Madras High Court
P.Muthu Mohanraj vs The Deputy Registrar Of Cooperative … on 15 April, 2026
Author: N.Sathish Kumar
Bench: N.Sathish Kumar, B.Pugalendhi
W.P(MD)No.14274 of 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 15.04.2026
DELIVERED ON : 27.04.2026
CORAM
THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR
AND
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
AND
THE HONOURABLE MR.JUSTICE M.JOTHIRAMAN
WP(MD)No.14274 of 2020
P.Muthu Mohanraj ...Petitioner
Vs
1. The Deputy Registrar of Co-operative Societies,
Madurai Range, Madurai
2. Tmt.J.Subbulakshmi,
Under Section 82 Enquiry Officer
Cum Co-Operative Sub-Registrar,
A-2547 Pasumalai Urban Co-Operative
Credit Society, Pasumalai,
Madurai. ....Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India,
praying this Court to issue a Writ of certiorari to call for the records in
Na.Ka.4620/2016/Sa.Pa. dated 23.6.2020 on the file of the 1st respondent and
quash the same.
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For Petitioner : Mr.H.Arumugam
for Mr.S.Kumar
For Respondents : Mr.M.Ajmal Khan,
Addl. Advocate General I, Assisted by
Mr.S.P.Maharajan
Special Government Pleader for R1
Counsels assisted : Mr.Isaac Mohanlal, Senior Counsel
the Hon'ble Court : for M/s.Isaac Chambers
Mr.Sunny Sheenakkara
ORDER
(Order of the Court was delivered by MR.N.SATHISH KUMAR, J.)
This Larger Bench has been constituted on the basis of a
reference made by the learned Single Judge of this Court
[G.R. Swaminathan, J.] vide order dated 03.01.2024, to answer the issue as
to whether surcharge proceedings could be initiated against a retired
employee. The said reference was made in view of the observations
contained in paragraphs 28 and 29 of the Larger Bench (comprising three
Judges) of this Court in S.Andiyannan v. The Joint Registrar, Co-operative
Societies and another reported in 2015-3-L.W. 513.
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2. In S.Andiyannan’s case, the Full Bench of this Court
adjudicated upon the following questions:
“1. Whether the disciplinary proceedings initiated
against an employee of a co-operative society, governed by the
Tamil Nadu Co-operative Societies Act, 1983, could be continued
even after retirement of the said employee?
2. Whether Section 87 of the Tamil Nadu Co-
operative Societies Act, 1983, could be considered as an enabling
provision empowered the disciplinary authority to continue the
disciplinary proceedings even after the retirement of the
employee?”
3. While answering the reference, the Full Bench held that
disciplinary proceedings cannot be continued against the concerned
employee after his retirement. Such proceedings are bad in law in the
absence of any service rules or bye-laws permitting their continuation. As
regards the second question of law, the Full Bench held that ‘surcharge’
proceedings are not penal in nature, as they are concerned only with the
recovery of money or property, or any part thereof, along with interest, from
the retired employee in lieu of the financial loss caused by the concerned
employee. The Full Bench further held that Section 87 of the Tamil Nadu
Co-operative Societies Act, 1983 is not an enabling provision permitting a
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Co-operative Society to continue disciplinary proceedings against an erring
employee, after retirement. In fact, the Full Bench answered the reference to
the extent that only disciplinary proceedings are impermissible after the
retirement of an employee. The question of initiation of surcharge
proceedings was not directly adjudicated upon. However, in paragraphs 27
and 28, while making certain observations, the Full Bench recorded that
surcharge proceedings cannot be initiated against a retired employee. This
observation has led to confusion, resulting in the constitution of this Bench
to determine whether surcharge proceedings can be initiated against a retired
employee.
4. Mr.H.Arumugam, learned counsel appearing for the
petitioner, fairly submitted that, insofar as the question of law is concerned,
the language employed in Section 87 of the Tamil Nadu Co-operative
Societies Act is clear and unambiguous, and that the said provision makes it
evident that surcharge proceedings can be initiated even against former
employees, provided such proceedings are commenced within the time
stipulated under the Act. He further submitted that the observations made in
paragraphs 28 and 29 of the Full Bench judgment in S. Andiyannan’s case
are, at best, attributable to clerical errors, and may be construed as obiter
dicta, which are not binding.
