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Andhra HC (Pre-Telangana)

S.Ramu S/O Laxmana vs The A.P. Cooperative ... on 18 February, 2014

       

  

  

 
 
 THE HONBLE SRI JUSTICE A.V.SESHA SAI       

W.P.No.17226 of 2009  

Dated 18-2-2014 

S.Ramu S/o Laxmana...Petitioner  

The A.P. Cooperative Tribunal,Visakhapatnam, rep. by its Registrar,and four
others.....Respondents

Counsel for the Petitioner:Mr.V.V.N.Narayana Rao

Counsel for the Respondent: G.P. for Cooperation

<GIST:  

>HEAD NOTE:    

?Cases referred

1.      1998 (1) ALT 482 (D.B)
2.      1992 (3) ALT 50
3.      2007 (5) ALD 698 
4.      1997 (6) ALD 98 
5.      1998 (3) ALD 154 (DB) 
6.      2010(11) SCC 278  
7.      AIR 1964 SC 506  
8.      AIR 1963 SC 1612  
9.      2013 (3) ALD 413 

THE HONOURABLE SRI JUSTICE A.V.SESHA SAI          

WRIT PETITION No.17226 of 2009   

Dated   18th February, 2014


O R D E R:

In the present writ petition, the petitioner herein assails the order dated 13.07.2009 passed by the Andhra Pradesh Cooperative Tribunal, Visakhapatnam, in O.A.50/2007 and the Proceedings in Rc.No.297/2003-B, dated 28.06.2003, issued by the Deputy Registrar of Cooperative Societies, third respondent herein.

2. Briefly stated, the case of the petitioner herein as per the pleadings in the affidavit filed in support of the writ petition is as under:-

i. When the petitioner was functioning as a Secretary of the Golugonda Mandal Teachers Cooperative Credit Society Limited, the Joint Registrar/District Cooperative Officer, Visakhapatnam, second respondent herein, vide proceedings in Rc.No.706/2002-C (Coop.), dated 08.03.2002, ordered inspection under Section 52 of the Andhra Pradesh Cooperative Societies Act, 1964 (hereinafter called the Act) into the affairs of the said society on the objections submitted by the rival members of the society.

ii. Pursuant to the said orders, the Sub-Divisional Cooperative Officer, Narsipatnam, Visakhapatnam District, fourth respondent herein, was appointed as Enquiry Officer, and on his requisition, the entire records were handed over to him under proper acknowledgement and in stead of inspecting the books, he conducted enquiry by taking sworn statement from the members, who made complaint against the petitioner. The Enquiry Officer lost the entire books handed over to him, which would be evident from the complaint made by him to the Station House Officer, Anakapalli Police Station and the same was registered as FIR.No.111/2002.

iii. The Enquiry Officer without giving any opportunity and without verifying record and in violation of principles of natural justice, submitted the enquiry report to the third respondent/Deputy Registrar of Cooperative Societies, fastening the liability to the petitioner and basing on the said report, the third respondent issued surcharge notice dated 07.03.2003 and asked the petitioner to submit explanation and the said notice was received by the petitioner on 14.03.2003.

iv. Petitioner got issued telegram dated 26.03.2003 to the fourth respondent/Sub-Divisional Cooperative Officer, Narsipatnam, with a request to grant 20 days time for submission of explanation in view of his sons illness and further requested to intimate the next date of hearing so as to enable him to submit his explanation. The fourth respondent without giving any further notice and opportunity and without furnishing the documents as requested for cross examining the witnesses to defend his case, passed the surcharge order dated 28.06.2003 for realisation of the alleged amount of Rs.6,50,353/-. Assailing the said surcharge proceedings, petitioner filed W.P.No.17915/2003 before this Court and this Court initially admitted the writ petition and after filing counter by the respondents, the said writ petition was disposed of on 13.12.2006 with a direction to file appeal before the appellate authority under Section 76 of the Act. In pursuance of the same, the petitioner herein filed O.A.No.50/2007 before the Cooperative Tribunal and also filed M.A.No.26/2007 for stay of all further proceedings and the Tribunal initially was pleased to grant stay on 02.07.2007 and the same was in force till the disposal of the appeal.

v. Respondents 2 to 5 did not file their counters and there was no representation on behalf of respondents 2, 3 and 4. But, however fifth respondent was represented by a counsel. Without considering the contentions advanced by the petitioner herein before the first respondent and without there being any proper appreciation, the Tribunal vide Judgement dated 13.07.2009 dismissed the said O.A.50/2007 filed by the petitioner.

