Andhra Pradesh High Court - Amravati
Pitta Chalapati Rao vs The State Of Andhra Pradesh on 20 September, 2023
THE HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA
WRIT PETITION No.17767 OF 2023
ORDER:-
The present Writ Petition is filed under Article 226 of the Constitution of India, seeking the following relief:
"...to issue a Writ, Order or Direction, more particularly one in the nature of Writ of Mandamus declaring the action of the 2nd respondent in ordering enquiry U/Sec.51 of APCS Act, 1964 into the affairs of 5th respondent society through proceedings Rc.No. 707/2023-C (Coop), Dated 28.06.2023 at the instance of the 3rd respondent is highly illegal, arbitrary, and contrary to the provisions of APCS Act, 1964 and also in violation of Article 14 of the Constitution of India and liable to be set aside and to pass such other order or orders. .."
2. The case of the petitioner is as follows:
3. The petitioner herein was initially appointed as Clerk at Respondent No.5 Society in the year 1984. Later, he was promoted as Secretary in the year 1999 and he had been continued as Secretary till his retirement dated 31.05.2023.
4. While so, on 19.06.2023, Respondent No.3 bank addressed a letter to Respondent No.4 to conduct an enquiry regarding the allegations on the employees of Respondent No.5 Society including the petitioner who were involved in the misappropriation of funds of Respondent No.5 Society, specifically in drawal of salaries, arrears, PF loans etc. Apart from this, NV,J 2 W.P.No.17767 of 2023 Respondent No.2 also issued proceedings dated 20.06.2023, directing the Respondent No.4 for conducting an enquiry regarding misappropriation of funds of Respondent No.5 Society. Pursuant to the same, the Respondent No.4 conducted a preliminary enquiry and submitted a detailed report with specific remarks.
5. On perusal of the preliminary report as well as specific remarks submitted by the Respondent No.4, apart from the report submitted by Respondent No.3 bank, the Respondent No.2 issued proceedings dated 28.06.2023 directing the statutory enquiry as contemplated under Section „51‟ of the Andhra Pradesh Co-operative Societies Act, 1964 (for short "the Act, 1964") by appointing / authorizing Sri S. Satyanarayana, Assistant Registrar, Narsipatnam Sub-Division, as an inquiry officer and also directed to submit the report. Hence, the order of the said statutory enquiry was assailed in the present writ petition.
6. Learned counsel for the petitioner submits that the present impugned proceedings under which the enquiry was ordered is not in accordance with the Section 51 of the Act, 1964. In the given facts and circumstances, utmost an enquiry can be ordered by Respondent No.2 is only under Section 52 of the Act, 1964 but cannot be under Section 51 of the Act. As such, the impugned proceedings directing enquiry under Section 51 of the Act, 1964 is liable to be quashed.
7. Learned counsel for the petitioner further submits that Section 51 of the Act envisages that the Respondent No.2 should apply his mind NV,J 3 W.P.No.17767 of 2023 independently and he was empowered to order suo moto enquiry but not upon the material or letter of request submitted by Respondent No.3, who is the creditor of the Respondent No.5 Society. He further submits that the entire impugned proceedings dated 28.06.2023 were issued on the basis of the enquiry report submitted by Respondent No.3 bank on 19.06.2023. At best, Respondent No.3 can order an enquiry under Section 52 of the Act, 1964 but not under Section 51 of the Act, 1964 for which the learned counsel for the petitioner relied upon a judgment of this Court in B. Sreenivasulu Vs. Government of Andhra Pradesh1. As such the present impugned orders are liable to be set aside.
8. On the other hand, the learned Government Pleader for Cooperation submitted written instructions as well as the proceedings issued by Respondent No.2 vide office Memo dated 20.06.2023 under which Respondent No.4 was directed for conducting enquiry and for submission of Report. Then, the Divisional Cooperative Officer, Yelamanchili proceedings also issued vide Memo dated 24.06.2023 forwarding the proceedings of Respondent No.2 to Respondent No.4 for conducting enquiry. Accordingly, the enquiry report dated 27.06.2023 was submitted by the Respondent No.4 to the Respondent No.2.