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5. Mr.M.Ajmalkhan, learned Additional Advocate General
appearing for the first respondent, submitted that in S. Andiyannan’s case,
the Full Bench was constituted solely to answer the issue as to whether
disciplinary proceedings could be continued after the retirement of an
employee. The question of surcharge proceedings was never in issue.
Hence, he contended that the Full Bench did not decide the question relating
to the initiation of surcharge proceedings after retirement. Accordingly, he
submitted that any observations contained in paragraphs 28 and 29 of the
Full Bench judgment are, at best, an obiter dicta and, therefore, not binding.
He further submitted that, as per Section 87 of the Tamil Nadu Co-operative
Societies Act, 1983, surcharge proceedings can be initiated against both past
and present employees.
6. Mr.Issac Mohanlal, learned Senior Counsel assisting this
Court, submitted that the observations contained in paragraphs 28 and 29 are
clearly in the nature of an obiter dicta and, therefore, the same are not
binding as precedent. He contended that the same may be disregarded, as the
Full Bench was never called upon to decide that issue, having been
constituted solely to answer the question as to whether disciplinary
proceedings could be initiated against a retired employee. According to him,
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on a plain reading of Section 87 of the Tamil Nadu Co-operative Societies
Act, 1983, surcharge proceedings are very well maintainable.
7. Mr.Sunny Sheenakkara, learned counsel, who voluntarily
assisted the Court, took us through the various prior legislations governing
surcharge proceedings. According to him, under the predecessor enactment,
namely the Madras Co-operative Societies Act, 1932, surcharge proceedings
could be initiated under Section 49 against any person who had taken part in
the organisation or management of the society, or any past or present officer
thereof, who had misappropriated or fraudulently retained any money or
other property, or had been guilty of breach of trust in relation to the society.
Similarly, under the Tamil Nadu Co-operative Societies Act, 1961,
analogous provisions existed in Sections 64, 65, and 66, relating to audit,
enquiry, inspection, or winding up. Where, upon such audit or enquiry, it
appears that any person, including a past or present officer or servant of the
society, had misappropriated or fraudulently retained any money or property
of the society, surcharge proceedings could be initiated under Section 71. A
similar provision is contained in the present enactment, namely the Tamil
Nadu Co-operative Societies Act, 1983. Section 87 of the said Act enables
Co-operative Societies to initiate surcharge proceedings against any person
who was entrusted with the organisation or management of the society, or
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any past or present officer or servant thereof, who has misappropriated or
fraudulently retained any money or property of the society. Hence, it is his
contention that the observations contained in the judgment of the earlier Full
Bench of this Court are not binding, being in the nature of obiter dicta.”
8. It was also brought to the notice of this Court that provisions
pari materia with Section 87 of the Tamil Nadu Co-operative Societies Act,
1983 exist in other State enactments. Under the Andhra Pradesh Co-
operative Societies Act, 1964, Section 60 permits the initiation of surcharge
proceedings against both present and retired employees. Similarly, Section
68 of the Kerala Co-operative Societies Act, 1969 and Section 88 of the
Maharashtra Co-operative Societies Act, 1960 also provide for the initiation
of surcharge proceedings against present as well as retired employees.
9. In the light of the above submissions, we have gone through
the provisions of Section 87 of the Tamil Nadu Co-operative Societies Act,
1983, 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 or7/26
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W.P(MD)No.14274 of 2020was entrusted with the organisation or management of the
society or any past or present officer or servant of the society,
either on his own or in connivance with any other person, has
misappropriated or fraudulently retained or transferred 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 negligence or has made any
payment which is not in accordance with this Act, rules or by-
laws, the Registrar 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 or such
other person and after giving a reasonable opportunity to the
person concerned and in the case of his demise, to his
representative who inherits his estate or a person who holds 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 retention
or transfer of money or other property, breach of trust or
negligence or payments which are not in accordance with this
Act, rules or by-laws as the Registrar or the person authorised
as aforesaid thinks just:
Provided that no action shall be commenced under this
sub-section after the expiry of seven years from the date of
detection of any act or omission referred to in this sub-section:
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W.P(MD)No.14274 of 2020Provided 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.
