-compliance with the requirements of Article 320(3)(c)? It does not, either in express terms or by implication, provide that the result of such
a non-compliance is to invalidate the proceedings ending with the final order of the Government.
This aspect of the relevant provisions of Part XIV of the Constitution, has a direct bearing on the question whether Article 320 is mandatory. The
question whether a certain provision in a statute imposing a duty on a public body or authority was mandatory or only directory, arose before their
Lordships of the Judicial Committee of the Privy Council in the case of Montreal Street Railway Company v. Normandin, 1917 A.C. 170(B).
In that case the question mooted was whether the omission to revise the jury lists as directed by the statute, had the effect of nullifying the verdict
given by a jury. Their Lordships held that the irregularities in the due revision of the jury lists, will not ipso facto avoid the verdict of a jury. The
Board made the following observations in the course of their judgment:
...The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no
general rule can be laid down, and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in
Maxwell on Statutes, 5th Edn., p. 596 and following pages. When the provisions of a statute relate to the performance of a public duty and the
case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have
no control over those entrusted with the duty, and at the same time would not promote the main object of the legislature, it has been the practice to
hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done.
The principle laid down in this case was adopted be the Federal Court in the case of Biswanath Khemka v. King-Emperor, 1945 F.C.R. 99 : AIR
1945 FC 76 (C). In that case, the Federal Court had to consider the effect of non-compliance with the provisions of Section 256 of the
Government of India Act, 1935, requiring consultation between public authorities before the conferment of magisterial powers or of enhanced
magisterial powers, etc.
The Court repelled the contention that the provisions of Section 256, aforesaid, were mandatory. It was further held that non-compliance with that
section would not render the appointment otherwise regularly and validly made, invalid or inoperative. That decision is particularly important as the
words of the section then before their Lordships of the Federal Court, were very emphatic and of a prohibitory character.
An examination of the terms of Article 320 shows that the word ""shall"" appears in almost every paragraph and every clause or sub-clause of that
article. If it were held that the provisions of Article 320(3)(c) are mandatory in terms, the other clauses or sub-clauses of that article, will have to
be equally held to be mandatory.
If they are so held, any appointments made to the public services of the Union or a State, without observing strictly, the terms of these sub-clauses
in clause (3) of Article 320, would adversely affect the person so appointed to a public service, without any fault on his part and without his having
any say in the matter.
This result could not have been contemplated by the makers of the Constitution. Hence, the use of the word ""shall"" in a statute, though generally
taken in a mandatory sense, does not necessarily mean that in every case it shall have that effect, that is to say, that unless the words of the statute
are punctiliously followed, the proceeding or the outcome of the proceeding, would be invalid.
On the other hand, it is not always correct to say that where the word ""may"" has been used, the statute is only permissive or directory in the sense
that non-compliance with those provisions will not render the proceeding invalid. In that connection, the following quotation from Crawford on
Statutory Construction -Article 261 at p. 516, is pertinent:
The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the
intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the
provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other....
The very same passage from the judgment of the Privy Council referred to above has been approvingly quoted by the Supreme Court in extenso.
Similar principles have been reiterated in a subsequent Constitution Bench judgment of the Supreme Court in the case of State of U.P. vs. Babu
Ram Upadhya (supra). Justice K. Subba Rao, as His Lordship then was, speaking for the majority, quoting the same passage from Montreal
Street Railway Company V. Normandi (supra), has come to the same conclusion [See page 765]:-
The relevant rules of interpretation may be briefly stated thus: When a statute uses the word ""shall"", prima facie, it is mandatory, but the Court may
ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the
Legislature the Court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it
the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the
circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with
the provisions is or is not visited by some penalty, the serious or trivial consequences that flow there from, and, above all, whether the object of the
legislation will be defeated or furthered.
The decision of the Supreme Court in State of U.P. vs. Manbodhan Lal (supra) was also reiterated.
