Crl.O.P.(MD) No.1501 of 2024 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT Reserved on 30.10.2025 Pronounced on 10.11.2025 CORAM THE HON'BLE MR.JUSTICE SUNDER MOHAN Crl.O.P.(MD) No.1501 of 2024 and Crl.M.P.(MD) No.1037 of 2024 A.Elamathiyan ... Petitioner Vs. 1.The Inspector of Police, CCIW Police Station, Ramnad, Ramnad District. (Crime No.1 of 2022) 2.V.Udhayakumar S/o.Velukutty, Deputy Registrar, 2/421-B, Bhagavath Singh Road, Madurai Mandabam Road, Ottapalam Bus Stop Backside, Paramakudi, Ramanathapuram District. ... Respondents PRAYER : Criminal Original Petition filed under Section 482 of Code of Criminal Procedure, 1973/Section 528 of Bharathiya Nagarik Suraksha Sanhita, 2023 to call for the records pertaining to the First Information Report in Crime No.1 of 2022 on the file of the first respondent police and quash the same. _____________ Page No. 1 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 For Petitioner : Mr.Sricharan Rangarajan Senior Counsel for Mr.C.Jeganathan For Respondents : Mr.R.Meenakshi Sundaram Additional Public Prosecutor ***** O R D E R This Criminal Original Petition has been filed seeking to quash the FIR in Crime No.1 of 2022, on the file of the first respondent police, registered against the petitioner and others for the offences under Sections 408, 409, 420, 465, 468, 471, and 477-A of the Indian Penal Code, 1860. 2. The petitioner is arrayed as A1. There are three accused in this case. It is the case of the prosecution that the defacto complainant, the Deputy Registrar of Co-operative Societies, Ramanathapuram, lodged a complaint stating that the Kiliyur Branch is under the administrative control of the Kodikulam Primary Agricultural Co-operative Society; that on 11.11.2021 and 12.11.2021, a jewel verification was conducted and, on such verification, it was found that out of 313 gold bags, 81 gold bags contained fake gold, the value of which was Rs.1,47,14,000/-; and that the _____________ Page No. 2 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 said bags were under the control of one Murugesan, who was working as Assistant Secretary-cum-Manager, one Arivazhagan, who was working as Jewel Appraiser, and the petitioner, who was working as Secretary-cum- President of the said Society, and that they are jointly responsible for the loss caused to the Society. 3. 3. Mr.Sricharan Rangarajan, learned Senior Counsel for the petitioner, submitted that pursuant to the report of the Enquiry Officer under Section 81 of the Tamil Nadu Co-operative Societies Act, 1983, surcharge proceedings were initiated against the petitioner under Section 87 of the Act, and the second respondent had concluded that the petitioner had neither misappropriated nor was guilty of gross negligence and, therefore, exonerated the petitioner from the surcharge proceedings; and that this Court, in several cases, has held that where the accused has been exonerated in surcharge proceedings, the prosecution cannot be sustained against the said accused, and he relied upon the orders passed by this Court. 4. The learned Additional Public Prosecutor for the respondents, per contra, submitted that the surcharge proceedings and the criminal _____________ Page No. 3 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 proceedings are different; that the criminal proceedings cannot be quashed merely because the surcharge proceedings have ended in favour of the petitioner; that the scope of enquiry in surcharge proceedings is confined to assessing financial liability, and it is different from the scope of enquiry in criminal proceedings; and that since a serious fraud to the tune of Rs.1,47,14,000/- has been committed, the investigation cannot be scuttled. 