H. Rajasekar Petitioner In W.P 22558/08 v. G. Prabakaran Petitioner In W.P 23558/08, Madras High Court, Judgment, Law, casemine.com

Factual and Procedural Background

An enquiry under Section 81 of the Tamil Nadu Co-operative Societies Act, 1983 was ordered regarding a monetary loss allegedly caused by the petitioners, who were employees of the Fourth Respondent Society. The Enquiry Officer submitted a report on 18.08.2006 holding the petitioners responsible for the loss. Based on this report, the first respondent initiated a proceeding under Section 87(1) of the Act by way of Penal Assessment No. 33/2008.Sa.Pa dated 01.08.2008 against the petitioners. The petitioners challenged the proceeding on the ground that it was barred by the seven-year limitation period prescribed in the first proviso to Section 87(1) of the Act. The respondents contended that this time limit is only directory and not mandatory, thus the proceeding was not barred by limitation.

Arguments of the Parties

Petitioners' Arguments

The proceeding under Section 87(1) is barred by limitation as it was initiated after the expiry of the seven-year period prescribed in the first proviso to Section 87(1) of the Act.

Respondents' Arguments

The time limit in the first proviso to Section 87(1) is not mandatory but only directory.

The proceeding under Section 87(1) should be considered a continuation of the enquiry under Section 81, and thus, the limitation period for Section 81 suffices.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
State of U.P v. Manbodhan Lal Srivastava (A.I.R 1957 S.C 912)	Statutory interpretation principle that legislative intent governs whether a provision is mandatory or directory, not just language.	Used to establish that intent, nature, and consequences determine mandatory or directory nature of a provision.
Haridwar Singh v. Bagun Sumbrui and Others (A.I.R 1972 S.C 1242)	Negative or prohibitive statutory language generally indicates a mandatory provision.	Supported the conclusion that the negative language in the first proviso to Section 87(1) makes it mandatory.
M. Pentiah v. Muddala Veeramallappa (A.I.R 1961 S.C 1107)	Negative words in statutes are ordinarily used to make provisions imperative.	Reinforced the interpretation of the first proviso as mandatory due to its negative phrasing.
Bhagchand v. Secretary for State (A.I.R 1927 PC 176)	Negative language in procedural statutes is mandatory.	One of several Supreme Court precedents cited to show that negative language in limitation provisions mandates strict compliance.
Gaekwar Baroda State Railway v. Hafiz Habib-ul-Haq (A.I.R 1938 PC 165)	Mandatory nature of statutory time limits expressed in negative terms.	Supported the mandatory interpretation of negative statutory provisions.
Council v. Masaddi Lal (A.I.R 1961 SC 725)	Negative statutory language indicates mandatory requirements.	Used to reinforce the mandatory character of the first proviso.
Waman Shriniwas v. Ratilal Bhagwandas & Co. (A.I.R 1959 S.C 689)	Negative language in statutes denotes mandatory provisions.	Further precedent supporting the court's interpretation.
Hem Nolini Judah v. Isolyne Sarojabashini Bose (A.I.R 1962 S.C 1471)	Mandatory effect of negative statutory language.	Supported the principle that negative phrasing signifies mandatory compliance.
H.N Rishbud v. State of Delhi (A.I.R 1955 S.C 196)	Mandatory nature of negative statutory provisions.	One of the authorities cited to emphasize mandatory interpretation.
Suraj Mull Nagoremull v. Tritorn Ins. Co. (A.I.R 1925 PC 83)	Negative language in statutes is generally mandatory.	Used to illustrate the mandatory effect of negative phrasing.
Mannalal Khetan v. Kedarnath Khetan (A.I.R 1977 S.C 536)	Statutory provisions expressed in negative terms are mandatory.	Supported the court’s reasoning on mandatory time limits.
A.K Roy v. State of Punjab (A.I.R 1986 S.C 2160)	Mandatory nature of negative statutory language.	Reinforced the principle applied by the court.
State of Bihar v. Murad Ali Khan (A.I.R 1989 SC 1)	Negative language provisions are mandatory.	Further authority for mandatory interpretation.
Jaipur Zila Sahakari Bhoomi Vikas Bank Ltd., v. Ram Gopal Sharma and others (A.I.R 2002 S.C 643)	Negative language in provisos to statutes is mandatory.	Recent Supreme Court decision confirming mandatory character of negative provisos.
S.V.K Sahasramam v. Deputy Registrar Of Co-operative Societies (2008 (8) M.L.J 231)	Period of limitation in Section 81(4) and second proviso to Section 87(1) held to be directory, not mandatory.	Distinguished by the court from the first proviso to Section 87(1), which was held mandatory.