Assailing the said order dated 13.07.2009 passed by the Tribunal dismissing the application filed by the petitioner and the surcharge order dated 28.06.2003 passed by the third respondent herein, the present writ petition has been filed.

3. A counter affidavit, deposed by the third respondent, is filed on behalf of respondents 2 to 4, stating inter alia that the members of the society in their telegram dated 01.03.2002 alleged suspicion of misappropriation with reference to the benami loans and requested the respondent authorities to conduct enquiry into the affairs of the society. It is further stated that the Joint Registrar/District Cooperative Officer, Visakhapatnam, on receipt of the telegram directed the Sub-Divisional Cooperative Officer, Narsipatnam, to submit a detailed report on the affairs of the society and in pursuance of the same, the Sub-Divisional Cooperative Officer, conducted a preliminary enquiry on the basis of the contents of the telegram and submitted a report to the Joint Registrar/District Cooperative Officer, Visakhapatnam on 05.03.2002, and basing on the report of the Sub- Divisional Cooperative Officer, the joint Registrar/District Cooperative Officer, Visakhapatnam, ordered a statutory inspection under Section 52 of the Act into the affairs of the society with reference to the petition of the members and also preliminary report of the Sub-Divisional Cooperative Officer, Narsipatnam, vide proceedings Rc.No.706/2002-C (Coop), dated 08.03.2002. It is further stated in the counter that soon after the receipt of the statutory inspection order, the Sub-Divisional Cooperative Officer, Narsipatnam, commenced the inspection and also examined the books and accounts of the society and submitted a preliminary inquiry report to the Joint Registrar/District Cooperative Officer, Visakhapatnam on 15.04.2002 stating that the petitioner committed serious financial irregularities in the affairs of the society and in the said report he further stated that he received letters from the President, two Directors and six members of the society, stating that an amount of 8 lakhs was misappropriated by the petitioner for the last two years. It is further stated that in his report the Sub-Divisional Cooperative Officer, Narsipatnam also mentioned that some miscreants have stolen some records on 04.04.2002 including the deposition recorded by the fourth respondent, which forced him to file an application before the Station House Officer, Anakapalli on 04.04.2002, as such, he again summoned the same creditors and recorded the statement on 10.04.2002 and 11.04.2002.

It is further stated in the counter affidavit that the petitioner failed to avail the opportunity to peruse the record available with the sub-Divisional Cooperative Officer, Narsipatnam and as a part of inspection, the Sub- Divisional Cooperative Officer, Narsipatnam issued summons to the petitioner on 04.12.2002 and directed him to attend before him to give sworn statement on 13.12.2002 at 11.00 AM in the office of the Sub- Divisional Cooperative Officer, Narsipatnam and the petitioner in his telegram dated 11.12.2002 addressed to the Inspecting Officer expressed his inability to attend the enquiry on that stipulated date on the ground that he had to go to N.I.M.S at Hyderabad to give medical assistance to his son.