9. Learned Government Pleader for Cooperation submits that the Respondent No.2 delegated the powers of the Registrar under Sections 51 and 52 of the Act, 1964 as per the procedure contemplated under the Act by 1 1987 Law Suit(AP) 224 NV,J 4 W.P.No.17767 of 2023 way of G.O.Ms.No.34, Food & Agriculture (Coop-IV) Department dated 18.01.1989 in favour of the District Cooperative Officer. As such, Respondent No.2 would be the Registrar for the purpose to initiate any action and for order an enquiry either under Section 51 or 52 of the Act, 1964 against any Primary Agriculture Cooperative Societies / Respondent No.5 herein. Therefore, Respondent No.2 is the competent authority to cause a preliminary enquiry, once the Respondent No.2 came to known about the misappropriation of funds or irregular transactions / affairs in respect of Respondent No.5 Society out of the Preliminary Report he is empowered to order an enquiry as contemplated under Section 51 of the Act,1964, after receipt of the preliminary information about the misappropriation of funds in respect of Respondent No.5 Society. In view of the letter addressed by Respondent No.3 to Respondent No.4, directing the Respondent No.4 for causing preliminary enquiry regarding misappropriation of funds as alleged by the petitioner in respect of Respondent No.5 Society and for submission of Report. He further submits that the report submitted by Respondent No.4 on 27.06.2023 indicates that there is a misappropriation of funds at Respondent No.5 Society by the petitioner and others to the tune of Rs.96,01,762.71/- which is a huge amount, by which the financial position of the Respondent No.5 Society going to be affected severely.
10. Learned Government Pleader for Cooperation further submits that pursuant to the said preliminary enquiry report submitted by Respondent No.4 and also based upon the information forwarded / furnished by NV,J 5 W.P.No.17767 of 2023 Respondent No.3. The Respondent No.4 issued the present impugned proceedings for conducting enquiry under Section 51 of the Act, 1964. He further submits that the present impugned proceedings are only at preliminary stage for conducting a statutory preliminary enquiry, unless the petitioner does not have committed any misappropriation, nothing will happen to the petitioner. At this stage of statutory enquiry on the basis of said preliminary enquiry was ordered purely basing upon report of the Respondent No.3 bank. Therefore, it cannot be proceeded an enquiry under Section 51 of the Act, 1964 is against the object and a scheme of the Act. As such the impugned order does not warrants any interference of this Court, for which the learned Government Pleader for Cooperation relied upon a ratio laid down by this Court in Mandava Laxmana Rao Vs. Primary Agricultural Co-operative Society, Warangal District and others2 and Akkayapalli Co-operative House Building Society Limited, Kadapa Vs. Joint Registrar / District Co-operative Officer, Y.S.R. District, Kadapa and others3. Therefore, the present writ petition is liable to be dismissed.
11. Heard learned counsel for the petitioner and learned Government Pleader for Cooperation and perused the material placed on record.
12. On perusal of the impugned proceedings dated 28.06.2023 issued by Respondent No.2 is only an order for causing a preliminary enquiry as required under Section 51 of the Act, 1964. Moreover, for any penal action the respondents should comply other provisions and should comply 2 1996 (4) ALD 141 3 2011 (1) ALD 662 NV,J 6 W.P.No.17767 of 2023 principles of natural justice and fair and reasonable opportunity for rebuttal of allegations or accusations of the Respondents.
13. The contention of the learned counsel for the petitioner that the Respondent No.2 is neither competent authority nor empowered to conduct an enquiry under Section 51 of the Act, 1964. In given facts and circumstances the very limitation of enquiry under Section 51 is contrary to the ingredients of Section 51 of the Act, 1964. But, Respondent No.2 is competent enough to order an enquiry under Section 52 of the Act, since he relied upon a report submitted by Respondent No.3 who is a creditor of Respondent No.5 Society, is unjust and unsustainable, for the reason that the impugned enquiry under Section 51 of the Act, 1964 was initiated pursuant to the preliminary report submitted by Respondent No.4 but not as per the letter addressed by Respondent No.3 dated 19.06.2023, therefore both the Sections 51 and 52 of the Act, 1964 are extracted as under:
51. Inquiry:- The Registrar, may of his own motion and shall, on the application of a society to which the society concerned is affiliated, or of not less than one third of the members of the Committee, or of not less than one fifth of the total 'number of members of the society, hold an inquiry or direct some person authorised by him by an order in this behalf to hold an inquiry into the constitution, working and financial condition of a society. Such inquiry shall be completed within a period of four months and the report of inquiry along with the findings of the Registrar thereon NV,J 7 W.P.No.17767 of 2023 shall be communicated to the managing committee of the society. It shall be the responsibility of the managing committee to place the inquiry report before the General Body or Special General Body convened for the purpose for its information, within a period of one month from the communication of the inquiry report by the Registrar.
