Andhra Pradesh High Court - Amravati
Attili Soma Sekhar vs The State Of Ap on 27 March, 2024
HONOURABLE SMT. JUSTICE V.SUJATHA
WRIT PETITION Nos.15893, 18558, 23177 and
23264 of 2023
COMMON ORDER:
1) All these petitions are filed claiming same relief by different petitioners, but the issue involved in these petitions is one and the same. Therefore, I am of the view that it is appropriate to decide all the petitions by common order taking Writ Petition No.15893 of 2023 as leading petition.
2) W.P. No.15893 of 2023came to be filed under Article 226 of the Constitution of India seeking the following relief:-
"....to issue an appropriate Writ, order or direction mostly one which is in the nature of a Writ of Mandamus declaring the Orders of the 2nd Respondent vide File No.AGC06- 170261/1/2019-APCOBDCCB-CCRCS dated 29.03.2023 and the consequential orders of 7th Respondent vide Rc.No.9/2023/DCCB dated 21.06.2023 as illegal, irregular, without jurisdiction, violative of principles of natural justice, arbitrary, unjust, unconstitutional and unsustainable and set- aside the same in so far as the petitioner is concerned and pass...."
3) The brief facts of the case are that the petitioner is Ex-Chairman of the Eluru District Co-operative Central Bank Limited, Eluru District. The District Co-operative Central Bank was registered on 18.11.1918 and commenced its banking business on 30.11.1918 and granted license to respondent No.5 - The District Co-operative Central Bank Limited, Eluru under 2 VS,J wps_15893_2023 and batch Section 22 of Banking Regulation Act, 1949 vide RBI letter No.RPCD.Hyd/82-C dated 25.08.1997 and subsequently the Bank was issued revised license vide letter No.RPCD (H)/Coop/22/05.08.03/ 2011-12 dated 06.02.2012. Since then, respondent No.5 is functioning as per the aims and objects with which it is formed. The petitioner was elected as the President of the Bank and 20 others were elected as the Members of the Managing Committee in the elections held in 2013 and started functioning from 19.02.2013. The term of the Managing Committee is 5 years i.e. from 19.02.2013 to 17.02.2018 as per the provisions of A.P. Co-operative Societies Act, 1964 (for short "the Act").
4) However, the Government after competition of the tenure of 5 years has extended the term of Managing Committee from time to time through proceedings vide Rc.No.1447/2018-Cr1 dated 16.02.2018 for a period of 6 months, and subsequently through proceedings vide Rc.No.1447/2018-Cr1 dated 17.08.2018 for another period of 6 months and through proceedings vide Rc.No.1447/2018-Cr1 dated 12.02.2018 for a period of another 6 months and thus continuing the term of Managing Committee to up to 03.08.2019. Thus, the petitioner discharged his duties as 3 VS,J wps_15893_2023 and batch the President of the Managing Committee of Respondent No.5 right from 18.02.2013 to 03.08.2019. The share capital was hardly Rs.75.00 crores in 2013, the same has been increased to Rs.111.00 crores in 2017. The fixed deposits that were hardly Rs.595.00 crores in 2013 and the same was increased to Rs.1199.00 crores in 2017. The working capital got increased from Rs.1759.00 crores to Rs.2600.00 crores. Respondent No.5 Bank is able to stand at good competition with any other nationalized banks business in the District.
5) While the things stood thus, upon the news published in the Eenadu Telugu daily newspaper on 04.01.2019 alleging sanction of Rs.20.00 crores of bank guarantee without mortgaging the secured properties in Elamanchili Branch, respondent No.4 verified the information furnished by bank authorities and submitted his report to respondent No.2 vide File No.DCO-CR- 2/1/2019-CREDIT1-DCO-WG, dated 09.01.2019 of the District Cooperative Officer (FAC), Eluru, West Godavari District, requesting to order an Inquiry under Section 51 of the Act, 1964. On such request, respondent No.2 appointed an Inquiry Officer under Section 51 of the Act vide Proc.Rc.No.10804/2018-Cr.2, dated 18.01.2019 to look into the affairs of the District 4 VS,J wps_15893_2023 and batch Cooperative Central Bank Limited, West Godavari District, Eluru, and the report of the said inquiry officer was submitted on 19.05.2020.
6) Thereafter, respondent No.2, after considering the inquiry report, through letter File No.AGC06-17026/1/2019- APCOBDCCB-CCRCS dated 03.12.2020 submitted his remarks to respondent No.3. However, respondent No.2 instead of acting upon such report, found fault with the inquiry report submitted by respondent No.3 and pointed out certain lapses and instructed respondent No.3 to fill up the lacunae in the inquiry report and submit the information. In fact, respondent No.3 at Paras (iii) &
(iv) suggested disciplinary action against the concerned Managers, Assistant General Managers, Deputy General Managers, General Managers and the CEO, and that appropriate civil, criminal and disciplinary actions may be initiated against the persons named by him who are found to be responsible under each item as fixed in the report. In view of the instructions given by respondent No.2, respondent No.3 through letter dated 15.02.2021 submitted further information. Respondent No.2 treated such additional information as a further report of the inquiry officer. Though in the original inquiry report, there is no attribution of any role to 5 VS,J wps_15893_2023 and batch the members of the Managing Committee, in the additional information, the inquiry officer opined that the members of the managing committee along with CEO‟s, Nodal officers and branch managers are jointly and severally responsible for the lapses in issuance of bank guarantees and suggested that civil and criminal actions may be taken up against the members of the Managing Committee also. But, however, disciplinary action shall be taken only against the officers and staff of the bank.
7) It is further urged that respondent No.2 recorded his findings in File No.AGC06-17026/1/2019-APCOBDCCB-CCRCS dated 29.03.2023 that the balance unrecovered money, if any, may be recovered from the Chairman of the Managing Committee and concerned bank officials by invoking Section 60 of the Act with reference to the allegation of irregularities in issuance of bank guarantees. In respect of other allegations are concerned, respondent No.2 did not find any lapses on the part of the Managing Committee. Ultimately, respondent No.2 directed respondent Nos.4 to 6 to initiate surcharge proceedings, civil, criminal and disciplinary actions. Even though, respondent No.2 did not issue any instructions to respondent No.7 to cause attachment of properties belonging to the petitioner and his 6 VS,J wps_15893_2023 and batch family members, respondent No.7 by Proceedings Rc.No.9/2023/DCCB dated 21.06.2023 issued notice to the petitioner to provide adequate security for the amount shown in the inquiry report immediately, failing which necessary orders will be issued for attachment of the immovable properties belonging to the petitioner and his family members mentioned in the schedule. On the same day, without even waiting for some reasonable time, an order of attachment is passed in exercise of power under Section 73 of the Act. Hence, the attachment order passed by respondent No.7 is in violation of principles of natural justice.