Counter further states that the Inspecting Officer issued summons under Section 55 (1) of the Act to the petitioner on 17.12.2002 and asked him to appear before him on 23.12.2002 at 11.00 AM to give sworn statement and the petitioner issued a telegram to the Inspecting Officer stating that it would not be possible for attending enquiry on 23.12.2002 as the same was declared last working day of the schools. It is further stated that basing on the telegram, the Sub-Divisional Cooperative Officer, Narsipatnam and Inspecting Officer directed the petitioner by the telegram dated 23.12.2002 to attend on 24.12.2002 in the respondent office to give statement in this regard and at last the petitioner attended on that stipulated date and requested to give 15 days time on the ground that he was feeling mentally in view of his ill-health of his son. Counter further states that finally the enquiry officer issued summons under Section 55 (1) of the Act on 24.12.2002 and directed the petitioner to attend before him on 31.12.2002 along with recorded evidence to contradict the aspect of irregularities during the course of inspection under Section 52 of the Act and the petitioner at last attended for enquiry on 31.12.2012 and refused to give sworn statement, even though the enquiry officer had given permission to peruse the available records of the society. It is further submitted that under those circumstances, the enquiry officer completed the inspection and submitted his report on the basis of the recorded evidence and also other sworn deposition of the members. It is further stated that the enquiry officer in the report stated that an amount of 6,50,353/- was misappropriated by the petitioner. It is further stated that basing on the inspection report, action was initiated against the petitioner as per the finding of the Inspecting Officer and as a part of civil action, a surcharge notice was issued to the petitioner under sub-Section (1) of Section 60 of the Act vide Rc.No.297/2002, dated 07.03.2003, for recovery of an amount if Rs,6,50,353/- with further interest thereon and asked the petitioner to attend for the same on 29.03.2003 to give explanation against the proposed action of the petitioner and the petitioner acknowledged the surcharge notice on 17.03.2003, but did not submit his explanation on the stipulated date and the petitioner requested the respondent to grant time for submission of explanation on the ground that he was unable to attend on 29.03.2003 saying that his son was under medical treatment at Hyderabad. Subsequently, summons dated 19.04.2003 were issued to the petitioner under Section 55 (1) of the Act on 21.04.2003 and asked the petitioner to appear before the Divisional Cooperative Officer, Yellamanchili on 29.04.2003 along with his recorded evidences and to file written explanation to the proposed action, but the summons were returned with the postal endorsement saying returned to sender since addressee not came back in one week. It is further stated that a final notice dated 02.06.2003 was issued to the petitioner asking the petitioner to submit his explanation to the proposed action, but the petitioner failed to attend before the Divisional Cooperative Officer even though several opportunities were given to him, which resulted in passing surcharge proceedings vide Rc.No.297/2002-B, dated 29.06.2003, for a sum of Rs.6,50,353/- with further interest @ 18% per annum and basing on the surcharge orders, the society filed EP.No.1/2003-04 and is pending before the Sale Officer for execution and the Sub-Divisional Cooperative Officer, Narsipatnam and the Inspecting Officer has also recommended for criminal action against the petitioner for the alleged misappropriation of funds of the society. Counter further states that the Tribunal also dealt with all the aspects raised by the petitioner and the orders passed by the Tribunal, confirming the surcharge order do not suffer from any legal infirmity and various grounds urged by the petitioner are not tenable in view of the law laid down by this Court in various decisions.

Pleading in the manner indicated supra, it is eventually requested in the counter of the respondents 2 to 4 to dismiss the writ petition.

4. A reply affidavit is filed by the petitioner herein, stating that pursuant to the orders of the Joint Registrar/District Cooperative Officer, Visakhapatnam, ordering inspection, the Sub-Divisional Cooperative Officer, Narsipatnam, on 10.03.2002, received the entire society records from the petitioner under proper acknowledgment and that the said records were lost and the said officer lodged a complaint on 04.04.2002 before the Station House Officer, Anakapalli. It is further stated that the Inspecting Officer submitted report dated 31.01.2003 without providing any opportunity to the petitioner and in the absence of the records and fastened the liability on the petitioner. It is further stated that the petitioner got issued a telegram on 26.03.2003 to the Surcharge Officer requesting time, and thereafter, the petitioner did not receive any notice, and to his surprise, the proceedings dated 28.06.2003 were issued without any opportunity. It is further submitted that the inspection was ordered under Section 52 of the Act into the books of the society and the same was not enquired into and such fixation of liability based on the alleged sworn statements and depositions of the said members is not permissible under the Act in the absence of any books from the society.

5. In the backdrop of the above pleadings, submissions and contentions, now the point which arises for consideration of this Court is whether the Judgment dated 13.07.2009 rendered by the A.P. Cooperative Tribunal, Visakhapatnam in O.A.50/2007, confirming the order of surcharge dated 28.06.2003 issued by the Deputy Registrar of Cooperative Societies, Yellamanchili vide Rc.No.297/2003-B, dated 28.06.2003 is sustainable and is inconsonance with the Provisions of the Act?

