Authority: Madras High Court, Madurai Bench

Order Date: 08 July 2026

Case Overview

  • Petitioners: Tamil Nadu Primary Co-operative Bank, All Employees Association, represented by Honourary General Secretary C. Kuppusamy, filing W.P.(MD) No.12695 of 2018 and W.M.P.(MD) Nos.11574 & 11575 of 2018.
  • Respondents: 1. Director of Co-operative Audit, Office of the Director of Co-operative Audit, Chennai; 2. Registrar of Co-operative Societies, Office of the Registrar of Co-operative Societies, Chennai.
  • Subject Matter: Challenge to Circular No.4 of 2015, dated 26‑12‑2016 (Na.Ka.No. 32055/2016/Se.Tha.Pu.Ku.1Aa), which mandates a special audit of cooperative societies to recover losses from board members and employees arising from jewel loan transactions, and directs recovery of such losses from the societies.
  • Petitioner's Claims: The circular treats loss from auction of pledged jewels (often sold below loan amount) as liability of board members and the secretary, rather than a business loss; the secretary is merely an employee; the auction period was reduced from one year to ninety days, rendering it impracticable; seeks quashing of the circular, restraining special audits, reports, and recovery of jewel loan losses.
  • Respondent's Defense: Circular issued to protect agriculturist‑loanees, prevent irregularities, and ensure accountability; special audit intended to identify negligence or misconduct; petitioner failed to demonstrate infringement of legal or fundamental rights.
  • Court's Consideration: Reviewed submissions and records; noted that a special audit is a fact‑finding exercise and does not by itself impose liability; any adverse finding would be subject to procedural safeguards including notice and hearing; the Secretary, as an employee, may be held answerable depending on audit findings; the reduced auction period is a policy measure unless shown arbitrary or unconstitutional; petitioner did not establish specific prejudice or rights infringement.

Final Outcome

  • The Court finds no illegality, arbitrariness, or infirmity in Circular No.4 of 2015 dated 26‑12‑2016.
  • The Writ Petition is dismissed.
  • No order as to costs.
  • Connected miscellaneous petitions are closed.

Topics: Co-operative Banking, Regulatory Audit