5. The first respondent police have also filed a counter affidavit to that effect. This Court specifically directed the first respondent to file a better affidavit by furnishing details of the additional evidence available with them to sustain the investigation and further proceedings against the petitioner for the commission of the alleged offences. The first respondent has therefore filed an additional counter affidavit. 6. In the counter affidavit, apart from narrating the facts of the case, it is stated that several witnesses have been examined to show that they had not pledged any jewels, and that their signatures in the jewel loan records were forged; that the investigation has prima facie revealed that forged documents were used to sanction loans; and that the petitioner, _____________ Page No. 4 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 who was jointly entrusted along with the second accused with the control of the jewels locker, is wholly responsible. There is nothing in the affidavit to suggest as to why the surcharge order cannot be relied upon. 7. It is not in dispute that the petitioner was the Secretary-cum- President of the Society and had overall control of the affairs of the Society. The second accused was the Assistant Secretary of the said Society, and the third accused was the Jewel Appraiser. The impugned FIR was registered at the instance of the Deputy Registrar of Co-operative Societies, Ramanathapuram. 8. The gist of the allegations is that 81 jewel bags contained fake jewels and that a loss to the extent of Rs.1,47,14,000/- was caused to the Society by creating fabricated documents to make it appear as if certain persons had obtained loans. Those persons have denied having obtained any loan. 9. The impugned FIR was lodged on 19.01.2022. The surcharge proceedings were conducted, and the petitioner was exonerated on 09.03.2023. The order passed in the surcharge proceedings exonerates the _____________ Page No. 5 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 petitioner not only with regard to his financial liability, but also with regard to his alleged role in the sanctioning of loans and his knowledge of the transactions. The other accused, namely Murugesan, the Jewel Appraiser, admitted his guilt and agreed to repay the money. The relevant portion in the surcharge proceedings, which exonerated the petitioner not only from his financial liability but also from his involvement in the alleged misappropriation, reads as follows: “jpU.vk;.KUNfrd;> jpU.v];.mwptofd; Mfpa ,UtUk; rq;fg; gzpahsu;fshd vOj;ju; jpU.f.fhu;Nkfk; rpw;nwOj;ju; jpUkjp.Nf.uhjpfh Kd;dpiyapy; rq;f jiyikapl mYtyfj;jpy; itj;J vOjp nrayhsu; jpU.V.,skjpadplk; nfhLj;Js;shu;. ,e;j Mtzk; kpf Kf;fpa Mtzkhf cs;sJ. ,tu;fs; ,UtUk; 29.11.2021y; ,uhkehjGuk; kz;ly ,izg;gjpthsUf;F vOjp mDg;gpa fbjj;jpy; jhq;fs; ,UtUk; ,j;jtiw nra;jjhfTk;> jq;fsJ nrhj;J tpguq;fis njuptpj;J mjid tpw;W Nkhrbj;njhifia tR+ypj;J nfhs;s rk;kjk; njuptpj;J jdpj;jdpahf fbjk; mDg;gpAs;sdu;. ,tu;fs; ,UtUNk> fpspA+u; fpisapy; eilngw;Ws;s Nghyp eiff;fld; toq;Fk; Fw;wkhdJ> KJepiy vOj;ju; jpU.vd;.,uhN[e;jpud; fpspA+u; _____________ Page No. 6 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 fpisapy; Ntiy ghu;j;j fhyj;jpypUe;J ele;J te;Js;sJ vd;gij jq;fsJ ];Nll;nkz;by; kiwj;Js;sdu;. 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Mdhy; ,q;F epiya mYtyu;fs; (Spot Officers) Neu;ikahsu;fshf ,Ue;Js;sjhy; ,q;F eiff;fld; 100% gupNrhjidapy; Nghyp eiff;flNdh> ftupq; eiffNsh ,y;iynad;gJ Fwpg;gplj;jf;fjhFk;. vt;tifapYk; fpspA+u; fpisapy; eiff;fld; toq;fypy; ftupq; eifapd; Ngupy; 25 Nghypahd egu;fspd; ngaupy; 81 eiff;fld;fs; toq;fp &. 1>47>14>000/- ,og;gPL Vw;gLj;jpa Nkhrb nraypy; gpujpthjp mYtyu; jpU.V.,skjpad; <Lgl;Ls;shu; vd;gJ vdJ jz;lj;jPu;it tprhuizapy; ep&gzkhftpy;iy vd;w Kbtpw;F ehd; tUfpNwd;. vdNt ,tu; kPjhd jz;lj;jPu;it eltbf;ifia iftpl KbT nra;ag;gLfpwJ. _____________ Page No. 7 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 ...... 