Andhra HC (Pre-Telangana)
G. Anasuyamma vs Kandulapuram Primary Agricultural ... on 15 December, 2003
Equivalent citations: 2004(1)ALD526, 2004(1)ALT787
ORDER D.S.R. Varma, J.
1. This writ petition is filed for a writ of Mandamus to declare the proceedings in surcharge order and the sale notice in E.P. No. 1/2001-2002 dated 5.2.2003 as illegal and arbitrary and consequently quash the same.
2. The brief facts of the case are that the petitioner is the wife of G. Nandi Reddy, a former President of the Society. During 1981-1985 allegedly certain irregularities were committed by him. Subsequently an inspection was conducted under Section 53 of the A.P. Co-operative Societies Act, 1964 (for short 'the Act') and it was found that the husband of the petitioner committed certain irregularities and caused deficiency to the assets of the society to the tune of Rs. 25,848/- between 1981-1985. Basing on the inspection report, surcharge notice dated 25.1.1995, was served on the petitioner on 16.4.1995. Consequently the surcharge order was passed on 27.9.1996 to recover the amounts and proceedings were also initiated under Rules 52 and 53 of the A.P. Co-operative Societies Rules, 1964 (for short hereinafter referred to as 'the rules'). The petitioner did not appeal against the said proceedings. E.P. was also filed against the petitioner for recovery of the surcharge amount in E.P. No. 1/2001-2002 dated 18.5.2001 and was entrusted to the competent authority for execution. Challenging the said proceedings, the present writ petition is filed.
3. The contentions of the learned Counsel for the petitioner are of twofold viz., firstly; the surcharge proceedings ought not have been initiated against her for the irregularities allegedly committed by her late husband while he was in office. Therefore, the surcharge order passed under Section 60(1) of the Act and the consequential proceedings initiated under Rules 52 and 53 of the Rules are illegal. Secondly; no proper opportunity by way of conducting an independent enquiry was given to the petitioner before passing the order under Section 60(1) of the Act.
4. On the other hand the learned Government Pleader for Co-operative Societies contended that as per the revelations of the enquiry conducted under Section 53 of the Act, surcharge proceedings were initiated and notice was served on the petitioner, who is the legal heir of the original delinquent and that having received the said notice issued under Section 60, the petitioner did not offer any explanation, nor the same was carried in appeal and, therefore, the petitioner cannot at the stage of execution raise this objection.
5. In view of the above rival contentions, first it is necessary to examine the relevant provisions.
6. Section 60 deals with the surcharge and the said provision to the extent relevant is extracted as under:
(1) Notwithstanding anything contained in any other law for the time being in force where in the course of an audit under Section 50 or an inquiry under Section 51 or an inspection under Section 52 or Section 53, or the winding up of a society, it appears that any person who is or was entrusted with the organization, affairs or management of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or has 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 wilful negligence or has made any payment contrary to the provisions of this Act, the rules or the bye- laws, the Registrar himself, or any person specially authorized by him in this behalf, of his own motion or on the application of the committee, liquidator or any creditor or contributor, may inquire into the conduct of such person or officer or servant and 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 authorized 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, breach of trust, or wilful negligence as the Registrar or the person authorized as aforesaid thinks just:
Provided that no order shall be passed against any person referred to in this subsection unless the person concerned has been given an opportunity of making his representation. (2)......
(3)......
7. From a bare reading of the above provision it is clear that the competent authority may enquire into the conduct of any person who is entrusted with certain duties of the society and if found guilty, make an order requiring him to repay or restore the money or property with interest.
8. The proviso to Sub-section (1) of Section 60 requires some attention. It postulates that no order shall be passed as contemplated under Sub-section (1) of Section 60 against any person, unless that 'person concerned' has been given an opportunity of making a representation.
9. Therefore it is very clear that a notice or consequential order under Sub-section (1) of Section 60 can be passed only against that 'person concerned'. In the present case, obviously the 'person concerned' is no other than the deceased husband of the petitioner, who is the erstwhile officer attached with delinquency at the relevant point of time i.e., during 1981 to 1985. It is also not in dispute that the said delinquent officer was no more even as on the date of either issuing notice under Section 60 or at the time of passing surcharge order. Admittedly as per the counter-affidavit the surcharge notice and order was passed only against the widow of the deceased. In other words, the order and notice had been passed only against the person who is not concerned. As already pointed out, proviso to Sub-section (1) of Section 60 clearly postulates that the order should be passed only against the 'person concerned', after giving an opportunity.