Precedent

Rule or Principle Cited For

Application by the Court

State of U.P v. Manbodhan Lal Srivastava (A.I.R 1957 S.C 912)

Statutory interpretation principle that legislative intent governs whether a provision is mandatory or directory, not just language.

Used to establish that intent, nature, and consequences determine mandatory or directory nature of a provision.

Haridwar Singh v. Bagun Sumbrui and Others (A.I.R 1972 S.C 1242)

Negative or prohibitive statutory language generally indicates a mandatory provision.

Supported the conclusion that the negative language in the first proviso to Section 87(1) makes it mandatory.

M. Pentiah v. Muddala Veeramallappa (A.I.R 1961 S.C 1107)

Negative words in statutes are ordinarily used to make provisions imperative.

Reinforced the interpretation of the first proviso as mandatory due to its negative phrasing.

Bhagchand v. Secretary for State (A.I.R 1927 PC 176)

Negative language in procedural statutes is mandatory.

One of several Supreme Court precedents cited to show that negative language in limitation provisions mandates strict compliance.

Gaekwar Baroda State Railway v. Hafiz Habib-ul-Haq (A.I.R 1938 PC 165)

Mandatory nature of statutory time limits expressed in negative terms.

Supported the mandatory interpretation of negative statutory provisions.

Council v. Masaddi Lal (A.I.R 1961 SC 725)

Negative statutory language indicates mandatory requirements.

Used to reinforce the mandatory character of the first proviso.

Waman Shriniwas v. Ratilal Bhagwandas & Co. (A.I.R 1959 S.C 689)

Negative language in statutes denotes mandatory provisions.

Further precedent supporting the court's interpretation.

Hem Nolini Judah v. Isolyne Sarojabashini Bose (A.I.R 1962 S.C 1471)

Mandatory effect of negative statutory language.

Supported the principle that negative phrasing signifies mandatory compliance.

H.N Rishbud v. State of Delhi (A.I.R 1955 S.C 196)

Mandatory nature of negative statutory provisions.

One of the authorities cited to emphasize mandatory interpretation.

Suraj Mull Nagoremull v. Tritorn Ins. Co. (A.I.R 1925 PC 83)

Negative language in statutes is generally mandatory.

Used to illustrate the mandatory effect of negative phrasing.

Mannalal Khetan v. Kedarnath Khetan (A.I.R 1977 S.C 536)

Statutory provisions expressed in negative terms are mandatory.

Supported the court’s reasoning on mandatory time limits.

A.K Roy v. State of Punjab (A.I.R 1986 S.C 2160)

Mandatory nature of negative statutory language.

Reinforced the principle applied by the court.

State of Bihar v. Murad Ali Khan (A.I.R 1989 SC 1)

Negative language provisions are mandatory.

Further authority for mandatory interpretation.

Jaipur Zila Sahakari Bhoomi Vikas Bank Ltd., v. Ram Gopal Sharma and others (A.I.R 2002 S.C 643)

Negative language in provisos to statutes is mandatory.

Recent Supreme Court decision confirming mandatory character of negative provisos.

S.V.K Sahasramam v. Deputy Registrar Of Co-operative Societies (2008 (8) M.L.J 231)

Period of limitation in Section 81(4) and second proviso to Section 87(1) held to be directory, not mandatory.

Distinguished by the court from the first proviso to Section 87(1), which was held mandatory.