(2)Without prejudice to any other mode of recovery
which is being taken or may be taken under this Act or any
other law for the time being in force, any sum ordered under
this section to be repaid to a registered society or recovered as
a contribution to its assets may be recovered as if it were an
arrears of land revenue and for the purpose of such recovery,
the Registrar shall have the powers of a Collector under the
Tamil Nadu Revenue Recovery Act, 1864 (Tamil Nadu Act II of
1864).
(3)This section shall apply notwithstanding that such
person or officer or servant may have incurred criminal liability
by his act.
(4)The Registrar or the person authorised by him shall,
when acting under this section, have all the powers of a Civil
Court while trying a suit under the Code of Civil Procedure,
1908 (Central Act V of 1908) in respect of the following matters,
namely:~
(a)summoning and enforcing the attendance of any
person and examining him on oath;
(b)requiring the discovery and production of any
documents;
(c)reception of evidence on affidavits;
(d)requisitioning any public record from any Court or
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(e)issuing Commission for examining of witnesses.”
10. The Tamil Nadu Co-operative Societies Act, 1983 came into
force after the repeal of the predecessor enactments, viz., the Tamil Nadu
Co-operative Societies Act, 1932 and the Tamil Nadu Co-operative Societies
Act, 1961. Even under the earlier enactments, provisions for surcharge
proceedings existed even prior to independence. The various enactments
referred to above also clearly indicate that provisions existed for initiating
action against past servants as well, in cases where misappropriation or
fraudulent retention of money or property was found. Similar provisions are
also contained in Section 60 of the Andhra Pradesh Co-operative Societies
Act, 1964, which is pari materia with Section 87 of the Tamil Nadu Co-
operative Societies Act, 1983. Except for the procedural safeguard requiring
the Registrar or his authorised representative to afford an opportunity of
hearing to the person concerned to make a representation and establish
otherwise, initiation of surcharge proceedings against past employees is
permitted. Similarly, Section 68 of the Kerala Co-operative Societies Act,
1969 and Section 88 of the Maharashtra Co-operative Societies Act, 1960
also permit initiation of surcharge proceedings against past employees.
Thus, Section 87 of the Tamil Nadu Co-operative Societies Act, 1983, which
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is the culmination of various legislative models adopted across different
States, though with certain variations from the Tamil Nadu Co-operative
Societies Act, 1961, makes it clear that surcharge proceedings can also be
initiated against retired employees.”
11. The plain language of Section 87 of the Tamil Nadu Co-
operative Societies Act, 1983 makes it clear that 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, either on his own or in connivance with any
other person, has misappropriated or fraudulently retained or transferred 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 negligence or has made any payment which is not in accordance with
this Act, rules or by-laws, the Registrar 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 or such other person and after
giving a reasonable opportunity to the person concerned and in the case of
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his demise, to his representative who inherits his estate or a person who
holds his estate, to answer the charges for the purpose of recovery of money
or other property of the society.
12. The plain reading of the language employed in Section 87
makes it clear that there is no bar in law to initiate surcharge proceedings
against any person, whether a past or present servant of the society.
Therefore, we are of the view that proceedings under Section 87, namely
surcharge proceedings, can be initiated against retired employees or against
any person who was entrusted with the organisation or management of the
society, or any past or present officer or servant thereof, if an audit under
Section 80, or an enquiry or inspection or investigation under Section 82, or
an inspection of books under Section 83, or the winding up of a society,
discloses circumstances warranting such initiation of proceedings
13. The Full Bench, in the reference in question, answered two
questions as follows:
“30. Answer to the first question referred to this
Bench:
Under the Tamil Nadu Cooperative Societies Act,
1983, once an employee retired from service, there could be no12/26
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W.P(MD)No.14274 of 2020authority vested with the employer for continuing any
disciplinary proceeding, in the absence of relevant service
Rules permitting the employer to continue the disciplinary
proceeding. In other words, if there is no service Rules or bye-
law of the society empowering the employer to continue the
departmental proceeding, the employer, would have no
authority to continue the departmental proceeding after the
retirement of the employee.