8) It is further asserted that Section 73 of the Act contemplates the attachment of the property by the Registrar only after his objective satisfaction that there is likelihood of disposal or removal of any part or whole property from the jurisdiction of the registrar. In the instant case, respondent No.2 - Registrar did not indicate any such objective satisfaction in terms of Section 73 of the Act. The Order of the respondent No.2 dated 29.03.2023 and consequential order of respondent No.7 dated 21.06.2023 does not indicate anywhere that the petitioner and his family members are disposing off the property. Therefore, impugned 7 VS,J wps_15893_2023 and batch attachment order is totally unwarranted, without jurisdiction, unjustified, irregular, illegal and unsustainable.
9) It is further urged that when once the inquiry officer in the first report submitted by him did not find any lapses on the part of the Managing Committee, the findings of respondent No.2 through the impugned Order that the surcharge proceedings shall be initiated against the petitioner for recovery of the unrecovered amount, if any, is totally unjustified. Only after recovery of the amount from the responsible bank staff and the beneficiaries of irregular transaction, such recovery from the petitioner would arise. Neither the inquiry report nor the findings of respondent No.2 make any specific allegation against the petitioner in discharge of his functions as the chairman of the Managing Committee. Since no specific overt act is alleged against the petitioner, passing of impugned Order including the name of the petitioner along with the bank staff whose role is found to be suspicious, is totally unwarranted, unjustified, unlawful and unsustainable. The action would be contrary to the wisdom of the starting of co-operative sector institutions. The impugned Order passed by respondent No.2 is causing damage to the reputation and grave hardship and injury.
8
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10) It is further urged that the Managing Committee always tried its best for the betterment of the bank and acted to prevent any irregularities in the bank. On coming to know about certain irregularities, the then Manger of the Elamanchili branch was terminated by Managing Committee much prior to the inquiry through Proceedings vide Rc.No.Esst/2018-2019 dated 05.12.2018. The domestic inquiry proved that the said Manager of the Elamanchili Branch sanctioned bank guarantees willfully, intentionally and negligently to Sri. Gudimetala Sundara Ramireddy and Co., Mallipuri for Rs.6.90 crores and to Sri Vamsi Teja Modern Rice Mill to an amount of Rs.11.90 crores, in total Rs.18.80 crores without obtaining proper documents and guarantees. FIR was also filed against the then Manager vide FIR No.40/2019 dated 25.01.2019. The termination of the Branch Manager, who caused loss to the bank, clearly shows the bona fides of the Managing Committee.
11) It is further asserted that neither respondent No.5 passed any resolution nor 1/5th of the number of members of respondent No.5 passed any resolution requesting the Registrar to conduct the enquiry under Section 51 of the Act. When a committee was formed, one of the three person‟s in-charge through his complaint 9 VS,J wps_15893_2023 and batch requested holding of such enquiry. First of all, Section 51 contemplates the request by 1/3rd of the managing committee of the society. The managing committee consists of 21 members. 1/3rd of the number would be more than seven. Therefore, the enquiry initiated by respondent No.2 and held by respondent No.3 is totally without jurisdiction and contrary to Section 51 of the Act. Therefore, initiation of enquiry by respondent No.2 and passing of impugned order by him are totally motivated. Hence, the writ petition.
12) When the matter came up for admission, while granting time for filing counter, this Court passed the following interim order in I.A.No.2 of 2023.
"For the reasons mentioned in the accompanying affidavit filed in support of the Writ Petition and considering the submissions made, there shall be an interim suspension of the operation of order issued by the 7th respondent vide Rc.No.9/2023/DCCB, dated 21.06.2023 for a period of two (2) weeks"
13) Later, the said interim order has been extended from time to time.
14) Respondent No.2 - Commissioner for Cooperation and Registrar of Co-operative Societies has filed a counter on behalf of respondent Nos.1, 3, 4 and 6, denying the allegations made by the 10 VS,J wps_15893_2023 and batch petitioner and stated that the Eluru District Cooperative Central Bank is a Cooperative Credit society registered under the provisions of the Act and is governed by both the Act, 1964 and Banking Regulation Act, 1949. After completion of the elected tenure of the then managing committee in February, 2018, headed by the petitioner, the Government has extended the term of the elected committees of all DCCBs in the State by virtue of Section 115-D (16)(a) of the Act, but not on merits of the Boards hitherto managing the affairs of the Banks. Once upon a time, the Eluru DCCB used to be a strong, earning profits continuously, but, due to the misdeeds and violative decisions of the Managing Committee headed by the petitioner, the bank fell under weak category. Certain irregularities of the bank were examined and were brought to the notice of respondent No.2 through adverse news published in various newspapers and the observations reported in the NABARD inspection report as on 31.03.2018. The same was verified preliminarily through respondent No.4 and as respondent No.4 reported that there are huge violations/ irregularities in sanctioning of Bank Guarantees/Personal loans, the Registrar ordered an Inquiry under Section 51 of the Act vide proceedings dated 18.01.2019, authorizing the respondent No.3 11 VS,J wps_15893_2023 and batch herein to conduct a thorough inquiry who in turn had submitted a report on 19.05.2020. As per the provision under Section 51 of the Act, the Registrar shall issue findings on the inquiry report and communicate the same along with Inquiry Report to the Bank. In order to satisfy himself on the report submitted by respondent No.3, the Registrar, before issuing his findings for follow up actions, sought certain clarification/information from the inquiry officer vide memo in File No:AGC06-17026/1/2019- APCOB-DCCB-CCRCS, dated 03.12.2020.
15) It is further contended that the inquiry report categorically revealed the role of the President and Managing Committee on each and every item of irregular Bank Guarantees issued in crores of Rupees in violation of exposure norms prescribed by NABARD. The action of respondent No.2 in seeking some additional information and clarifications while issuing his findings on the statutory inquiry report in the process of evaluation of the case cannot be found fault with as the information submitted by respondent No.3 is part and parcel of Statutory Inquiry report and the said additional information consists of approval of loan policies, sanctioning/ratifications of Bank guarantees and the 12 VS,J wps_15893_2023 and batch status of major deficiencies reported in NABARD‟s XVII inspection report.