10. From a perusal of the counter-affidavit, there is no clear information as to when the delinquent died. The other particulars like when the inspection under Section 53 was conducted, when the report had been submitted and when the consequential surcharge order under Sub-section (1) of Section 60 has been passed, are not made clear. These particulars in my considered view are essential to know as to when actually the inspection under Section 53 was conducted and how many years thereafter the surcharge proceedings have been initiated.
11. The important question that arises for consideration in this case is whether the surcharge order can be passed against the legal heir instead of the person concerned?
12. As already pointed out, the proviso to Sub-section (1) of Section 60 specifically postulates that an opportunity should be given to the 'person concerned' before passing any order. Obviously in the present case, no notice or order had been served or passed against the person concerned i.e., the husband of the petitioner, who was no more as on the date of issuance of notice under Section 60 of the Act.
13. As per the averments of the petitioner in the affidavit filed in support of the writ petition, her husband died somewhere in the year 1995. Notice and order of surcharge under Section 60 were passed only in the year 1996. It could be seen from the counter-affidavit that the notice was admittedly issued on 16.4.1995 on the petitioner, which manifests that even as on that day, the husband of the petitioner was no more. When the notice itself was served on the petitioner, who is the legal heir of the deceased delinquent, as stated in the counter affidavit, there is no wonder in passing the surcharge order against the petitioner only. In such a case, the issuance of the notice and the consequential order passed under Sub-section (1) of Section 60 are undoubtedly against a person who is not concerned. In other words, the proceedings under Section 60 have been initiated apparently against the petitioner who is not concerned and it can be said that the proceedings are initiated indirectly against the dead person for his alleged irregularities. In such a case, in my considered view, the very issuance of notice and orders passed under Sub-section (1) of Section 60 being against a dead person, cannot be treated as valid proceedings and such proceedings have to be necessarily declared as null and void.
14. This aspect can be examined from a different dimension also. The proviso to Sub-section (1) of Section 60 contemplates that a reasonable opportunity must be given to the 'person concerned' before passing any order. When the original delinquent was no more, the person who is unconnected or not concerned cannot be expected, at any stretch of imagination, to explain the notice issued under Section 60 or answer the irregularities allegedly found to have been committed during the course of enquiry under Section 53 of the Act. Otherwise, the purpose of using the expression 'person concerned' in the proviso in Sub-section (1) of Section would be totally devoid of any meaning.
15. Further a Division Bench of this Court in a reference in Ch. Sanyasinaidu v. Deputy Registrar of Co-operative Societies, , had elaborately discussed the scope of Section 52 of the Act and the enquiry thereof, which is the cause of action for the Registrar to initiate proceedings under Section 60(1) of the Act and held that an independent enquiry, complying with the principles of natural justice has to be conducted before finally surcharging the delinquent. The relevant observation at paragraph No. 11 of the judgment is extracted as under for ready reference:
"..... After the show-cause notice is served and an explanation is called for, an opportunity should be given to the affected person to cross-examine the witnesses examined in the course of enquiry under Section 52 or permit him to examine his witnesses to rebut their evidence. Until this is done, the spirit of making a representation as contemplated under Section 60 cannot be fulfilled. Although Section 60 does not prescribe any particular procedure before passing surcharge order, nonetheless it is mandatory that principles of natural justice should be followed in the enquiry. Evidence recorded behind the back of the defaulter cannot be relied upon to fasten the liability on him without giving him an opportunity to cross-examine the witnesses. The Registrar in his surcharge proceedings is a Court whose order can very well form the subject-matter of judicial review under Article 226 of the Constitution of India. Therefore, it is in the fitness of things that an opportunity like supply of copy of enquiry report, statements of witnesses recorded during the said enquiry, and also an opportunity to cross-examine those witnesses, or permit him to examine his own witnesses by the delinquent by way of rebuttal should be allowed before an order under Section 60 is passed."