6. Contentions of Sri V.V.N.Narayana Rao, learned counsel for the petitioner:-

i. The orders impugned in the writ petition are opposed to the very spirit and object of the provisions of Sections 52 and 60 of the Act.

ii. Provisions of Section 52 of the Act do not authorise any initiation of inspection based on the complaint or petition of the members of the society.

iii. The contention of lack of jurisdiction in ordering inspection based on the complaint of the members of the society was urged before the Tribunal, but the Tribunal failed to consider it from proper perspective and without providing opportunity surcharge order was passed.

iv. The only basis for fastening the liability is the statements of the complainants without appreciating the records which were admittedly lost while in the custody of the Sub-Divisional Cooperative Officer, who lodged complaint with the police on the aspect of loss of the said records.

v. No independent appreciation of material was undertaken either by the surcharge officer or by the Tribunal. Neither the report under section 52 of the Act nor the surcharge order under Section 60 of the Act are based on record and evidence in view of the admitted reality that the records were lost after the same were handed over to the Sub-Divisional Cooperative Officer under proper acknowledgment by the Society.

7. To bolster his submissions and contentions the learned counsel for the petitioner places reliance on the Judgments of this Court in MANAGING COMMITTEE OF THE BUREAU OF ECONOMICS AND STASTICS EMPLOYEES COOPERATIVE HOUSING SOCIETY LIMITED v. THE COMMISSIONER FOR COOPERATION AND REGISTRAR OF COOPERATIVE SOCIETIES, A.P (W.A.No.1262 of 2004), CHALLA SANYASINAIDU v. DEPUTY REGISTRAR OF CO-OP. SOCIETIES, SRIKAKULAM and S.RAMADAS v. THE SUBORDINATE JUDGE, (CO-OPERATIVE TRIBUNAL), KOTHAGUDEM AND OTHERS .

8. Contentions of the learned Government Pleader:-

i. The District Cooperative Officer did not order enquiry directly on the complaint of the members, but he called for a report and the report submitted under Section 52 of the Act can be taken cognizance of since it contains the allegations against the petitioner herein and the Registrar cannot shut his eyes as he is also authorised to exercise the power suo motu under Section 60 of the Act and as such the contentions contra advanced by the petitioner are unsustainable. ii. It is not a case of lack of affording opportunity to the petitioner, but it is a failure on the part of the petitioner to avail the opportunity afforded to him.

iii. The Tribunal considered the aspect of affording opportunity to the petitioner and recorded valid findings on the issuance of notice and it is a failure of the petitioner to avail the said opportunity and as such it is not open for the petitioner to advance the contentions otherwise.

iv. The judgments cited on behalf of the petitioner have no relevance to the facts of the case as the petitioner in the instant case failed to avail the opportunity given to him.

9. In support of his contentions, the learned Government Pleader places reliance on the judgments in A.N.RAO v. DISTRICT CO-OPERATIVE OFFICER/JOINT REGISTRAR, KRISHNA DISTRICT , M.V.R.REDDY v. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES and KOLLURI BHASKARA RAO v. DEPUTY REGISTRAR OF CO-

OPERATIVE SOCIETIES, GUDIVADA, KRISHNA DISTRICT .

10. The material available on record manifestly discloses that the Joint Registrar/District Cooperative Officer, Viaskhapatnam issued order in proceedings Rc.No.706/2002-C (Coop.), dated 08.03.2002, authorising the Sub-Divisional Cooperative Officer, Narsipatnam, to conduct statutory inspection under Section 52 of the Act with special reference to the petitioner and the members and preliminary enquiry report of the Sub-Divisional Cooperative Officer, Narsipatnam. The very first paragraph of the said order shows the genesis for the impugned action, which reads as follows:

Whereas, certain members of Golugonda Mandal Teachers Cooperative Society Ltd., Golugonda have submitted a petition on the irregularities in working of said society.

11. At this juncture, it may be appropriate and relevant to refer to the provisions of Section 52 (1) of the A.P. Cooperative Societies Act, which read as follows:

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.