16) The counter further states that the Inquiry Officer of respondent No.5 bank has submitted his report stating that during the year 2012-13 to 2018-19, the Eluru DCCB through its branches has issued irregular bank guarantees to various rice millers for supply of custom milled rice to the AP State Civil Supplies Corporation from 2013, to a tune of Rs.29.53 Cr. Respondent No.3 reported that the bank has been issuing Bank Guarantees to various organizations for running liquor business, supply of customs milled rice to the A.P. State Civil Supplies Corporations etc. and through its resolution No.85, dated 10.07.2012, the Managing Committee of the Bank resolved to take up bank guarantee business with the maximum ceiling of Rs.30.00 Lakhs. Thereafter, the managing committee which was elected on 19.02.2013 under the Chairmanship of the petitioner had enhanced the Bank Guarantee limit by violating the norms prescribed by the NABARD in fixing the individual exposure limit as per the circular No.68/DoS-10/2008, dated 12.05.2008. The said managing committee had also reduced the collateral security to be obtained, the Guarantee amount to be deposited and 13 VS,J wps_15893_2023 and batch reduced the guarantee fees to be collected which is the income to the Bank. In most of the occasions, the petitioner solely had taken decisions enhancing the Bank Guarantee limit from Rs.50 lakhs to Rs.5 Crores from time to time and reduced the security deposit and percentage of commission. Most of the firms which obtained bank guarantees have failed to supply the Custom Milled Rice to A.P. Civil Supplies Corporation for which the Bank Guarantees were invoked and bank has paid the amount to the corporation, and certain firms have approached the Courts and got stay orders to drag the recovery process.
17) It is further contended that after thorough examination of the Inquiry Report and further Report/Information, the Registrar issued findings vide file No.AGC 06 17026 APCOB DCCB-CCRCS, dated 29.03.2023 as specified in the Act to take further follow-up actions. With regard to the civil action, the Inquiry Officer reported in respect of Bank Guarantees, the bank filed arbitrations before the DR/OSD of the Bank i.e. respondent No.7 herein and recommended to recover the balance, if any, from the Managing Committee and others jointly. With regard to the criminal action, the Inquiry officer recommended action as per Section 79(1) (a) (f), 79-A(1)(c)(2) of the Act and Section 120-B, 14 VS,J wps_15893_2023 and batch 405, 406, 409, 415, 420 and 477-A of I.P.C against the borrowers, Managing Committee members, Chief Executive Officers, Nodal Officers, Managers of the branches who have worked during the period of irregularities. In case of Ramachandra Rao Peta (RR Peta) Branch, criminal action was recommended as it attracts liability for criminal action under Sections 406 and 420 of IPC against the concerned staff including nodal officers as mentioned in the Inquiry Report with further clarifications.
18) It is further contended that the Registrar opined that though legal action has been initiated by the Bank, it cannot guarantee the recovery of the funds. As such, the Registrar issued a finding to complete all the arbitration cases immediately with regard to invoked Bank Guarantees involving an amount of Rs.1116.90 lakhs and thereafter, the unrecovered amount, if any, may be recovered from the Chairman, managing committee and concerned bank officials by invoking Section 60 of the Act. Basing on the recommendations of the Inquiry officer, under Section 51 of the Act, the Commissioner for Co-operation and Registrar of Co-operative Societies, A.P. Guntur, issued findings on the inquiry report vide file No.AGC 06 17026 APCOB DCCB-CCRCS, dated 29.03.2023 and directed the District Co-operative Officer, Eluru 15 VS,J wps_15893_2023 and batch District to take action for conditional attachment of properties under Section 73 of the Act against the persons responsible for the loss caused to the bank i.e. Ex-Managing Committee members, Chief Executive Officers, Nodal Officers, Ex-Managers etc., including the petitioner herein who was involved in the financial irregularities in the District Cooperative Central Bank Ltd, Eluru. Respondent No.5 furnished the property particulars of the petitioner and his family members, and requested to take action for conditional attachment. As per the application made by respondent No.5, and as per findings of respondent No.2 dated 29.03.2023, respondent No.4 instructed respondent No.7, who was delegated with the powers of the Registrar under Section 73 of the Act to issue orders for attachment under Section 73 of the Act duly following the procedure as laid down under provisions of the Act against the properties of the petitioner and his family members to prevent the alienation of properties of the petitioner.
19) It is further contended that as per the inquiry report which includes further report the President and Managing Committee Members had taken the decisions enhancing the bank guarantee limits indiscriminately violating the NABARD exposure norms, due to which the bank fell in losses. As per the NABARD exposure 16 VS,J wps_15893_2023 and batch norms, the limits of Bank guarantees to be sanctioned is Rs.40 Lakhs, but, the petitioner, solely took decisions in enhancing the bank guarantee limit from Rs.50 lakhs to Rs.5 crores from time to time and had reduced the security deposit and percentage of commission.
20) It is further contended that the observations in the inquiry report form substantiating grounds for ordering the enquiry under Section 51 and the financial regulation i.e. NABARD had also found fault with the functioning of the bank and reported in their statutory inspection report that 141 major deficiencies were made during the tenure of the petitioner.
21) Respondent No.5 - The District Co-operative Central Bank Limited filed counter contending that respondent No.2 recorded his findings vide file No.AGC06-17026/1/201-APCOB-DCCB- CRCS dated 29.03.2023 stating that the balance unrecovered money may be recovered from the Chairman of the Managing Committee and concerned Bank officials by invoking Section 60 of the Act. During the years 2012-13 to 2018-19, the Eluru DCCB through its branches issued irregular Bank Guarantees to various organizations for running liquor business, supply of custom milled rice to the Andhra Pradesh State Civil Supplies Corporation 17 VS,J wps_15893_2023 and batch from 2013 onwards. Through its resolution No.85, dated 10.07.2012, the Managing Committee of the Bank resolved to take up Bank guarantee business with the maximum ceiling of Rs.30.00 lakhs. Thereupon, the Managing Committee elected on 19.02.2013 had enhanced the Bank Guarantee limit by violation of Norms prescribed by the NABARD in fixing the individual exposure limit as per the Circular No.68/DoS-10/2008 dated 12.05.2008 and reduced the collateral security to be obtained and guarantee fee to be collected, which is the income to the Bank.
22) It is further contended that the petitioner, President of the Bank, vide his orders dated 28.06.2013 reduced the percentage of the deposited guarantee amount from 25% to 20%. The same was communicated to all the Branches by Chief Executive Officer of the Bank vide Memo Rc.No.Admn/2013-14 dated 28.06.2013. Further, Managing Committee of the Bank vide its resolution No 24 dated 24.07.2014 reduced the deposited guarantee amount from 20% to 15%. The Managing Committee of the Bank vide its Resolution No.6 dated 22.01.2015 reduced the fee from 2% to (i) 1.25% for 6 months (ii) 1.5% for 9 months and (iii) 2% for one year. The petitioner i.e. the President of the Bank vide note orders dated 15.04.2015 enhanced the Bank guarantee limit from 30.00 18 VS,J wps_15893_2023 and batch lakhs to 100.00 lakhs. The same was communicated to the Branches by the Chief Executive Officer of the Bank vide Memo Rc.No.Admn/2014-15 dated 17.04.2015. The Managing Committee of the Bank vide its resolution No 22 dated 30.05.2015 ratified the action of the President in enhancing the Bank Guarantee limit from Rs.30.00 lakhs to 100.00 lakhs and enhanced the limit upto Rs.200.00 lakhs with surety of 100%. The President of the Bank vide his note orders dated 12.10.2015 enhanced the Bank guarantee limit upto Rs.500.00 lakhs. The same was ratified by the Managing Committee vide its resolution No.12 dated 07.11.2015 and further resolved to reduce the Guarantee deposited amount from 15% to 10%. The Managing Committee of the Bank vide its resolution No.36 dated 30.05.2017 reduced the Bank guarantee limit from Rs.500.00 lakhs to Rs 50.00 lakhs.