16. From the above judgment it is clear that even though notice has been issued and an explanation is offered, the same is not sufficient and essentially an independent enquiry has to be conducted.
17. Now back to the facts of the case on hand, no particulars are forthcoming from the counter -affidavit as to when the enquiry under Section 53 of the Act was conducted and when the report was submitted. If, in the event of the enquiry under Section 53 being conducted long prior to the issuance of notice under Section 60 of the Act, it would be yet another thing to make a comment against such belated initiation of proceedings under Section 60 of the Act. However, inasmuch as no such particulars are furnished, further comments on this aspect are not needed.
18. Coming to the contention of the learned Government Pleader that the notice or surcharge order were never appealed against, is concerned, it is to be noted that no doubt any order passed under Section 60(1) of the Act is appealable under Section 76 of the Act. But when the very notice and order under Sub-section (1) of Section 60 are found to be valid and void ab initio, subjecting the petitioner, after a long lapse of time to the ordeal of preferring an appeal, in my considered view would be a futile exercise.
19. Apropos the contention of the learned Government Pleader that pursuant to the surcharge order passed under Section 60(1) of the Act, proceedings under Section 70 have been issued and consequently the execution as prescribed under Rules 52 and 53 have also been initiated, it is to be noted that no doubt Section 70 deals with the power of the Registrar to recover certain amounts by attachment and sale of property and execution of orders and the procedure thereof is prescribed under Rule 52 of the Rules. In this context is necessary to look Sub-section (2) of Section 52 and the same is extracted as under for ready reference:
"Where a defaulter dies before the decree has been fully satisfied, an application under Sub-rule (1) may be made against the legal representative of the deceased and thereupon all the provisions of this rule, shall, save as otherwise provided in this sub-rule, apply as if such legal representative was the defaulter. When the decree is executed against such legal representative he shall be liable only to the extent of the property of the deceased devolved on him and has not been duly disposed of; and for the purpose of ascertaining such liability, the Registrar, executing the decree may of his own motion or on the application of the decree-holder compel the legal representative to produce such accounts as it thinks fit.
Explanation :--For the purposes of this rule, any property in the hands of son or other descendant under the Hindu Law for the payment of the debt in respect of which a decree has been passed against a deceased ancestor shall be deemed to be the properly devolved on such son or descendant"
20. The above provision deals with the execution of the proceedings pursuant to the order passed under Section 70 of the Act and it sufficiently clarifies the present controversy. It would only indicate that there must be an order under Section 60 followed by an order under Section 70(2), against the 'person concerned', who is alive. In order to remove the doubt as to what should follow when such defaulter against whom orders under Sections 60 and 70 were passed followed by execution proceedings under Rule 52, dies during such execution proceedings or before decree has been fully satisfied. In such a contingency, Sub-section (2) of Rule 52 makes it abundantly clear that the application under Sub-rule (1) of Rule 52 may be made against the legal representative of the deceased and convert such legal representative as the original defaulter. In other words, it presupposes that the order under Sections 60 and 70 and the procedure under Rule 52 should be in subsistence at the time of the death of the original defaulter and only in such an event, the interest of the society does not cease and the liability will be carried forward to the legal heirs.
21. But so far as the present contingency is concerned, the Act is silent and the provisions of Code of Civil Procedure meet the same. In other words, the present situation is akin to Order 1, Rule 10 CPC, under which suit in the name of wrong plaintiff is not maintainable, of course subject to certain conditions. Further a Single Judge of Madras High Court in Venkatesha v. Vitla Bhakta, AIR 1933 Madras 454, held that suit filed against dead person is not maintainable. Therefore, in such a case, particularly when Statute is silent about the present situation, taking cue from the principles of CPC, I am of the considered view that the provisions of the Act have to be given a purposive interpretation.
22. However, as already pointed out, when the initial proceedings suffer from irregularity, the effect of the subsequent proceedings need not be gone into.
23. For the foregoing discussion, the surcharge proceeding under Sub-section (1) of Section 60 of the Act and the sale notice issued under Rules 52 and 53 of the Rules are liable to be set aside and accordingly they are set aside.
24. In the result the writ petition is allowed. No costs.