In our view, the learned Judge of the writ court, therefore, placed reliance on the correct proposition of law and the judgment of the Apex Court
and the formulation of the principles of the Privy Council. Subsequently also, in a two judge bench decision of the Supreme Court in the case of
T.V. Usman Vs. Food Inspector, Tellicherry Municipality, Tellicherry, , the same principles have been reiterated [See paragraph 14]:
In Maxwell on Interpretation of Statutes, Eleventh Edn., at page 362 it is stated as under:
Where, indeed, the whole aim and object of the legislature would be plainly defeated if the command to do the thing in a particular manner did not
imply a prohibition to do it in any other manner, no doubt can be entertained as to the intention; that is to say, such a requirement would be
imperative.
It is further stated on page 364 that: ""The general rule is, that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a
directory enactment be obeyed or fulfilled substantially.
When a public duty is imposed and the statute requires that it shall be performed in a certain manner, or within a certain time, or under other
specified conditions, such prescriptions may well be regarded as intended to be directory only in cases when injustice or inconvenience to others
who have no control over those exercising the duty would result if such requirements were essential and imperative.
In Craies Statute Law, Seventh Edn., at page 62 it is stated thus:
When a statute is passed for the purpose of enabling something to be done, and prescribes the formalities which are to attend its performance,
those prescribed formalities which are essential to the validity of the thing when done are called imperative or absolute; but those which are not
essential and may be disregarded without invalidating the thing to be done, are called directory.
At page 250 it is further stated thus:
The question whether the provisions in a statute are directory or imperative has frequently arisen in this country, but it has been said that no general
rule can be laid down and that in every case the object of the statute must be looked at.... When the provisions of a statute relate to the
performance of a public duty and the case is such that to hold null and void acts done in respect of this duty would work serious general
inconvenience or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main
object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable not affecting
the validity of acts done.
In Dattatreya Moreshwar Pangarkar Vs. The State of Bombay and Others, , it was held as under:
Generally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the
provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty
would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time
would not promote the main object of the legislature, it has been the practice of the Courts to hold such provisions to be directory only, the neglect
of them not affecting the validity of the acts done.
In Rule 7(3) no doubt the expression ''shall'' is used but it must be borne in mind that the rule deals with stages prior to launching the prosecution
and it is also clear that by the date of receipt of the report of the Public Analyst the case is not yet instituted in the court and it is only on the basis
of this report of the Public Analyst that the authority concerned has to take a decision whether to institute a prosecution or not. There is no time-
limit prescribed within which the prosecution has to be instituted and when there is no such limit prescribed then there is no valid reason for holding
the period of 45 days as mandatory. Of course that does not mean that the Public Analyst can ignore the time-limit prescribed under the rules. He
must in all cases try to comply with the time-limit. But if there is some delay, in a given case, there is no reason to hold that the very report is void
and on that basis to hold that even prosecution cannot be launched. May be, in a given case, if there is inordinate delay, the court may not attach
any value to the report but merely because the time-limit is prescribed, it cannot be said that even a slight delay would render the report void or
inadmissible in law. In this context it must be noted that Rule 7(3) is only a procedural provision meant to speed up the process of investigation on
the basis of which the prosecution has to be launched. No doubt, sub-section (2) of Section 13 of the Act confers valuable right on the accused
under which provision the accused can make an application to the court within a period of 10 days from the receipt of copy of the report of Public
Analyst to get the samples of food analysed in the Central Food Laboratory and in case the sample is found by the said Central Food Laboratory
unfit for analysis due to decomposition by passage of time or for any other reason attributable to the lapses on the side of prosecution, that valuable
right would stand denied. This would constitute prejudice to the accused entitling him to acquittal but mere delay as such will not per se be fatal to
the prosecution case even in cases where the sample continues to remain fit for analysis in spite of the delay because the accused is in no way
prejudiced on the merits of the case in respect of such delay. Therefore it must be shown that the delay has led to the denial of right conferred u/s
13(2) and that depends on the facts of each case and violation of the time-limit given in sub-rule (3) of Rule 7 by itself cannot be a ground for the
prosecution case being thrown out.