The Registrar shall be competent to initiate action under the provisions of this Act, if the committee fails to take action as aforesaid:
52. Inspection. -[(1)] The Registrar may, of his own motion or on the application of a creditor of a society, inspect or direct any person authorised by him by a general or special order in this behalf to inspect the books of the society.
[Such inspection shall be completed within a period of three months from the date of order of inspection] Provided that no such inspection shall be made or directed on the application of a creditor unless the creditor:-
(a) satisfies the Registrar that the debt is a sum then due and that he has demanded payment thereof and has not received satisfaction within a reasonable time ; and
(b) deposits with the Registrar such sum as security, for the costs of the proposed inspection as the Registrar may require.
14. By cumulative reading of Sections 51 and 52 of the Act, 1964 envisages that Registrar of the Societies is empowered on his own motion or NV,J 8 W.P.No.17767 of 2023 shall on the application of the Society by passing resolution with minimum strength of not less than 1/3rd members of the committee or not less than 1/5th members out of the total members of the Society can hold an enquiry under Section 51 of the Act, 1964. The Registrar may on his own motion or on the application of the creditor of the Society can ordered an enquiry in respect of books of the Society under Section 52 of the Act.
15. It appears that in a case on hand there is a report of the creditor by Respondent No.3 dated 19.06.2023 to the Respondent No.4 but not to the Registrar as alleged by the petitioner. Similarly, a special report also submitted by Respondent No.3 to Respondent No.5 bank on 17.06.2023.
16. Be that as it may, Respondent No.2 delegated powers as Registrar and issued proceedings dated 20.06.2023 directing Respondent No.4 to conduct an enquiry basing upon the special report in reference to the report submitted by Respondent No.3 into the affairs of Respondent no.5 Society.
17. It is a fact that Respondent No.4 submitted his detailed reported as instructed by Respondent No.2 on 27.06.2023, which seems to be the basis for ordering suo moto enquiry under Section 51 of the Act, 1964 by way of impugned proceedings against Respondent No.5 Society. Therefore, the contention of the learned counsel for the petitioner that Respondent No.2 not exercised his power of suo moto enquiry but exercised at the behest of the enquiry Report of Respondent No.3 who is a creditor of the Respondent No.5, as such the enquiry under Section 51 of the Act, 1964 cannot be initiated and which is contrary to the Section 51, of the Act, 1964 is NV,J 9 W.P.No.17767 of 2023 untenable and unjustified for the reason that admittedly the Respondent No.2 acted upon on suo moto after ordering enquiry only. At best, an enquiry under Section 52 of the Act, 1964 can be ordered and for which he relied the ratio laid down by this Court in B. Sreenivasulu Vs. Government of Andhra Pradesh (1 Supra) wherein it is held as follows:
Examining the matter from that angle, we must consider the question as to what is the purpose for which the enquiry is authorised to be instituted by the Registrar. The purpose is spelt out by the language of the section. The scope of the enquiry is to enquire into the constitution, working and financial condition of the society. the society is managed by a managing committee under the provisions of the Act. It is that small body which holds the reins of administration in its hands. The enquiry contemplated under section 51 is to see how that body is functioning or has functioned. the enquiry is intended by the Act to aid and help the general body to effectively supervise the functioning of the managing committee. That is why the section directs that the report should be submitted to the general body together with the remarks of the Registrar so that the general body, on consideration of this report, may take appropriate disciplinary and suitable action in the affairs of th society. The enquiry report contains findings of facts which are kept away from the knowledge of the general body. It is not by itself capable of imposing any punishment on the committee. By considering the NV,J 10 W.P.No.17767 of 2023 whole exercise as mandatory with the result of invalidating the enquiry report on the ground that it has not been submitted within the stipulated period and thus defeating and crippling the supervisory authority of the general body the promotion of which is the object of section 51, the whole purpose would be subverted. The interpretation sought to be placed by learned counsel, Sri V.T.M. Prasad, for the Committee, on section 51 of the Act does not help the purpose of the law. It only helps to suppress the truth from the general body and to shield the management form the glare of exposure which it is purpose of enquiry report to shed. Such interpretation cannot be accepted. Crawford, in his book On the Construction of Statutes, at page 516, has stated thus:
"The question as to whether a statute is mandatory or directory depends upon the intention of the legislature and not upon the language in which the intention is clothed. The meaning and intention of the legislature must govern and these are to be ascertained not only from the phraseology of the provision but also by considering its nature, its design and the consequences which would follow from construing it one way or the other....."