31. Answer to the second question referred to this
Bench:
As contemplated under Section 87 of the Tamil Nadu
Cooperative Societies Act, 1983, the term -surcharge- is not
penal in nature, hence if there is admission with regard to the
loss caused by the employee or the same is established by the
cooperative institution, based on the proceeding already
initiated for surcharge, the same could be recovered in the
manner known to law. However, the provision relating to
surcharge under Section 87 of the Act is not impliedly
empowering the disciplinary authority to continue any
disciplinary proceeding against an employee, who retired from
service, in the absence of any Service Rules or Bye-law. Hence,
Section 87 of the said Act cannot be construed as an enabling
provision or impliedly empowering provision to the employer to
continue any disciplinary proceeding after the retirement of
any employee, in the absence of any Service Rules.”13/26
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14. The Full Bench has never gone into the issue of surcharge
proceedings at all. However, in paragraphs 27 and 28, in the penultimate
lines of those paragraphs, the Full Bench has observed as follows:
In paragraph 27, it is stated that, “however,
surcharge proceedings cannot be initiated against any retired
employee.”In paragraph 28, it is stated that, “however, even
surcharge proceedings cannot be initiated after the retirement
of an employee to recover the same from his retiral benefits.”
15. In Director of Settlements, A.P. And others Vs.
M.R.Apparao and another reported in (2002) 4 SCC 638, the Hon’ble
Supreme Court has held as follows:
“A judgment of the Court has to be read in the
context of questions which arose for consideration in the case in
which the judgment was delivered. An ‘obiter dictum’ as
distinguished from a ratio decidendi is an observation by Court
on a legal question suggested in a case before it but not arising
in such manner as to require a decision. Such an obiter may not
have a binding precedent as the observation was unnecessary
for the decision pronounced.”14/26
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16. In Arun Kumar Aggarwal Vs. State of Madhya Pradesh
and others reported in (2014) 13 SCC 707, the Hon’ble Supreme Court has
observed as follows:
“24. At this stage, it is pertinent to consider the
nature and scope of a mere observation or obiter dictum in the
Order of the Court. The expression obiter dicta or dicta has been
discussed in American Jurisprudence 2d, Vol. 20, at pg. 437 as
thus:
“74. -Dicta
Ordinarily, a court will decide only the questions
necessary for determining the particular case presented. But
once a court acquires jurisdiction, all material questions are
open for its decision; it may properly decided all questions
so involved, even though it is not absolutely essential to the
result that all should be decided. It may, for instance,
determine the question of the constitutionality of a statute,
although it is not absolutely necessary to the disposition of
the case, if the issue of constitutionality is involved in the suit
and its settlement is of public importance. An expression in
an opinion which is not necessary to support the decision
reached by the court is dictum or obiter dictum.
“Dictum” or “obiter dictum: is distinguished from the
“holding of the court in that the so- called “law of the case”
does not extend to mere dicta, and mere dicta are not
binding under the doctrine of stare decisis.
As applied to a particular opinion, the question of
whether or not a certain part thereof is or is not a mere
dictum is sometimes a matter of argument. And while the
terms “dictum” and “obiter dictum” are generally used
synonymously with regard to expressions in an opinion
which are not necessary to support the decision, in
connection with the doctrine of stare decisis, a distinction
has been drawn between mere obiter and “judicial dicta,”
the latter being an expression of opinion on a point
deliberately passed upon by the court.” (Emphasis15/26
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W.P(MD)No.14274 of 2020supplied).
Further at pg. 525 and 526, the effect of dictum has been
discussed:
“190. Decision on legal point; effect of dictum
… In applying the doctrine of stare decisis, a
distinction is made between a holding and a dictum.
Generally stare decisis does not attach to such parts of an
opinion of a court which are mere dicta. The reason for
distinguishing a dictum from a holding has been said to be
that a question actually before the court and decided by it is
investigated with care and considered in its full extent,
whereas other principles, although considered in their
relation to the case decided, are seldom completely
investigated as to their possible bearing on other cases.
Nevertheless courts have sometimes given dicta the same
effect as holdings, particularly where “judicial dicta” as
distinguished from “obiter dicta” are involved.”