8......
It is nobody''s case that in the instant case, the proceeding u/s 81 of the said Act amounts to an enquiry which can be called a departmental or
disciplinary enquiry. It cannot be disputed that an enquiry u/s 81 of the said Act is an enquiry in public interest in order to find out whether the
affairs of a co-operative society are conducted legally and whether there are financial improprieties in the matter of conduct of its affairs. Such an
enquiry cannot be prima facie compared to an enquiry against any individual employee. It is obviously true that as a follow up action on such
enquiry u/s 81, various other steps may be taken, viz. surcharge proceedings can be initiated u/s 87 and steps can be also taken for initiating
criminal proceedings. In the instant case, both these steps have been taken.
(emphasis supplied by this Court)
Before the learned Judge of the writ court, the appellant relied on two learned single Bench judgments of this Court rendered in the case of
T.V. Ekambaram and two others Vs. The Co-operative Tribunal cum District Judge, Madurai and 2 others, and in the case of Gabriel vs. The
Deputy Registrar (Housing), Cuddalore reported in 2003 (3) CTC 23. In both these two judgments, the provisions of Section 87 of the said Act
which relate to surcharge proceedings were examined and the learned Judges in both the aforesaid judgments construed the following proviso to
Section 87:
Provided further that the action commenced under this sub-section shall be completed within a period of six months from the date of such
commencement or such further period or periods as the next higher authority may permit but such extended period or periods shall not exceed six
months in the aggregate.
Considering the said time limit of six months, the learned Judges came to the conclusion that the said period of six months is mandatory.
We are constrained to hold that even though no appeal has been taken to us from the said judgments, yet having regard to the well settled legal
position which has been referred to hereinabove, the finding of the learned Judges in these two judgments that the period of six months in the
second proviso to Section 87 of the said Act is mandatory is not a correct finding in law. We find that even though before the learned Judge of the
writ court those two judgments of the learned single Bench were cited, the learned Judge of the writ court was not swayed by those two decisions
and came to a correct finding, relying upon the well settled proposition laid down by the Supreme Court as pointed above hereinabove.
Another learned Single Judge of this Court, by placing reliance on the decision rendered by the First Bench of this Court, taken the similar view
in G. Pannerselvam and Others v. Deputy Registrar of Co-operative Societies, Dharmapuri and Others reported in (2009) 2 MLJ 901 and held as
hereunder:
Referring to the above decision in Senthil Kumar v. Co-operative Tribunal (Principal District Judge), Madurai and Others (supra) case, in
W.P.No.20310 of 2007 Justice S.Nagamuthu has taken the same view that the time stipulated u/s 81(4) of the Act is not mandatory.
The principles laid down by the First Bench of this Court and as well as by two other learned Judges of this Court makes it crystal clear that
proviso to Section 87 of the Act is not mandatory.
In view of the settled principle of law laid down by the Hon''ble Apex Court as relied by the First Bench of this Court and as well as by the two
learned Single Judges of this Court in the decisions cited supra, this Court is of the considered view that by no stretch of imagination, the proviso to
Section 87 of the Act could be held to be mandatory and the impugned order passed on such ground holding that proviso to Section 87 is
mandatory and accordingly the proceedings were completed within the stipulated period of six months or within the extended period of six months,
is liable to be set aside.
Accordingly, the writ petition is allowed and the impugned order passed by the third respondent herein dated 10.01.2008 in C.A.No.36/2004
is hereby set aside. Consequently, the matter is remitted back to the third respondent/Tribunal for fresh consideration on the basis of merits and in
accordance with law. It is made clear that it is open to the first respondent to raise all the points on merits before the Tribunal and the Tribunal shall
dispose of the appeal within a period of four (4) months from the date of receipt of a copy of this order. No costs. Consequently, connected
miscellaneous petition is closed.