Conduct audit of sale transactions entered into by cooperative societies: HC

Taking a serious view of the fact that officer-bearers of a cooperative society and third parties had entered into a conspiracy and conveyed properties worth crores of rupees at throw away prices, the Madurai Bench of the Madras High Court has imposed a cost of ₹10 lakh on a petitioner who sought a direction to the authorities to execute a registered sale deed.

Justice N. Anand Venkatesh observed that the Tamil Nadu Cooperative Societies Act, 1983 was enacted to provide an orderly development of the cooperative movement in accordance with cooperative principles to bring about an improvement in agriculture and industry, better methods of production, better business and better living.

On one hand, the Centre and the State were striving to improve the status of the cooperative movement. But unfortunately, there was no growth and many societies had become defunct. The manner in which the cooperative movement was functioning in the State militates against the very object of the Act, the judge said.

There are various causes attributed for this failure and it includes government interference, mismanagement and manipulation, lack of awareness and functional weakness. The bane that afflicts the cooperative movement in the State is mainly attributable to misappropriation and manipulation of funds of the societies by its office bearers and staff.

The judge said that the poor who were contributing their hard earned money to the societies were ultimately left in the lurch. Due to their poor bargaining capacity, many misappropriation cases go unquestioned and there are several criminal cases pending before the courts. The present case was a classic case, the court said.

It was hearing the petition filed by R.V. Shanmuganandam of Tiruchi. The petitioner challenged the proceedings of the Cooperative Sub-Registrar, Tiruchirappalli Cooperative House Construction Societies, Tiruchi. He sought a direction to the society to execute a sale deed in his favour.

The court took note of the fact that there was a scam. According to a government order, a price fixing committee was constituted and the cooperative societies were informed that no properties belonging to them can be sold below the price fixed by the committee. But, this government order was ignored. The petitioner had wrongfully gained.

Taking note of the fact that a probe was on into the scam, the court directed the petitioner to pay the cost of ₹10 lakh to the Chief Minister’s Public Relief Fund. The court also directed the Registrar of Cooperative Societies to conduct a thorough audit of the sale transactions entered into by the societies to find out if any other society had indulged in such scams. The writ petition was dismissed.

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