23) It is further contended that respondent No.2 directed Respondent Nos.4 and 6 to initiate surcharge proceedings, Civil, Criminal and disciplinary actions against the concerned. As per the instructions issued by the District Cooperative Officer, Eluru, respondent No.4 herein, the District Cooperative Central Bank Limited, Eluru, respondent No.5 herein, submitted the property 19 VS,J wps_15893_2023 and batch details of the Petitioner herein to respondent No.4 herein for taking action at their end keeping in view the findings of the Section 51 Inquiry report/instructions of the Commissioner for Cooperation and Registrar of Cooperative Societies who is respondent No.2 herein. As per the Directions issued by the respondent No.4 herein, the Deputy Registrar/Officer on Special Duty District Cooperative Central Bank Ltd., Eluru who is respondent No.7 herein issued order under Section 73 of the Act for conditional attachment of properties. Respondent No.5 is not a Statutory Authority as per the provisions of the Act. Respondent No.5 is supposed to execute the instructions of respondent Nos.2 and 4 herein. When the remedy of appeal is available under Section 76 of the Act before the Andhra Pradesh Cooperative Tribunal at Vijayawada, the writ petition is not maintainable and requested to dismiss the writ petition.
24) Respondent No.7 - Deputy Registrar/Officer on Special Duty filed a separate counter contending that as the effective and efficacious remedy is available to the aggrieved party, they can only approach A.P.Co-operative Tribunal constituted under Section 75 of the Act by filing appeal under Section 76 of the Act. The A.P. Co-operative Societies Act, 1964 mandates that any party 20 VS,J wps_15893_2023 and batch feels aggrieved by the Order of attachment of property, before decision or order under Section 73 of the Act can prefer an appeal by invoking Section 76 of the Act. As the writ petitioner without exhausting the remedies available under the Act, approached the Court directly, by invoking the jurisdiction of the Court under Article 226 of the Constitution of India, the maintainability of the writ petition has to be decided as a preliminary issue and the writ petition may be dismissed in limine.
25) It is further contended that respondent No.4-Joint Registrar/District Co-Operative Officer issued Memorandum, dated 16.06.2023 vide File No.AGC06- CREDOIN51/1/2022- SUPDT(EST)-ELR, whereunder, he has authorized respondent No.7, being the Deputy Registrar/Officer on Special duty, DCCB Ltd., Eluru District, to exercise powers by invoking the jurisdiction under Section 73 of the Act, for the conditional attachments of properties, relating to Ex-Managing Committee Members of the DCCB Limited, Eluru, by duly following the procedure in vogue, to safeguard the funds of the District Co-Operative Central Bank, Eluru.
26) It is further contended that in furtherance of the Memorandum issued by respondent No.4 - Joint 21 VS,J wps_15893_2023 and batch Registrar/District Co-Operative Officer dated 16.06.2023, respondent No.7 issued notice dated 21.06.2023 under Section 73 of the Act, calling upon the petitioner to furnish adequate security amount, as reported in the Inquiry Report, immediately, to prevent the alienation of the properties, to avoid attachment of the properties, before taking decision. The said order, passed by respondent No.7 is absolutely inconformity with Section 73 of the Act, 1964. The writ petitioner has given wrong interpretation to Section 73 of the Act, regarding the term of 'Registrar', mentioned in the said Section, by alleging that the Registrar means the respondent No.2 in the Writ Petition, i.e., the Commissioner for Co-Operation and Registrar of Co-Operative Societies only, though, the term 'Registrar' includes Deputy Registrars also.
27) It is further contended that when there was an apprehension about the immediate disposal of the whole or any part of the property to be attached, certainly, there is no legal embargo, to issue notice and order of attachment simultaneously. The petitioner is at liberty to submit adequate surety and get the order of attachment, either revoked or modified, even at a subsequent stage. Once the property is disposed of, there will be irreparable loss caused to the public funds and there will never be 22 VS,J wps_15893_2023 and batch any chance for the recovery of the amount from the petitioner, therefore in the interest of safeguarding the public funds, the action for the conditional attachment of the property was initiated. The initiation of conditional attachment under Section 73 was taken up strictly in adherence to the provisions of the Act, and requested to dismiss the writ petition.
28) The petitioner filed reply to the counters filed by the respondents reiterating the contentions raised in the writ petition. In the reply, the writ petitioner specifically contended that during 2010-2012, 2012-2014, 2014-2016 and 2016-2018, the National Bank for Agriculture and Rural Development has conducted statutory inspection and for every financial year Andhra Pradesh Co-operative Bank Ltd., is conducting annual inspection of the affairs of the Bank, wherein no irregularity is attributed to the petitioner or Managing Committee. The petitioner has already initiated criminal action against the Branch Manager of the branch. The order of respondent No.2 dated 29.03.2023 and consequential order of respondent No.7 dated 21.06.2023 does not indicate anywhere that the petitioner or his family members are disposing off the property and that they are removing the property. Neither respondent No.5 passed any resolution nor 1/5th 23 VS,J wps_15893_2023 and batch of the number of members of respondent No.5 passed any resolution requesting him to conduct the enquiry under Section 51 of the Act. The enquiry initiated by respondent No.2 and held by respondent No.3 is totally without jurisdiction and contrary to Section 51 of the Act. Respondent No.2 cannot pass an order of review over Inquiry Report submitted by the Inquiry Officer.