18. If the contention of the petitioner is accepted, the intention of the legislature which is a paramount consideration to make applicable a particular provisions of the Act, more particularly in the present case the enquiry under Section 51 of the Act, 1964 will be defeated.
NV,J 11 W.P.No.17767 of 2023
19. Coming to the submission of learned Government Pleader for Cooperation that Respondent No.2 is empowered to cause a preliminary enquiry, basing upon report of such enquiry, he can invoke suo moto enquiry as permitted under Section 51 of the Act, 1964. Even in the case in hand also the same is in accordance with the Section 51 of the Act, 1964 and also liable to be upheld, in view of the admitted fact that the Respondent No.2 ordered preliminary enquiry on 20.06.2023 and received a report dated 27.06.2023 from Respondent No.4 and after his satisfaction he finally ordered an enquiry under Section 51 of the Act is in accordance with Section 51 of the Act, 1964. He further contended that in this context, this Court in Mandava Laxmana Rao vs. Primary Agricultural Co-operative Society, Warangal District and others (2 supra) in para Nos.2 and 5, wherein it is held as follows:
The first and fore-most important contention raised by Sri Movva Chandrasekhara Rao, learned counsel for the petitioner is that the initiation of the proceedings under Section 51 of the Andhra Pradesh Co-operative Societies Act VII of 1964 (the Act) itself is bad, illegal and void in law as the said order was passed without satisfying any one of the ingredients of that Section. To appreciate this contention it is necessary to read Section 51 of the Act, which is to the following effect.
In the present case admittedly the Inquiry proceedings were initiated basing on the application of one of the members of the first NV,J 12 W.P.No.17767 of 2023 respondent society dated 23.06.1985 submitted to the Hon. Minister for Co-operation requesting into the affairs of the first respondent Society with special reference to the misappropriation of the funds of the said society by the petitioner herein, on which the Hon. Minister ordered enquiry, and the Special Grade Deputy Registrar / District Co-operative Officer on Special Duty, District Co-operative Central Bank Ltd., Warangal to conduct the enquiry in the said misappropriation of funds of the first respondent society. So admittedly the inquiry proceedings were not initiated suo moto by the Registrar as it was done under the directions of the Hon. Minister on the application. Neither one-third of the members of the committee nor of not less than one-fifth of the total number of members of the society made an application to the Registrar making allegations against the petitioner about the allegations against the petitioner about the alleged misappropriation of the funds of the first respondent-society. So none of the grounds mentioned in Section 51 of the Act were satisfied making a ground to initiate the enquiry proceedings in question. I see some force in the contention of Sri Movva Chandrasekhara Rao, learned counsel for the petitioner that the initiation of the proceedings is ab initio void as no just or reasonable grounds are made out attracting the provisions of Section 51 of the Act.
Hence I allow the writ petition setting aside the impugned proceedings without costs and direct the third respondent herein to NV,J 13 W.P.No.17767 of 2023 conduct a regular enquiry into the matter afresh after giving reasonable opportunity to the petitioner and take necessary action against the concerned, completing all the process necessary within six months from the date of receipt of a copy of this order.
20. Learned Government Pleader for Cooperation also relied upon a ratio laid down by this Court in Akkayapalli Co-operative House Building Society Limited, Kadapa vs. Joint Registrar / District Co-operative Officer, Y.S.R. District, Kadapa and others (3 supra) wherein in para Nos.2,3,5,6,7,8,9, it is held as follows:
2. The petitioner is a House Building Society. The Divisional Cooperative Officer, Kadapa, respondent No.2, has submitted his report, dated 06.10.2010, to respondent No.1, wherein he has pointed out that a sum of Rs.89,32,539/- was found as imbalance in between loan outstanding of loans at Housefed level and member level of the petitioner-Society. While submitting the said report, respondent No.2 has requested for instituting an inquiry under Section 51 of the Act. Placing reliance on the said report, respondent No.1 has ordered for inquiry into the affairs of the petitioner-Society by appointing respondent No.3 as Inquiry Officer.
3. At the hearing, Sri L.J.Veera Reddy, learned counsel for the petitioner, strenuously contended that the impugned order is in violation of the provisions of Section 51 of the Act, inasmuch as NV,J 14 W.P.No.17767 of 2023 respondent No.1 has not exercised his suo motu power or that no requisite quorum for holding an inquiry was made either by 1/3rd of the Managing Committee Members or 1/5th of the total number of members of the Society.