7) rptfq;if khtl;lj;ijr; NrH;e;j $l;LwT rhH;gjpthsu; jpU.etePjfpU~;zd; jiyikapyhd 100% eif rhpghHg;G FOtpdH 11.11.2021> 12.11.2021 Mfpa ehl;fspy; fpspA+u; fpis eifapUg;G rupghH;j;J> 81 eiff;fld;fspy; ftupq; eif mlkhdkhfitj;J fld; &.1>47>14>000/- mstpw;F toq;fg;gl;Ls;sij fz;lwpe;J mg;gl;bay; jahu; nra;J jpU.v];.mwptofdplk; gl;baypy; ftupq; eiffs; mlF itf;fg;gl;lij cWjp nra;J xg;Gif ngw;Ws;sdu;. gpd;du; 13.11.2021 md;W jiyikaplkhd g;gp.nfhbf;Fsk; eifapUg;Gfis ,uT 9.00 kzp tiu rupghu;j;Js;shu;. mq;F ftupq; eiffs; VJk; fhzg;gltpy;iy vdNt g;gp.nfhbf;Fsk; njhlf;f Ntshz;ik $l;LwT fld; rq;fj; jiyikafj;jpy; gzpahsu;fs; jpU.v];.mwptofdpd; KiwNfl;bw;Fj; Jiz Nghftpy;iy. fpspA+u; fpisapy; gzpGupe;j jpU.vk;.KUNfrd; kl;LNk Jiz NghAs;shu;. 100 rjtPj Ma;Tf;FOtpdu; nrd;wgpd; rq;fj;jpd; mYtyfj;jpy; rq;f nrayhsu; jpU.V.,skjpad; cjtpnrayhsu; jpU.vk;.KUNfrd; rq;f vOj;jH jpU.f.fhu;Nkfk; rq;f rpw;nwOj;ju; Nf.uhjpfh kl;LNk ,Ue;j NghJ &.100/- Kj;jpiuj;jhspy; jdJ ifg;gl vOjp xU ];Nll;nkz;il jpU.v];.mwptofd; vOjpf;nfhLj;Js;shu;. me;j ];Nll;nkz;by; jhk; ftupq; eif vd;W njupe;Nj eifkjpg;gPL nra;jjhfTk;> rq;fj;jpw;F Vw;gl;Ls;s epjpapog;gpw;F jhDk;> cjtpr;nrayhsu; jpU.vk;.KUNfrd; kl;LNk nghWg;G vd;Wk; rq;f nrayhsu; jpU.V.,skjpad; kw;Wk; gpw gzpahsu;fSf;F ,k;Nkhrb nraypy; njhlu;G ,y;iy vd;W njuptpj;Js;shu;. epjpapog;gpid jhDk; cjtpr;nrayhsu; vk;.KUNfrDk; jpUk;g nrYj;jptpLtjhfTk;> jtwpdhy; jhDk; jdJ _____________ Page No. 8 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 FLk;gj;jpdUk; ,og;Gf;F nghWg;G Vw;fpNwhk; njuptpj;Js;shu;. Fw;wk; gpbgl;l my;yJ Fw;w czu;T ,Ue;j NghJ cz;ik xg;Gf;nfhz;L jpU.v];.mwptofd; ];Nll;nkz;l; mspj;Js;shu;. mJ kl;Lky;y 29.11.2021 Njjpapl;L ,uhkehjGuk; kz;ly ,izg;gjpthsUf;F fpspA+u; fpis ftupq;eif Nkhrbf;F jhd; nghWg;G Vw;gjhfTk; jdJ nrhj;ij tpw;W. epjpapog;Gj; njhifia nrYj;JtjhfTk; vOj;J %yk; njuptpj;Js;shu;. ,e;epiyapy; jw;NghJ jdJ epiyia khw;wpf;nfhz;L jhk; kpul;lg;gl;ljhy;. vOjpf; nfhLj;jjhf $WtJ Vw;fg;glj;jf;fjy;y. mJ gpd; rpe;jidapy; Vw;gl;l $w;W MFk;. .... 10) jpU.v];.mwptofd; fpspA+u; fpis ftupq; eif Nkhrbapy; rq;f cjtp nrayhshu; jpU.vk;.KUNfrDld; Nru;e;J rq;fj;jpw;F &.1>47>14>000/-epjpaog;G Vw;gLj;jpatuhf cs;shu; vd;gJk; vdNt> mtu; gpujpthjp 2 Mfpa jpU.vk;.KUNfrDld; epjpapog;gpw;Ff; $l;lhfg; nghWg;ghfpwhu; vd;W vdJ jz;lj;jPu;it tprhuizapy; re;Njfj;jpw;F ,lkpd;w ep&gzkhfpwJ.” 10. Though the learned Additional Public Prosecutor submitted that two officers, who are said to have confessed their guilt, later retracted the same, it is seen that the officer who conducted the surcharge proceedings held that the retraction was an afterthought, and that both the officers had not only admitted their guilt but also furnished the list of their properties _____________ Page No. 9 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 to be attached for recovery of the money due to the society. 11. The respondents are not able to point out any additional evidence to show the involvement of the petitioner in the crime, apart from stating that the petitioner had statutory responsibility as the Secretary, who was jointly entrusted with the custody of the jewels and had supervisory control of the society. 12. In P.Parimaladevan v. State by the Inspector of Police, reported in 2020 MWN (Cri) 342, this Court held that where an employee of the society is found liable for supervisory lapse, and if the said employee has been exonerated in the proceedings under Section 87 of the Act, he cannot be prosecuted for the offence. The relevant paragraph reads as follows: “The aforesaid decisions are self explanatory and the same principle has been reiterated in various other decisions of this Court as well. As such, the over all legal position is that when an employee of the Society is found liable for Supervisory lapse, the same will not constitute any criminal