29) When the matter came up for hearing in the month of November, 2023, respondent No.2 filed additional counter along with certain material papers secured from respondent No.5 bank evidencing the involvement of the petitioner in framing such irregular loan policies for issuance of Bank Guarantees, in violation of the NABARD guidelines issued in Circular No.68/DoS- 10/2008 dated 12.05.2008. As per Section 129-A read with Section 2 (k) of the Act, 1964, the Managing Committee members shall be deemed to be public servants within the meaning of Section 21 of IPC. As per Section 31-A of the Act, the Managing Committee of a Society shall, subject to the provisions of the Act, Rules, Byelaws and resolution of General Body, exercise its powers. As per Section 115-D (2), though the Cooperative Credit Society is having autonomy to take its decision in the matter of loan policies, such decisions shall be subject to the guidelines of 24 VS,J wps_15893_2023 and batch NABARD. As per Bank Byelaw No.14-B-VII, the members of the Board shall be collectively accountable for their decisions. Being public servants, the President and other Managing Committee members shall function in accordance with statue. The decision regarding enhancement of Bank Guarantee limits up to 5 Crores and reducing Bank Guarantee commission/security deposit/securities etc., leads to turn the sanctioned Bank Guarantees into NPAs and some Bank Guarantees were invoked by A.P.Civil Service Corporation etc., caused loss to the assets of the Bank. The petitioner is one of the elected Managing Committee Members of Eluru DCCB sworn in on 18.02.2013 as Chairman/President of the Bank and completed his term of 5 years by 17.02.2018, thereafter, the Government has extended the term up to 05.08.2019, as such he is at the helm of the affairs of the Eluru DCCB as a Managing Committee Member from 18.02.2013 to 05.08.2019 and took part in the policy decisions of the Management duly signing the Minutes of the Bank.
30) It is further contended that the petitioner being the Chairman of the Bank has taken unilateral decision vide note orders dated 28.06.2013 though the Bye-laws of the Bank have not provided any powers to him to take such decisions unilaterally 25 VS,J wps_15893_2023 and batch and to implement the same. Further, the Managing Committee in its meeting held on 24.07.2014 vide resolution No.24 ratified the irregular and unilateral decision of the president, which is detrimental to the interest of the Bank. The petitioner along with Chief Executive Officer of the Bank and other Managing Committee members are responsible for such defective policy decisions. Further, the petitioner has taken unilateral decision vide note orders dated 21.12.2014 reducing the guarantee fee from 2% to 1.25% for 6 months Bank Guarantee, 1.5% for 9 months Bank Guarantee and 2% for 1 year. Since the guarantee fee is the miscellaneous income, the profitability of the bank has been affected. The petitioner also revised the loan policy on Bank Guarantees by enhancing the Bank Guarantee limit up to Rs.1 crore violating the Credit Monitoring Arrangement (CMA) norms. Though the ceiling limit is Rs.40,00,000/- to each individual, Rs.3.74 crores were sanctioned to one individual i.e. M/s Sri Venkateswara Agencies, Kovvur during the year 2016 in Kovvur Branch and were invoked by AP Civil Supplies Corporation. In the meeting held on 30.05.2015, the Managing Committee took decision enhancing the Bank Guarantee limit from Rs.1 crore to Rs.2 crore and also reduced the surety from 150% to 100%. 26
VS,J wps_15893_2023 and batch During 2016-17, respondent No.5 Bank issued 287 Bank Guarantees for Rs.250.47 crores, out of which 215 Bank Guarantees were issued above the ceiling limit of Rs.50 lakhs. The highest Bank Guarantee was issued to a single individual for Rs.17 crore. During 2017-18, Bank issued 904 Bank Guarantees for Rs.267.67 crores, out of which, 337 Bank Guarantees were issued above the ceiling limit of Rs.50 lakhs. The highest Bank Guarantee was issued by Yelamanchili Branch to a single individual i.e. Sri Gudimetla Sundara Rami Reddy for Rs.16.65 crores, for which respondent No.5 Bank received notice for invoking the same by AP Civil Supplies Corporation and due to stay order passed in W.P.No.36739 of 2018 filed by the borrower, the Guarantee amount is not yet paid.
31) It is further contended that the petitioner being the Chairman of the Managing Committee took unilateral and violative decisions and got his decisions ratified by the Managing Committee and caused loss to the Bank and requested to dismiss the writ petition.
32) Petitioner filed reply affidavit to the additional counter filed by respondent No.2 contending that respondent No.5 Bank did not incur any loss during the tenure of the petitioner as President. 27
VS,J wps_15893_2023 and batch Respondent No.3/inquiry officer in his preliminary inquiry report dated 19.05.2020 has relied upon the yearly audit inspection conducted by the NABARD and did not find any fault with the petitioner. Respondent No.3 - Inquiry Officer submitted in his further report dated 15.02.2021 that NABARD is the Apex financing agency and its report would be final. If the compliance report submitted by the Bank is not satisfactory, NABARD would impose strict penal action against the Bank. NABARD has never issued any penalty over respondent No.5 Bank during the tenure of the petitioner and there is no loss to the financial capacity or the assets of the bank during the tenure of the petitioner.
33) It is further stated that there are enough audit reports and financial statements of the bank assessed by respondent No.3 to substantiate the claims made by the petitioner and thus respondent No.3 did not find any fault with the petitioner in both the inquiry reports. The petitioner in the capacity of the Chairman of the Bank has proposed and later ratified by the Managing Committee regarding the issuance of the Bank guarantees in accordance with the guidelines of NABARD, the Banking Regulation Act, 1949 and RBI circulars. During 2010-2012, 2012- 2014, 2014-2016 and 2016-2018, the NABARD has conducted 28 VS,J wps_15893_2023 and batch statutory inspection and for every financial year Andhra Pradesh Co-operative Bank Limited had conducted annual inspection of the affairs of the Bank, wherein no irregularity is attributed to the petitioner. The then Manager of the Elamanchili Branch was terminated by Managing Committee way back to the inquiry through proceedings vide Rc.No.Esst/2018-2019 dated 05.12.2018. The domestic inquiry proved that the said Manger of the Elamanchili Branch sanctioned bank guarantees willfully, intentionally and negligently to Sri. Gudimetala Sundara Ramireddy and Co., Mallipuri for Rs.6.90 crores and to Sri Vamsi Teja Modern Rice Mill to an amount of Rs.11.90 crores which totals to Rs.18.80 crores without obtaining proper documents and guarantees. An FIR was also filed against the then Manager vide FIR No.40/2019 dated 25.01.2019. This termination of the Branch Manager, who caused loss to respondent No.5 bank, clearly shows the bona fides of the Petitioner. The Petitioner acted in accordance with law and thus the bi-annual NABARD inspection report, yearly financial audit report conducted by the Andhra Pradesh Co-operative Bank Ltd., the inquiry report of the 3rd respondent and the further inquiry report of the 3rd respondent did not make any allegation against the Petitioner. 29
VS,J wps_15893_2023 and batch Since no specific overt act is alleged against the petitioner, passing of impugned order including the name of the petitioner with the bank staff whose role is found to be suspicious is totally unwarranted, unjustified, unlawful and unsustainable.
