Case Note & Summary
The writ petition was filed by the legal representatives of the deceased sole petitioner, R. Kuppusamy, who had been employed as a Salesman with the second respondent, Kalavai Primary Agricultural Co-op. Bank, from 1980 to 2006. He was terminated due to shortages in the bank's finances amounting to Rs.51,260/-. The bank initiated surcharge proceedings and passed an order directing the petitioner to pay the amount. The petitioner did not pay immediately, and interest accrued at 15% per annum, increasing the demand. On 24.02.2011, the petitioner paid Rs.75,700/-, but a balance of Rs.1,66,411/- remained due. During the hearing, the court noted a beneficial circular issued by the Registrar of Co-operative Societies (Circular No.5 of 2024 dated 02.03.2024) which directed that interest on surcharge orders should not exceed the highest lending rate for non-agricultural advances fixed by the State Level Committee of the Apex Banks, which was 12%. The court directed the petitioners to calculate interest at 12% on the principal amount of Rs.51,260/- and pay the balance within eight weeks. The bank was directed to give credit for amounts already paid and issue a no objection certificate upon payment. The writ petition was disposed of with these directions.
Headnote
A) Cooperative Law - Surcharge - Interest Rate - Reduction - The court considered whether the interest on a surcharge order could be reduced pursuant to a beneficial circular issued by the Registrar of Co-operative Societies. The court directed recalculation of interest at 12% per annum on the principal amount of Rs.51,260/- as per Circular No.5 of 2024 dated 02.03.2024, instead of the earlier 15% rate, and granted eight weeks for payment of the balance. (Paras 4-6)
Issue of Consideration
Whether the interest rate on surcharge amount payable by a former employee of a cooperative bank should be reduced in accordance with a beneficial government circular issued by the Registrar of Co-operative Societies.
Final Decision
The court directed the petitioners to calculate interest at 12% per annum on the principal amount of Rs.51,260/- and pay the balance within eight weeks. The bank shall give credit for amounts already paid and issue a no objection certificate upon payment. The proceedings impugned stand deferred for eight weeks. The writ petition is disposed of with no costs.
Law Points
- Interest on surcharge orders in cooperative societies must not exceed highest lending rate for non-agricultural advances fixed by State Level Committee of Apex Banks
- Registrar of Co-operative Societies Circular No.5 of 2024 dated 02.03.2024
Case Details
2026 LawText (MAD) (01) 327
Ms.Dharani for Mr.C.Prakasam for petitioner, Mr.K.Tamilvendan (AGP Co-op) for R1, M/s.P.S.Sivashanmuga Sundaram and K.Arun Babu for R2
R.Kuppusamy (deceased) represented by LRs Saraswathi, Jothilakshmi, Srinivasan
1. The Deputy Registrar of Coop. Societies / District Registrar, Vellore District Central Coop. Bank, Arcot, Vellore District. 2. The Special Officer, C.2059 Kalavai Primary Agricultural Co-op. Bank, Agaram Road, Kalavai, Arcot Taluk, Vellore District.
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India seeking certiorari to quash surcharge order passed by the Deputy Registrar of Co-operative Societies.
Remedy Sought
Petitioners sought quashing of the surcharge order dated 09.02.2012 in C.E.P/A.R.C.No.31/2006-2007 passed by the first respondent.
Filing Reason
The deceased petitioner was terminated from service due to shortages of Rs.51,260/- and a surcharge order was passed; interest accrued at 15% per annum, leading to a higher demand.
Previous Decisions
The surcharge order was passed by the first respondent on 09.02.2012; the petitioner paid Rs.75,700/- on 24.02.2011 but a balance remained.
Issues
Whether the interest rate on the surcharge amount should be reduced in light of the beneficial circular issued by the Registrar of Co-operative Societies.
Submissions/Arguments
Petitioner's counsel argued for reduction of interest based on the beneficial circular.
Respondent's counsel submitted that the balance due was Rs.1,66,411/- due to 15% interest, but later produced the circular showing 12% rate.
Ratio Decidendi
Interest on surcharge orders in cooperative societies must be calculated at a rate not exceeding the highest lending rate for non-agricultural advances fixed by the State Level Committee of the Apex Banks, as per Registrar of Co-operative Societies Circular No.5 of 2024 dated 02.03.2024.
Judgment Excerpts
In terms of this order, the Registrar has directed that, while passing surcharge orders, the appropriate authority should fix the interest at a rate not exceeding the highest lending rate fixed for extending non-agricultural advances by the State Level Committee of the Apex Banks.
Hence, there shall be a direction to the writ petitioners to calculate interest at the rate of 12% on Rs.51,260/- and remit the balance within a period of eight (8) weeks from today.
Procedural History
The writ petition was filed in 2012 challenging the surcharge order dated 09.02.2012. The original petitioner died and his legal representatives were substituted vide order dated 11.11.2025 in WMP.23495/2021. The matter was heard and disposed of on 06.01.2026.
Acts & Sections
- Constitution of India: Article 226