Court's Reasoning and Analysis

The court began by examining the language of the first proviso to Section 87(1) of the Tamil Nadu Co-operative Societies Act, 1983, which prescribes a seven-year time limit to commence action. At first glance, the proviso appears mandatory due to its negative phrasing ("no action shall be commenced after..."). The respondents argued by analogy with the second proviso to Section 87(1) and Section 81(4), which this Court had previously held to be directory rather than mandatory.

However, the court distinguished these provisions on the basis of language: the first proviso employs negative, prohibitive language, while the others are framed affirmatively and negatively. The court emphasized that legislative intent governs whether a provision is mandatory or directory, and negative or prohibitive words are strong indicators of a mandatory provision, as supported by various Supreme Court precedents.

The court further rejected the respondents' contention that the proceeding under Section 87(1) is a continuation of the enquiry under Section 81. It explained that Section 81 enquiries are fact-finding and non-adjudicatory, whereas Section 87(1) proceedings are quasi-judicial, involve adjudication, and result in binding and executable orders. Thus, the two provisions operate in different spheres and are not continuous.

Applying the settled principles of statutory interpretation, the court held that the first proviso to Section 87(1) prescribes a mandatory time limit. Since the impugned proceeding was initiated after the seven-year limitation period, it is barred by limitation and liable to be quashed.

Holding and Implications

The writ petitions are allowed and the impugned proceedings under Section 87(1) dated 01.08.2008 are quashed as barred by limitation.

The direct effect of this decision is the termination of the proceedings against the petitioners initiated beyond the prescribed limitation period. The court did not set any new precedent beyond affirming the mandatory nature of the time limit in the first proviso to Section 87(1) of the Act. Connected miscellaneous petitions were closed with no order as to costs.

H. Rajasekar Petitioner In W.P 22558/08 v. G. Prabakaran Petitioner In W.P 23558/08

COMMON ORDER

Whether the time limit provided in first proviso to Section 87(1) of the Tamil Nadu Co-operative Societies Act, 1983 is imperative or only directory is the question which needs to be answered in these writ petitions.

2. An enquiry under Section 81 of the Tamil Nadu Co-operative Societies Act, 1983 (hereinafter referred to as “the Act”) was ordered in respect of monetary loss said to have been caused by the petitioners who were the employees of the Fourth Respondent Society. The Enquiry Officer submitted a Report on 18.08.2006 holding that the petitioners are responsible for the loss caused to the Society. Based on the said Report, on an application filed by the fourth respondent, a proceeding under Section 87(1) of the Act was initiated by the first respondent in Penal Assessment No. 33/2008.Sa.Pa dated 01.08.2008 against the petitioners. Challenging the said proceeding on the ground that it is barred by limitation as provided in the first proviso to Section 87(1) of the Act, the petitioners are now before this Court. To the contrary, the contention of the respondents is that the time limit provided therein is not mandatory and the same is only directory and therefore, the impugned proceeding is not barred by limitation, warranting interference at the hands of this Court.

3. In order to appreciate the legal plea taken by either side, it would be, at the outset, useful to refer to Section 87(1) of the Act, which reads as follows:—

“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 accordance with this Act, the Rules or the byelaws, the Registrar himself or any person specially authorised by him in this behalf, of his own motion or on the application of the board, liquidatory 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 the 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, mis-application of funds, fraudulent retainer, breach of trust or wilful negligence or payments which are not in accordance with this Act, the Rules or the byelaws as the Registrar or the person authorised as aforesaid thinks just.

First Proviso to Section 87(1) of the Act reads as follows:—

Provided that no action shall be commenced under this sub-section after the expiry of seven years from the date of any act or omission referred to in this sub-section”.

4. A plain reading of the above proviso to Section 87(1) of the Act, at the first glimpse, would give an unambiguous impression that the time limit provided therein is mandatory. But, the learned counsel for the respondents would submit that similar time limits provided in second proviso to Section 87(1) and Section 81(4) of the Act have been held to be only directory by this Court and so, applying the same yardstick, the first proviso to Section 87(1) of the Act should also be construed to be only directory and not mandatory.