action against him. Likewise, if such an _____________ Page No. 10 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 employee has been exonerated in the proceedings under Section 87 of the said Act, it has to necessarily be implied that he had neither misappropriated nor fraudulently retained the money or other property, nor is guilty of breach of trust or willful negligence. The offences for which the petitioner has now been charged with, are in effect, the very same overt acts for which he has been exonerated in the enquiry under Section 87 of the said Act.” 13. By following the aforesaid observations, this Court, in several cases including the case of Gobikrishnan v. Lilly Flora, vide order dated 19.06.2023 in Crl.O.P.No.32356 of 2019, observed as follows: “6. This Court finds that there cannot be any dispute over the proposition that these two proceedings are different from each other. An acquittal in criminal proceedings would not automatically exonerate the employee in departmental proceedings as the standard of proof in these two proceedings are different. However, if the accused is exonerated in the departmental proceedings then the approach has to be different. The standard of proof in a criminal prosecution is much higher than in departmental proceeding. It is settled law that the standard of proof which is necessary to establish guilt in a criminal court is not required in a disciplinary proceeding, where the decision is based on preponderance of probabilities.” 14. The learned Additional Public Prosecutor relied upon the decision of the Hon’ble Supreme Court in Dinesh Sharma v. Emgee _____________ Page No. 11 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 Cables and Communication Ltd. and another, Neutral Citation: 2025 INSC 571, in support of his submission that economic offences affecting the economy of the country as a whole are not to be viewed lightly. 15. The learned Additional Public Prosecutor also relied upon the judgment of the Hon’ble Supreme Court in Central Bureau of Investigation v. Maninder Singh, reported in (2016) 1 SCC 389, in support of his contention that this Court has to view economic offences seriously, and that if the prosecution against economic offenders is not allowed to continue, the entire community would stand aggrieved. 16. There cannot be any quarrel with the proposition that economic offences have to be viewed seriously. However, the question in this case is not about the gravity of the offence but about the legality of the prosecution against the petitioner, when he has been absolved of his financial liability and also with regard to his alleged involvement in the misappropriation in the surcharge proceedings. Therefore, this Court, by applying the principles laid down by this Court in several cases that where a person, who held a supervisory position, has been exonerated in the surcharge proceedings, the prosecution against such a person cannot be _____________ Page No. 12 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 sustained, is inclined to quash the impugned FIR insofar as the petitioner alone is concerned. The respondents may file the final report as against the other accused. 17. With the above observations, this Criminal Original Petition is allowed. Consequently, the connected Miscellaneous Petition is closed. 10.11.2025 JEN Index: Yes/ No Neutral Citation: Yes / No Speaking Order/Non Speaking Order Copy To: 1.The Inspector of Police, CCIW Police Station, Ramnad, Ramnad District. 2.The Additional Public Prosecutor, Madurai Bench of Madras High Court, Madurai. _____________ Page No. 13 of 14 https://www.mhc.tn.gov.in/judis Crl.O.P.(MD) No.1501 of 2024 SUNDER MOHAN , J. JEN Pre-Delivery Order made in Crl.O.P.(MD) No.1501 of 2024 10.11.2025 _____________ Page No. 14 of 14 https://www.mhc.tn.gov.in/judis