25. According to P. Ramanatha Aiyar’s, Advanced Law
Lexicon (3rd Edn. 2005), the expression “observation” means a
“view, reflection; remark; statement; observed truth
or facts; remarks in speech or writing in reference to
something observed.”
26. Wharton’s Law Lexicon (14th Edn. 1993) defines term
“obiter dictum” as an opinion not necessary to a judgment; an
observation as to the law made by a judge in the course of a case,
but not necessary to its decision, and therefore of no binding
effect; often called as obiter dictum, a remark by the way.”
27. The Black’s Law Dictionary, (9th Edn., 2009) defines
term “obiter dictum” as
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“obiter dictum._ A judicial comment made while
delivering a judicial opinion, but one that is unnecessary to
the decision in the case and therefore not precedential
(although it may be considered persuasive). — Often
shortened to dictum or, less commonly, obiter. …..
“Strictly speaking an “obiter dictum” is a
remark made or opinion expressed by a judge, in his
decision upon a cause, “by the way”__ that is,
incidentally or collaterally, and not directly upon the
question before the court; or it is any statement of law
enunciated by the judge or court merely by way of
illustration, argument, analogy, or suggestion…. In the
common speech of lawyers, all such extrajudicial
expressions of legal opinion are referred to as
“dicta,” or “obiter dicta,” these two terms being used
interchangeably.”
28. Words and Phrases, Permanent Edn., Vol. 29 defines
the expression “obiter dicta” or “dicta” thus:
“Dicta are opinions of a judge which do not embody
the resolution or determination of the court, and made
without argument or full consideration of the point, are not
the professed deliberate determinations of the judge
himself; obiter dicta are opinions uttered by the way, not
upon the point or question pending, as if turning aside for
the time from the main topic of the case to collateral
subjects; It is mere observation by a judge on a legal
question suggested by the case before him, but not arising
in such a manner as to require decision by him; “Obiter
dictum” is made as argument or illustration, as pertinent to
other cases as to the one on hand, and which may enlighten
or convince, but which in no sense are a part of the
judgment in the particular issue, not binding as a
precedent, but entitled to receive the respect due to the
opinion of the judge who utters them; Discussion in an
opinion of principles of law which are not pertinent,
relevant, or essential to determination of issues before
court is “obiter dictum”.
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29. The concept of “Dicta” has also been considered in
Corpus Juris Secundum, Vol. 21, at pg. 309-12 as thus:
“190. Dicta
a. In General A Dictum is an opinion expressed by a
court, but which, not being necessarily involved in the case,
lacks the force of an adjudication; an opinion expressed by
a judge on a point not necessarily arising in the case; a
statement or holding in an opinion not responsive to any
issue and noty necessary to the decision of the case; an
opinion expressed on a point in which the judicial mind is
not directed to the precise question necessary to be
determined to fix the rights of the parties; or an opinion of
a judge which does not embody the resolution or
determination of the court, and made without argument, or
full consideration of the point, not the professed deliberate
determination of the judge himself. The term “dictum” is
generally used as an abbreviation of “obiter dictum” which
means a remark or opinion uttered by the way.
Such an expression or opinion, as a general rule, is
not binding as authority or precedent within the stare
decisis rule, even on courts inferior to the court from which
such expression emanated, no matter how often it may be
repeated. This general rule is particularly applicable where
there are prior decisions to the contrary of the statement
regarded as dictum; where the statement is declared, on
rehearing, to be dictum; where the dictum is on a question
which the court expressly states that it does not decide; or
where it is contrary to statute and would produce an
inequitable result. It has also been held that a dictum is not
the “law of the case,”nor res judicata.”
30. The concept of “Dicta” has been discussed in
Halsbury’s Laws of England, Fourth Edition (Reissue), Vol. 26,
para. 574 as thus:
“574. Dicta.__ Statements which are not necessary
to the decision, which go beyond the occasion and lay18/26
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W.P(MD)No.14274 of 2020down a rule that it is unnecessary for the purpose in hand
are generally termed “dicta”. They have no binding
authority on another court, although they may have some
persuasive efficacy. Mere passing remarks of a judge are
known as “obiter dicta”, whilst considered enunciations of
the judge’s opinion on a point not arising for decision, and
so not part of the ratio decidendi, have been termed
“judicial dicta”. A third type of dictum may consist in a
statement by a judge as to what has been done in other
cases which have not been reported.