12. While dealing with the scope and ambit of Section 52 of the Act, this Court in W.A.No.1256/2004 dated 01.09.2004, held as under:-

When Appeal was taken up for consideration, we have asked learned counsel for the respondents to take appropriate instructions in the matter. Learned counsel for respondents, rightly and frankly, concedes that in the given facts and circumstances, orders could not have been passed by Respondent No.2 under Section 52 of the Act directing inspection of the books of the Society. We also find that on the given facts, order of the respondent No.2 is bad in law, and, contrary to the letter and spirit of Section 52 of the Andhra Pradesh Cooperative Societies Act, 1964. Consequently, we allow the appeal, and, set aside the impugned order with liberty reserved to the respondents to deal with the representation of members of the Society in accordance with law. No costs.

13. The record further discloses that the petitioner herein brought to the notice of the Tribunal the above aspect and the ratio laid down by a Division Bench of this Court in W.A.No.1262/2004 and the Tribunal in the impugned order, in a peculiar manner, held that the same is a technical one while answering point No.1. It is to be noted at this juncture that when a ratio laid down by this Court is brought to the notice of the Tribunal, it would be obligatory and mandatory on the part of the Tribunal not only to refer to the said judgment, but also to consider the impact and effect of the principle laid down in the said Judgment. Such an exercise is conspicuously absent in the order of the Tribunal. The case of the petitioner herein is that without affording proper opportunity, the authorities conducted surcharge proceedings and fastened the liability on the petitioner. In the grounds of appeal filed before the Tribunal, the petitioner herein on the said aspect categorically stated that one Sri Pothu Raju was appointed as an enquiry officer and he received the entire books of the society for the purpose of inspection and the said officer lost the entire record, which was received from the appellant and the same would be evident from the complaint made by the said person in Anakapalli Police Station vide FIR.No.111/2002. The petitioner herein further stated in the grounds of appeal that the said Pothu Raju conducted enquiry by recording the sworn statement from the members of the society, who lodged the complaint against the petitioner instead of conducting inspection of the books of the society and that the enquiry officer without giving any opportunity and without verifying the records submitted the enquiry report to the second respondent/Deputy Registrar of Cooperative Societies. The petitioner herein further stated in the grounds of appeal that the deputy Registrar of Cooperative Societies conducted surcharge proceedings without giving him any opportunity and without any notice to the appellant and passed the surcharge order. The petitioner herein further stated that except notice dated 07.03.2003, no summons, final notice or telegram were received by the appellant as referred to by the second respondent/Deputy Registrar in the impugned order and that he received only surcharge notice on 07.03.2003 and did not receive the summons dated 09.06.2003, final notice dated 02.06.2003 and telegram dated 10.06.2003, and further stated that he was not in station from 24.04.2003 to 11.06.2003 due to summer vacation of the schools and the schools were reopened on 12.06.2003 only. Eventually, in the said appeal, the petitioner stated that the observation in the impugned order that he failed to appear before the respondent authorities, is incorrect.

14. While dealing with the said aspect and the contention of the petitioner herein with regard to the lack of proper opportunity, the Tribunal at paragraph 8 of the impugned order observed that there is no procedure contemplated for issuance of summons and final notice after service of notice and record is evidencing issuance of summons and telegram after service of surcharge notice. The Tribunal however held in the impugned order that in the guise of non-service of notice, the appellant remained silent till the initiation of execution proceedings i.e., 13.02.2006. The Tribunal further held that if the appellant wanted to participate in the surcharge proceedings, he would have made efforts to know the status of enquiry and tried to appear before the surcharging authority after lapse of requested time and no such effort was found and the Tribunal eventually came to a conclusion that the said facts are enough to understand the conduct and negligent attitude of the appellant.

15. It is to be noted that Section 60 of the Act imposes obligation on the officer holding the surcharge proceedings that the surcharged officer should be given opportunity. The enquiry as contemplated under Section 52 of the Act is only administrative in nature and in the event of the Registrar prima facie being satisfied of the alleged irregularities on the basis of the report of the enquiry officer, the Registrar may issue surcharge proceedings under Section 60 of the Act. Under Section 52 of the Act, the person against whom a report is sent has no opportunity to squarely meet the allegations against him at that stage and has no right to cross-examine the witnesses from whom the statement was recorded, implicating his involvement and he cannot adduce any evidence in rebuttal. Section 60 of the Act contemplates, in clear terms, an opportunity to the delinquent for making a representation. The said right to file representation is a valuable one given to the person likely to be affected and the said right cannot be brushed aside in a routine and mechanical manner. After issuance of show-cause notice and service of the same and after calling for the explanation and after submission of the same by the delinquent, the delinquent is entitled to cross-examine the witnesses examined in the course of enquiry under Section 52 of the Act and also entitled to examine his witnesses to rebut their evidence. Unless and until the same is done, the spirit of making a representation as contemplated under Section 60 of the Act cannot be said to be fulfilled. The principles of natural justice have to be read into the provisions of Section 60 of the Act.