34) Sri P.Veera Reddy, learned Senior Counsel for the petitioner, contended that respondent No.2 has appointed respondent No.3 as the inquiry officer and directed to conduct the inquiry as per Section 51 of the Act. Respondent No.3 submitted inquiry report under Section 51 of the Act on 19.05.2020, however Section 51 of the Act allows the Registrar to hold an inquiry or direct some person authorized by him to hold an enquiry into the constitution, working and financial condition of a society either on his own motion or on the application of the concerned society or at least when one third of the members of the Managing committee or one fifth of the total number of members request the same. But in the present case, neither respondent No.5 passed any resolution nor one fifth of the number of members of respondent No.5 passed any resolution requesting him to conduct the enquiry under Section 51 of the Act. The inquiry initiated by respondent No.2 and held by respondent No.3 is totally without jurisdiction and contrary to Section 51 of the Act. Respondent 30 VS,J wps_15893_2023 and batch No.3, who is the inquiry officer in his report, clearly stated that due to lack of supervisory/monitoring by the bank authorities, the deficiencies could not be noticed and fixed responsibility against the persons concerned, but not against the Managing Committee.
35) It is further argued that after submission of report by the inquiry officer, respondent No.2 has to communicate the same to the Managing Committee of the Society along with his findings on the inquiry report. However, respondent No.2, instead of doing so, has straightaway taken action on the inquiry report by duly submitting his remarks to respondent No.3 on 03.12.2020 asking for further clarifications which is contrary to law. As per the „inquiry‟ under Section 51 of the Act, respondent No.2 cannot order for further inquiry report and cannot seek specific clarifications to take further course of action. Pursuant to the instructions of respondent No.2, respondent No.3 submitted a revised inquiry report on 15.02.2021 without conducting any fresh inquiry and without reverification of the earlier statements and records. Respondent No.2 had treated it as further inquiry report of respondent No.3 which is not in accordance with law, hence the revised inquiry report submitted by respondent No.3 is not suo moto as it was submitted only on the specific instructions 31 VS,J wps_15893_2023 and batch of respondent No.2. Further, there is no allegation of misappropriation of funds, but there is only allegation of mismanagement of funds by the bank authorities, hence civil and criminal actions against managing committee are not warranted. Without any specific allegation against the petitioner in the 2nd inquiry report, respondent No.2 went to an extent of giving a finding under Section 51 to recover the alleged imaginary misappropriated amount from the petitioner and the Managing Committee. Hence, the order passed by the respondent No.2 is in clear violation of Section 51 of the Act and violation of principles of natural justice.
36) It is further argued that it is the bounded duty and the responsibility of the managing committee to place the inquiry report before the General Body convened for its information within a period of one month from communication of the inquiry report by the Registrar, but in the present case the Registrar failed to place the inquiry report before the General Body. The clarifications sought by respondent No.2 are beyond imagination without any basis and not in accordance with law. Further, the ingredients of Section 60 of the Act cannot be attributed to the petitioner as there are no allegations against him either in the 32 VS,J wps_15893_2023 and batch inquiry report or in the revised inquiry report. Merely implicating the name of the Petitioner in the order passed by respondent No.2, without any specific allegation against him in the inquiry report and the second inquiry report, is unjust. Notice under Section 73 was issued on 21.06.2023 and the Order of Attachment was also passed on the same date i.e., 21.06.2023 which is in violation of Principles of natural justice. Respondents failed to substantiate that the petitioner is about to dispose/remove the whole or any part of his property. Further, the order of attachment does not fulfill any of the ingredients under Section 73 of the Act. There is no justification in passing the order of the attachment, that too on the same day of issuance of notice. No allegation is made against the petitioner either in the inquiry report or in the 2nd inquiry report, therefore, the impugned proceedings are liable to be set aside.
37) Learned Government Pleader for Co-operative Societies contended that based on the recommendations of the Inquiry Officer under Section 51 of the Act, respondent No.2 - Commissioner for Co-operation and Registrar of Co-operative Societies, A.P., Guntur submitted his findings on the Inquiry report vide file No.AGC 06 17026 APCOB DCCB-CCRCS dated 33 VS,J wps_15893_2023 and batch 29.03.2023. Respondent No.5 furnished the property particulars of the petitioner to respondent No.2 and requested to take action for conditional attachment. As per the findings of respondent No.2 dated 29.03.2023, respondent No.4 instructed respondent No.7 to issue orders for attachment under Section 73 of the Act duly following the procedure as laid down under the provisions of the Act against the properties of the petitioner and his family members to prevent the alienation of properties of the petitioner. Civil liability is fixed against the petitioner along with the Managing Committee members/staff as per the findings given by the inquiry officer, therefore to prevent alienation of properties, action under Section 73 of the Act is initiated against the petitioner. In the interest of public and to protect the public funds of the District Cooperative Central Bank Limited, Eluru, conditional attachment order was passed by respondent No.7 against the properties of the petitioner and his family members. Basing on the lucid and credible information that the petitioner has the intention to alienate the property, respondent No.7 passed the conditional attachment order. The petitioner being the Chairman of the Bank has taken unilateral decision vide note orders dated 21.12.2014 reducing the guarantee fee from 2% to 34 VS,J wps_15893_2023 and batch 1.25% for 6 months, 1.5% for 9 months and 2% for 1 year and thereafter in the managing committee meeting held on 22.01.2015, the same was ratified by passing resolution No.06. Further, the petitioner, without any power conferred on him, enhanced the bank guarantee limit up to Rs.1 crore violating the Credit Monitoring Arrangement (CMA) norms issued by NABARD. Apart from the above, the petitioner has taken several unilateral decisions, which caused loss to the assets of the Bank, therefore, the petitioner is not entitled to any relief as claimed by him and requested to dismiss the writ petition.
38) Admittedly, basing on the news item published in the Eenadu Telugu Daily newspaper on 04.01.2019, respondent No.4 herein had obtained information and furnished a report to respondent No.2 requesting for inquiry under Section 51 of the Act. On such report, respondent No.2 appointed respondent No.3 as Inquiry Officer to conduct inquiry under Section 51 of the Act, thereafter, respondent No.3, Inquiry Officer had submitted his detailed inquiry report on 19.05.2020. On examination of the Inquiry Report with reference to the remarks of the District Cooperative Officer, West Godavari District, the Registrar of Cooperative Societies has instructed the Inquiry Officer to submit 35 VS,J wps_15893_2023 and batch certain clarifications/ information on certain items of Inquiry report. In pursuance of which, on 15.02.2021 respondent No.3, without conducting any fresh inquiry and without even conducting any re-verification of the statements and records, had submitted a revised inquiry report adhering to the instructions of respondent No.2. On 29.03.2023, respondent No.2 gave his findings stating that the balance unrecovered money may be recovered from the Chairman of the Managing Committee and other officials by invoking Section 60 of the Act. The said proceedings dated 29.03.2023 are challenged in the present writ petition.