… Practice notes, being directions given without
argument, do not have binding judicial effect. Interlocutory
observations by members of a court during argument,
while of persuasive weight, are not judicial
pronouncements and do not decide anything.”
31. In Municipal Corporation of Delhi v. Gurnam
Kaur, (1989) 1 SCC 101 and Divisional Controller, KSRTC v.
Mahadeva Shetty, (2003) 7 SCC 197, this Court has observed that
“12……Mere casual expressions carry no weight at all.
Not every passing expression of a judge, however eminent,
can be treated as an ex cathedra statement, having the weight
of authority.”
32. In State of Haryana v. Ranbir, (2006) 5 SCC
167, this Court has discussed the concept of the “obiter dictum”
thus:
“13. ….. A decision, it is well settled, is an
authority for what it decides and not what can logically be
deduced therefrom. The distinction between a dicta and
obiter is well known. Obiter dicta is more or less
presumably unnecessary to the decision. It may be an
expression of a viewpoint or sentiments which has no
binding effect. See ADM, Jabalpur v. Shivakant Shukla. It is
also well settled that the statements which are not part of
the ratio decidendi constitute obiter dicta and are not19/26
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W.P(MD)No.14274 of 2020authoritative. (See Divisional Controller, KSRTC v.
Mahadeva Shetty)”
33. In Girnar Traders v. State of Maharashtra,
(2007) 7 SCC 555, this Court has held:
“53…..Thus, observations of the Court did not
relate to any of the legal questions arising in the case and,
accordingly, cannot be considered as the part of ratio
decidendi. Hence, in light of the aforementioned judicial
pronouncements, which have well settled the proposition
that only the ratio decidendi can act as the binding or
authoritative precedent, it is clear that the reliance placed
on mere general observations or casual expressions of the
Court, is not of much avail to the respondents.”
34. In view of above, it is well settled that obiter
dictum is a mere observation or remark made by the court by way
of aside while deciding the actual issue before it. The mere casual
statement or observation which is not relevant, pertinent or
essential to decide the issue in hand does not form the part of the
judgment of the Court and have no authoritative value. The
expression of the personal view or opinion of the Judge is just a
casual remark made whilst deviating from answering the actual
issues pending before the Court. These casual remarks are
considered or treated as beyond the ambit of the authoritative or
operative part of the judgment.”
17. In Property Owners Association and Others Vs. State of
Maharashtra and others reported in (2024) 18 SCC 1, in a Constitution
Bench, the Hon’ble Supreme Court has held as follows:
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153. Not every observation in a judgement of this
Court is binding as precedent. Only the ratio decidendi or the
propositions of law that were necessary to decide on the issues
between the parties are binding. Observations by the judge, even
determinative statements of law, which are not part of her
reasoning on a question or issue before the court, are termed obiter
dicta. Such observations do not bind the Court. More simply, a case
is only an authority for what it actually decides.
154. A Constitution Bench of this Court (speaking
through Chief Justice Khare) in Islamic Academy of Education v.
State of Karnataka111 pithily observed:
“2. The ratio decidendi of a judgment has to be
found out only on reading the entire judgment. In
fact, the ratio of the judgment is what is set out in the
judgment itself. The answer to the question would
necessarily have to be read in the context of what is
set out in the judgment and not in isolation. In case
of any doubt as regards any observations, reasons
and principles, the other part of the judgment has to
be looked into. By reading a line here and there
from the judgment, one cannot find out the
entire ratio decidendi of the judgment.”
18. Therefore, from the above judgments, the observations made
by the Full Bench, which are in no way connected to the issue referred to the
Full Bench, are, in our view, contrary to the plain meaning of Section 87 of
the Tamil Nadu Co-operative Societies Act, 1983. Therefore, the
observations contained in paragraphs 27 and 28 in S.Andiyanna’s case are to
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W.P(MD)No.14274 of 2020
be held as an obiter dicta and not a binding precedent for holding that
surcharge proceedings are not maintainable.