5. To appreciate the said argument, it is necessary to refer to second proviso to Section 87(1) and Section 81(4) of the Act, which read as follows:—

“Second Proviso to Section 87(1) of the Act:—

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.

81. Inquiry:— (4) The inquiry shall be completed within a period of three months from the date of ordering the inquiry or such further period or periods not exceeding three months at a time as the next higher authority may permit, provided that such extended periods shall not exceed six months in the aggregate.”

6. While interpreting Section 81(4) of the Act in W.P No. 20310 of 2007, it was contended before me that the period of limitation provided in Section 81(4) of the Act is mandatory. But, after analysing two previous judgments of this Court as well as few Judgments of the Hon'ble Supreme Court, I held that the said period provided in Section 81(4) of the Act is only directory and not mandatory. The affirmative language employed in Section 81(4) of the Act was given due appreciation. Challenging the said order, an appeal was preferred in W.A No. 949 of 2008 in which a Division Bench of this Court approved the view that the period of limitation provided under Section 81(4) of the Act is only directory and not mandatory. (Vide S.V.K Sahasramam v. Deputy Registrar Of Co-operative Societies (2008 (8) M.L.J 231)). The Division Bench further held that the period of limitation provided in second proviso to Section 87(1) of the Act is also directory and not mandatory.

7. It is based on the said view taken by me and the Division Bench, it is contended by the learned counsel for the fourth respondent that the period of limitation provided in the first proviso to Section 87(1) should also be construed to be only directory and not mandatory. In my considered opinion, the said contention of the learned counsel cannot be countenanced for the reasons that follow.

8. A cursory perusal of the first proviso to Section 87(1) of the Act on one side, Section 81(4) of the Act and second proviso to Section 87(1) of the Act on the other, would go a long way to indicate that in the former, the language employed is affirmative in nature, whereas it is negative in the later two provisions. From this, it could be understood that the Legislature had intended to draw a distinction between the first proviso to Section 87(1) of the Act and the other two provisions stated above. Had it been the intention of the Legislature that the first proviso to Section 87(1) of the Act should also be meant to be only directory, nothing would have prevented the Legislature to use similar affirmative language in the first proviso also. But, the Legislature has deliberately used negative language in the said proviso, which would go to clearly indicate the different intention of the Legislature. Therefore, the interpretation made to Section 81(4) and second proviso to Section 87(1) of the Act cannot be imported to first proviso to Section 87(1) of the Act.

9. At this juncture, let me analyse the Rule of Interpretation in the context of the language used in a statute. In general, the question as to whether a statute is mandatory or directory, of course, 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. (Vide State of U.P v. Manbodhan Lal Srivastava (A.I.R 1957 S.C 912)).

10. Thus, it is not only the language employed, but the intent of the Legislature which makes a particular provision in a Statue either imperative or directory. A mode of showing a clear intention that the provision enacted is mandatory, is by clothing the command in a negative form. Prohibitive or negative words can rarely, if ever, be directory. And this is so even though the statute provides no penalty for disobedience. (Vide Haridwar Singh v. Bagun Sumbrui and Others (A.I.R 1972 S.C 1242 = (1973) 86 L.W 48 S.N)). Negative words are clearly prohibitory and are ordinarily used as a legislative device to make a statute imperative. (Vide Subbarao, J. in M. Pentiah v. Muddala Veeramallappa (A.I.R 1961 S.C 1107)).