A perusal of the impugned proceedings shows that respondent No.1 has exercised his power under Section 51 of the Act on the basis of the report of respondent No.2, who has also incidentally made a request for instituting an inquiry. Though respondent No.1 has not used the phrase ?on his own motion?, the purport of the impugned order clearly reveals that he has exercised the powers inhered in him to order for an inquiry on the basis of the report received by him. The mere absence of words that he was exercising power of his own motion or his placing reliance on the report of a subordinate officer would not detract the nature of the power from the one of suo motu exercise.
6. I am also unable to accept the contention of the learned counsel for the petitioner that there is no application of mind on the part of respondent No.1. The very fact that respondent No.1 has referred to the report shows that he was aware of its contents and satisfied that it was a deserving case for holding an inquiry under Section 51 of the Act.
8. I have carefully perused the said Judgment, which dealt with a case, wherein an inquiry was ordered on the direction given NV,J 15 W.P.No.17767 of 2023 by the Minister for Cooperation. I am of the opinion that a direction given by a superior authority is different from a request coming from the subordinate officer while sending his report. While in the former case, the competent authority had no discretion, in the latter case, he is always vested with the power either to exercise his suo motu power or not to exercise such power. Therefore, this Judgment is not of any assistance to the petitioner.
9. One other reason for my disinclination to interfere with the matter is that by the impugned order, respondent No.1 has merely directed holding of an inquiry into the affairs of the Society. The petitioner is unable to plead, much less substantiate, that by such inquiry, the interest of the society or its members would in any way be jeopardized. In the interests of cooperative movement, it is always desirable that whenever the alleged lapses are pointed out, inquiries are lied so that the cooperative movement is sustained and corruption in the societies is curbed.
21. After analysis of the judgments relied upon by the learned counsel for the petitioner cautiously and consciously that the facts mentioned therein is not applicable to the facts mentioned in the case in hand, wherein the Registrar ordered an enquiry pursuant to the directions, without there being any preliminary enquiry or without any basis for ordering such an enquiry. But in the present case the Registrar / Respondent No.2 after having preliminary enquiry and after his satisfaction regarding the report only he ordered for suo moto enquiry under Section 51 of the Act, 1964 as NV,J 16 W.P.No.17767 of 2023 envisaged. Coming to the another submission of learned counsel for the petitioner that the present enquiry under Section 51 of the Act 1964 is not suo moto enquiry, it is only basing upon the enquiry of the Respondent No.3 is not acceptable and liable to be rejected for the reason that there is an preliminary enquiry conducted by Respondent No.4, pursuant to the suo moto initiation of Respondent No.2, the said submission was also upheld by this Court in Akkayapalli Co-operative House Building Society Limited, Kadapa vs. Joint Registrar / District Co-operative Officer, Y.S.R. District, Kadapa and others.
22. In view of the foregoing reasons and upon the analysis as stated above and the ratio laid down by this Court in Akkayapalli Co-operative House Building Society Limited, Kadapa vs. Joint Registrar / District Co- operative Officer, Y.S.R. District, Kadapa and others wherein this Court negatived the similar contention of the petitioner herein.
23. On the above analysis of submissions of both the counsel and having regard to the material placed before this court as referred supra, the subject enquiry was ordered in accordance with Section 51 of the Act, 1964 and the Respondent No.2 is empowered and issued proceedings of enquiry in consonance with the provisions of the Act, much less as per Section 51 of the Act, 1964.
24. Accordingly, the impugned proceedings does not warrants interference of this Court at preliminary stage and more over it is only an enquiry to find out whether any misappropriation has been taking place in respect of NV,J 17 W.P.No.17767 of 2023 Respondent No.5 Society. As per the report of Respondent No.4, the alleged misappropriation of funds is in high value which may affects the financial position of Respondent No.5 Society, unless a statutory enquiry is not conducted the Respondent No.5 Society will suffer with huge loss and hardship.
25. Therefore, the Writ Petition is dismissed. There shall be no order as to costs.
26. As a sequel thereto, interlocutory applications pending, if any in the writ petition, shall also stand closed.
_____________________________________________ JUSTICE VENKATESWARLU NIMMAGADDA 20th September, 2023 KNR NV,J 18 W.P.No.17767 of 2023 HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION.No.17767 of 2023 20th September, 2023 KNR