19. We also refer to the judgment of this Court in P. Thangavel
vs. The Chairman, Common Cadre Committee, reported in 2012 (3) CTC
468. In that case, this Court held that, although disciplinary proceedings
cannot be initiated in the absence of service rules, a Co-operative Society can
initiate surcharge proceedings against a retired employee. A similar view has
been taken in R. Murugesan vs. Joint Registrar of Co-operative Societies,
reported in 2014-2-L.W. 96. Further, in M.K.S. Balasubramanian vs. The
Kancheepuram Central Co-operative Bank Limited, reported in 2010 (2)
CTC 569, a Division Bench of this Court held that, although disciplinary
proceedings under Section 87 cannot be initiated against a deceased official,
the loss sustained by the Society can be recovered from the legal
representatives of the said erring official. Therefore, we are of the definite
view that, as the issue before the Full Bench was not with regard to
surcharge proceedings, the observations made therein can only be construed
as obiter dictum and not as ratio decidendi. This has also been held in
Kerala State Science & Technology Museum vs. Rambal Co. and Others,
reported in (2006) 6 SCC 258.
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W.P(MD)No.14274 of 2020
20. In view of the above, and having regard to the legislative
intent to recover the loss caused to the Society from its past or present
employees, we answer the reference as follows:
Surcharge proceedings against a retired
employee are also permissible under Section 87 of the Tamil
Nadu Co-operative Societies Act, 1983, provided that the
same are initiated within the time limit stipulated under the
said provision.
21. It is also brought to our notice as to the amendment made in
the first proviso to Section 87(1) of the Tamil Nadu Co-operative Societies
Act, 1983, wherein the following amendment has been made:
“Provided that no action shall be commenced under this
sub-section after the expiry of seven years from the date of
detection of any act or omission referred to in this sub-section”.
22. Prior to the amendment, the first proviso to Section 87(1) of
the Tamil Nadu Co-operative Societies Act, 1983, read as follows:
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W.P(MD)No.14274 of 2020“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”.
23. Though the constitution validity of amendment was upheld
by the Division Bench of this Court in W.P.No.21100 of 2022 (H. Rajasekar
vs. The Principal Secretary to Government, Chennai 9), dated 18.08.2022,
the issue regarding the period of seven years, whether it is to be reckoned
from the date of the Act or omission or from the date of detection, is pending
consideration before the Larger Bench. Therefore, while upholding the
constitutional validity of the amendment, the Division Bench has left open
the question as to whether the first proviso to Section 87(1) of the Tamil
Nadu Co-operative Societies Act, 1983, will have prospective or
retrospective effect, which would be governed by the outcome of the
judgment of the Larger Bench in Special Officer, S.1945, Madgondapalli
Primary Agricultural Co-operative Bank Ltd. vs. The Deputy Registrar of
Co-operative Societies, Krishnagiri Circle and Others [W.A. No. 1522 of
2009] and connected batch. Therefore, the question of limitation has to be
decided by the Larger Bench, as the issue is already seized by it, and we are
not expressing any view on that aspect. However, on a plain reading of the
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W.P(MD)No.14274 of 2020
the Tamil Nadu Co-operative Societies Act, 1983, we answer the issue by
holding that surcharge proceedings can be initiated against a retired
employee.
24. The Writ Petition may be listed before the appropriate Court
for orders in accordance with the answer given by us in the reference.
25. We also place on record our appreciation for the valuable
assistance rendered by Mr. Issaac Mohanlal, learned Senior Counsel,
Mr.M.Ajmal Khan, learned Additional Advocate General, Mr.H.Arumugam,
learned counsel for the petitioner and Mr. Sunny Sheenakkara, learned
counsel, who have brought to our notice various aspects of past legislations.
[N.S.K., J.] & [B.P.,J.] & [M.J.R., J.]
27.04.2026
NCC : Yes
Index : Yes
Internet : Yes
vsm
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W.P(MD)No.14274 of 2020
N.SATHISH KUMAR, J.
and
B.PUGALENDHI,J.
AND
M.JOTHIRAMAN, J.
vsm
To
The Deputy Registrar of Co-operative Societies,
Madurai Range, Madurai.
WP(MD)No.14274 of 2020
27.04.2026
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