11. Based on the above rules of interpretation, from the negative language employed, the Hon'ble Supreme Court has held that Section 80 of the Code of Civil Procedure, 1908 (Vide Bhagchand v. Secretary for State (A.I.R 1927 PC 176 = (1927) 26 L.W 809)), Section 87-B of the Code of Civil Procedure, 1908 (Vide Gaekwar Baroda State Railway v. Hafiz Habib-ul-Haq (A.I.R 1938 PC 165 = (1938) 47 L.W 753)), Section 77 of the Railways Act, 1890 (Vide G.G in Council v. Masaddi Lal (A.I.R 1961 SC 725)), Section 15 of the Bombay Rent Act, 1947 (Vide Waman Shriniwas v. Ratilal Bhagwandas & Co., (A.I.R 1959 S.C 689)), Section 213 of the Succession Act, 1925 (Vide Hem Nolini Judah v. Isolyne Sarojabashini Bose (A.I.R 1962 S.C 1471)), Section 5-A of the Prevention of Corruption Act, 1947 (Vide H.N Rishbud v. State of Delhi (A.I.R 1955 S.C 196)), Section 7 of the Stamp Act, 1899 (Vide Suraj Mull Nagoremull v. Tritorn Ins. Co., (A.I.R 1925 PC 83)), Section 108 of the Companies Act, 1956 (Vide Mannalal Khetan v. Kedarnath Khetan (A.I.R 1977 S.C 536 = (1977) 90 L.W 102 S.N)), Section 20(1) of the Prevention of Food Adulteration Act, 1954 (Vide A.K Roy v. State of Punjab (A.I.R 1986 S.C 2160)) and Section 55 of the Wild Life Protection Act, 1972 (Vide State of Bihar v. Murad Ali Khan (A.I.R 1989 SC 1)) as mandatory. Recently, while analysing the negative language employed to the proviso to Section 33(2)(b) of the Industrial Disputes Act, 1947, the Hon'ble Supreme Court has held that it is mandatory. (Vide Jaipur Zila Sahakari Bhoomi Vikas Bank Ltd., v. Ram Gopal Sharma and others (A.I.R 2002 S.C 643)).

12. Applying the above principle laid down by the Hon'ble Supreme Court in various judgments cited supra, if the deliberate negative language employed in the first proviso to Section 87(1) of the Act is analysed in the light of the affirmative language employed in Section 84(1) and second proviso to Section 87(1) of the Act, the intent of the Legislature could be perceived that the Legislature has prescribed the time limit only as mandatory.

13. In the case on hand, admittedly, the proceeding under Section 87(1) of the Act was initiated after the expiry of seven years period of limitation provided. The learned counsel for the fourth respondent would further submit that the proceeding under Section 87(1) of the Act should be construed to be a continuation of the enquiry held under Section 81 of the Act and therefore, it would be suffice if the enquiry under Section 81 of the Act is commenced within a period of seven years from the date of the commission or omission. I find it very hard to persuade myself to accept the said argument. Section 81 and 87(1) of the Act operate on different spheres in different angles. An enquiry under Section 81 of the Act is held only to find out the truth in respect of certain matters enumerated therein pertaining to the society, where there is no adjudication between the parties in respect of any disputed question. But, a proceeding under Section 87(1) of the Act is quasi Judicial in nature where there is adjudicatory process undertaken; ultimate award binds the parties to the proceeding and the award is executable. Thus, these provisions are totally dissimilar and they operate on different areas. So, a proceeding under Section 87(1) of the Act is only a follow up act and not a continuation of Section 81 of the Act.

14. Thus, looking at the legal issues from any angle, applying the well settled principles of interpretation as enumerated above, I hold that the first proviso to Section 87(1) of the Act prescribes a period of limitation, which is mandatory. Consequently, the impugned proceedings are liable to be quashed as barred by limitation.

15. In the result, these writ petitions are allowed and the impugned proceedings of the first respondent dated 01.08.2008 are quashed. Connected miscellaneous petitions are closed. No costs.

VCJ/VCS

Writ Petition No. 22558, 23558 & 23559 of 2008 and M.P Nos. 1 & 2, 1 & 2 and 1 & 2 of 2008

H. Rajasekar Petitioner In W.P 22558/08 v. G. Prabakaran Petitioner In W.P 23558/08

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners' Arguments

Respondents' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

H. Rajasekar Petitioner In W.P 22558/08 v. G. Prabakaran Petitioner In W.P 23558/08

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