39) It appears from the record that the impugned proceedings dated 29.03.2023 are issued basing on the clarifications issued by the inquiry officer. The inquiry officer did not find any lapses on the part of the petitioner in the initial enquiry report. The relevant portion in part-A of the inquiry report is as follows:
"The Inquiry conducted reveals that some firms in West Godavari District got approval for custom milling of paddy from the A.P. State Civil Supplies Corporation Ltd., West Godavari Dist., Eluru. Taking advantage of the loosely knitted loaning procedure of the DCCB Ltd., WG Dist., Eluru, the firms in question have applied and obtained Bank Guarantees from various branches. Later, they have resorted to dispose off the 36 VS,J wps_15893_2023 and batch custom milled rice in black market without supplying the same to the A.P. State Civil Supplies Corporation Ltd., WG Dist., Eluru. As per rules, the APSCSC Ltd., had invoked the bank guarantees and the same were paid by the bank. Due to lack of proper supervision/monitoring by the bank authorities, the deficiencies in documentation in issuance of the said Bank Guarantees could not be noticed till letters requesting for revoking the bank guarantees are received in the bank. However, in most of the cases, arbitration petitions were filed by the bank while in seine cases, the firms have obtained orders from the Hon'ble High Court of Judicature.
However, responsibility was fixed up against the persons concerned.........."
40) It is evident from the above, there is no finding about the misappropriation/misutilisation of funds of the bank by the petitioner.
41) Having not satisfied with the findings of the inquiry officer, respondent No.2, without ordering for fresh inquiry, sought some clarifications from the inquiry officer/respondent No.3 vide File No. AGC06-17026/1/2019 - APCOBDCCB-CCRCS dated 03.12.2020. On receipt of the same, respondent No.3 without conducting fresh inquiry and even without re-verification of the statements and records, submitted revised inquiry report dated 15.02.2021 strictly following the instructions of respondent No.2. 37
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42) At this stage, it is relevant to examine whether the Commissioner for Cooperation and Registrar of Co-operative Societies can seek clarification from the Inquiry Officer on the report submitted by him.
43) Section 51 of the Act deals with "inquiry", which reads thus:
"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 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:
Provided that notwithstanding anything contained in this Act and the Rules made thereunder, the bye laws of a society and the action of the society in placing the inquiry report along with the findings of the Registrar, the Registrar shall not be precluded from taking follow up action as may be required on the basis of inquiry report :38
VS,J wps_15893_2023 and batch Provided further that such action shall not be nullified even if the General Body of the Society passes a resolution negativing the findings of the inquiry:
Provided also that the Registrar may for reasons to be recorded in writing extend the period of four months for completion of inquiry for a further period not exceeding two months."
44) As per Section 51 of the Act, the report of inquiry along with the findings of the Registrar thereon 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.
45) Nowhere it is stated in the counters filed by the respondents that the inquiry report along with the findings of the Registrar were communicated to the managing committee of the society, thereafter, managing committee placed the same before the General Body or Special General Body. Therefore, it is not known whether the respondents followed the procedure contemplated in Section 51 of the Act or not. If the respondents have followed the procedure as prescribed in Section 51 of the Act, certainly they would have mentioned the same in the counters filed by them. 39
VS,J wps_15893_2023 and batch Hence, it can be inferred that the Registrar has failed to place the inquiry report before the General body. Therefore, it can be safely held that the respondents have not followed the procedure contemplated in Section 51 of the Act.
46) Further, in the revised report dated 15.02.2021, the inquiry officer has stated as follows:
"In this connection, it is submitted that Sec.51 Inquiry report is an administrative report to identify the deficiencies and recommending for corrective measures. The surcharging authority while independent trial can take omissions and commissions wherever necessary to decide the deficiencies judiciously weighing the oral, documentary and circumstantial evidences u/S 60 (1) of the APCS Act, 1964 following due process of law."
47) Section 60 defines "surcharge", which reads thus:
"60. Surcharge. - (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 organisation, 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 willful 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 40 VS,J wps_15893_2023 and batch authorised 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 authorised 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 authorised as aforesaid thinks just:
Provided that no order shall be passed against any person referred to in this sub-section unless the person concerned has been given an opportunity of making his representation.
(2) Any sum ordered under this section to be repaid to a society or recovered as a contribution to its assets may be recovered on a requisition being made in this behalf by the Registrar to the Collector in the same manner as arrears of land revenue.
(3) This section shall apply notwithstanding that such person or officer or servant may have incurred criminal liability by his act "
.
48) As per Section 60 of the Act, 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, if it is found that any person who is or was entrusted with the organisation, affairs or management of the society or any past or present officer or servant of the society has misappropriated or 41 VS,J wps_15893_2023 and batch 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 willful 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 authorised 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.
49) In the present case, no independent enquiry was conducted under Section 60 of the Act so as to make the petitioner liable for the enforcement of the surcharge order. Admittedly, the inquiry officer, in the initial inquiry report, did not find any fault or lapse on the part of the petitioner about the misappropriation/ mis- utilization of funds of the bank. But in the revised report, which was submitted on instructions of respondent No.2, he made some allegations against the petitioner. Respondent No.2 is not vested with the power to seek clarification on the inquiry report submitted by the Inquiry officer. As per the provisions of the Act, 42 VS,J wps_15893_2023 and batch respondent No.2 has no authority to direct the inquiry officer to submit revised report.
50) At the cost of repetition, it is appropriate to refer to the proviso to Section 51 of the Act, which is as follows:
"Provided that notwithstanding anything contained in this Act and the Rules made thereunder, the bye laws of a society and the action of the society in placing the inquiry report along with the findings of the Registrar, the Registrar shall not be precluded from taking follow up action as may be required on the basis of inquiry report"
51) It is clear from the above provision, the Registrar is not precluded from taking follow up action as may be required on the basis of inquiry report. Therefore, the Registrar has power to take any decision on the basis of inquiry report submitted by the inquiry officer. But, nowhere it is stated in the Act that respondent No.2 - Commissioner for Cooperation and Registrar of Co-operative Societies has authority to seek clarification if he is not satisfied with the report submitted by the inquiry officer. If really the Commissioner or Registrar is not satisfied with the inquiry report submitted by the inquiry officer, at best, he can order fresh inquiry.
43
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52) In "S. Ramadas Vs. The Subordinate Judge1", this Court held as follows:
"2... It is admitted that apart from the enquiry conducted under S. 51 of the Act, no independent enquiry was conducted under S. 60 so as to make the petitioner liable for the enforcement of the surcharge order. It is pertinent to mention that enquiry under S. 51 of the Act is only an administrative enquiry for the satisfaction of the Registrar as to whether under S. 60 surcharge proceedings have to be initiated or not. Once the proceedings under S. 60 of the Act are initiated, the enquiry thereof should be akin to Civil Court enquiry as the Civil Court's jurisdiction is barred expressly in view of S. 121 of the Act. As no independent enquiry has been conducted by the second respondent herein to pass a decree for realisation of the amount, the said order is not only an infraction of the statutory provisions, but also violative of the principles of natural justice....."
53) In view of the law laid down in the said judgment, the enquiry under Section 51 of the Act is only an administrative enquiry for the satisfaction of the Registrar as to whether surcharge proceedings under Section 60 have to be initiated or not. Once the proceedings under Section 60 of the Act are initiated, the enquiry thereof should be akin to Civil Court enquiry as the Civil Court's jurisdiction is barred expressly in view of Section 121 of the Act. Further, ingredients of 1 AIR 1993 AP 6 44 VS,J wps_15893_2023 and batch Section 60 of the Act cannot be attributed to the petitioner as no allegations are made against him by the inquiry officer in the inquiry report. In the present case, no independent inquiry was conducted, but straightaway impugned attachment order was passed.
54) Now, before proceeding further, it is also apt to extract Section 73 of the Act, which deals with attachment of property before decision or order.
55) Section 73 of the Act reads thus:
"73. Attachment of property before decision or order:-
If the Registrar is satisfied on application, report, inquiry or otherwise, that any person with intent to delay or obstruct the enforcement of any decision or order that may be made against him under the provisions of this Act:
a) is about to dispose of the whole or any part of his property; or
b) is about to remove whole or any part of his property from the jurisdiction of the Registrar, the arbitrator or liquidator, as the case may be, he may, unless adequate security is furnished, direct attachment of the said property and such attachment shall have the same effect as if made by competent Civil Court .
56) A plain reading of the above Section would indicate that Registrar must satisfy that the person is intending to delay or 45 VS,J wps_15893_2023 and batch obstruct the enforcement of decision or order and is about to dispose of whole or part of the property or about to remove whole or any part of the property from his jurisdiction, then attachment can be ordered unless adequate security is furnished. Thus, sine-
qua non for attachment, the satisfaction of the Registrar that the person is about to dispose or remove whole or part of the property to delay or obstruct enforcement of the decision to be made, should exist.
57) In the case on hand, as can be seen from the record no material is put forth to show that petitioner is about to dispose of whole or any part of the property or about to remove whole or any part of the property from the jurisdiction of the Registrar in order to delay or to obstruct enforcement of the decision.
58) The contention of respondent No.7 that the writ petition is not maintainable as the petitioner approached this Court without exhausting the alternative remedy available under Section 76 of the Act cannot be accepted for the reason that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the High Court under Article 226 has not pursued, would not oust the jurisdiction of the High Court and render a writ petition "not maintainable". 46
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59) The Hon‟ble Supreme Court in "Godrej Sara Lee Ltd. Vs. The Excise and Taxation Officer-cum-Assessing Authority and Others2" held as follows:
"Before answering the questions, we feel the urge to say a few words on the exercise of writ powers conferred by Article 226 of the Constitution having come across certain orders passed by the high courts holding writ petitions as "not maintainable"
merely because the alternative remedy provided by the relevant statutes has not been pursued by the parties desirous of invocation of the writ jurisdiction. The power to issue prerogative writs Under Article 226 is plenary in nature. Any limitation on the exercise of such power must be traceable in the Constitution itself. Profitable reference in this regard may be made to Article 329 and ordainments of other similarly worded articles in the Constitution. Article 226 does not, in terms, impose any limitation or restraint on the exercise of power to issue writs. While it is true that exercise of writ powers despite availability of a remedy under the very statute which has been invoked and has given rise to the action impugned in the writ petition ought not to be made in a routine manner, yet, the mere fact that the Petitioner before the high court, in a given case, has not pursued the alternative remedy available to him/it cannot mechanically be construed as a ground for its dismissal. It is axiomatic that the high courts (bearing in mind the facts of each particular case) have a discretion whether to entertain a writ petition or not. One of the self-imposed restrictions on the exercise of power Under Article 226 that has evolved through judicial precedents is that the high courts should normally not entertain a writ petition, where an effective and efficacious alternative remedy is available. At the same time, it must be remembered that mere 2 AIR 2023 SC 781 47 VS,J wps_15893_2023 and batch availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the high court Under Article 226 has not pursued, would not oust the jurisdiction of the high court and render a writ petition "not maintainable". In a long line of decisions, this Court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a Rule of policy, convenience and discretion rather than a Rule of law......."
60) In view of the law laid down by the Hon‟ble Supreme Court in "Godrej Sara Lee Ltd. Vs. The Excise and Taxation Officer- cum-Assessing Authority and Others" (referred above) mere availability of alternative remedy is not a bar to entertain the writ petition. Moreover, in the case on hand, the petitioner sought to set aside the proceedings issued under Section 73 of the Act as a consequential relief.
61) It is also clear from the record that the notice of attachment and as well as the order of attachment under Section 73 of the Act were issued on the same day i.e. on 21.06.2023 attaching the properties of the petitioner and his family members without even affording any opportunity to the petitioner to furnish any surity before passing the order of attachment, which is admittedly in violation of the principles of natural justice. 48
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62) Further, in the present case, respondent No.2, instead of ordering for fresh enquiry, has called for revised report from respondent No.3, which is contrary to the provisions of the Act. Even otherwise, if respondent No.2 intends to order for a fresh inquiry, he is supposed to place the inquiry report before the Managing Committee. As respondent No.2 has failed to follow the procedure contemplated in the Act, the impugned order passed by respondent No.2 is liable to be set aside.
63) In view of the aforesaid discussion, the writ petition No.15893 of 2023 deserves to be allowed.
64) In view of the detailed order passed in W.P.No.15893 of 2023, the other W.P.Nos.18558, 23177 and 23264 of 2023 deserve to be allowed.
65) Accordingly, writ petition Nos.15893, 18558, 23177 and 23264 of 2023 are allowed by setting aside the order passed against the petitioners herein by respondent No.2 vide File No. AGC06 - 17026/1/ 2019 - APCOBDCCB - CCRCS dated 29.03.2023 and the consequential order passed by respondent No.7 vide Rc.No.9/2023/DCCB dated 21.06.2023. However, the 49 VS,J wps_15893_2023 and batch respondents are at liberty to order fresh inquiry, if so advised. There shall be no order as to costs.
Miscellaneous petitions pending, if any, in the Writ Petitions, shall stand closed.
________________________ JUSTICE V.SUJATHA 27.03.2024 Ksp