16. In W.P.No.23350 of 2008, this Court at paragraphs 17 to 21, held as follows:-

17. It is a settled and well established elementary and cardinal principles of law that any action by the authorities which has penal and civil consequences must be preceded by prior notice and the opportunity to the persons likely to be affected by such action. Unless such pre-decisional mandatory requirements are adhered to the actions having civil consequences cannot be sustained. Non-compliance of principles of natural justice, which are obviously an off-shoot of the underlying principles of Article 14 of the Constitution, which strikes at the arbitrariness would render the impugned order unsustainable, null and void. This Court is of the opinion that before passing the impugned order, the respondents ought to have issued notice and ought to have afforded an opportunity of being heard to the petitioner, so that the authorities could be in a position to arrive at a reasonable conclusion having regard to the issue. In the instant case, the respondents 1 and 2, simply basing on the request made by the State Government, resorted to the impugned action. Another significant aspect which requires mention at this juncture is that there is no allegation of violation of any conditions of agreement. In the case of INDU BHUSHAN DWIVEDI VS. STATE OF JHARKHAND AND ANOTHER , the Hon'ble Supreme Court while referring to judgments reported in STATE OF MYSORE V. K. MANCHE GOWDA and STATE OF ASSAM V. BIMAL KUMAR PANDIT at paragraphs 21 and 22 held as under:

21. The proposition laid down in the above noted judgment represents one of the basic canons of justice that no one can be condemned unheard and no order prejudicially affecting any person can be passed by a public authority without affording him reasonable opportunity to defend himself or represent his cause.

22. As a general rule, an authority entrusted with the task of deciding lis between the parties or empowered to make an order which prejudicially affects the rights of any individual or visits him with civil consequences is duty bound to act in consonance with the basic rules of natural justice including the one that material sought to be used against the concerned person must be disclosed to him and he should be given an opportunity to explain his position.

This unwritten right of hearing is fundamental to a just decision, which forms an integral part of the concept of rule of law. This right has its roots in the notion of fair procedure. It draws the attention of the authority concerned to the imperative necessity of not overlooking the cause which may be shown by the other side before coming to its decision.

18. The proposition laid down in the above noted judgments represents one of the basic cannons of justice that no one can be condemned unheard and no order prejudicially affecting any person can be passed by a public authority without affording him the reasonable opportunity to defend himself or represent his cause.

19. As a general rule, the authority entrusted with the task of deciding the lis between the parties or empowered to make an order which prejudicially affects the rights of any individual or visits him with civil consequences, is duty bound to act in consonance with the basic rules of natural justice including the one that material sought to be used against the person concerned must be disclosed to him and he should be given an opportunity to explain his position. This unwritten right of hearing is fundamental to a just decision which forms an integral part of concept of rule of law. This right has its roots in the notion of fair procedure. It draws attention of the authorities concerned to the imperative necessity of not overlooking the cause which may be shown by the other side before coming to its decision.

20. In the case reported in CHATAK AGRO INDIA PRIVATE LIMITED v. COMMISSIIONER OF AGRICULTURE , this Court held that no person shall be visited with a non-speaking order and without providing an opportunity to defend his case and that any order affecting the interest of a person shall comply with principles of natural justice and that one of the facets of principles of natural justice is to record valid reasons supporting the conclusion and giving reasons is a sine-qua-non for exercise of quasi-judicial power and that if reasons are not assigned, the order however laudable in its result cannot be commended.

21. The aspect of affording opportunity to the affected individuals would assist the decision making authority to arrive at a reasonable and valid conclusion. In the instant case, the case of the petitioner is that the impugned order was passed without prior notice or opportunity of being heard to the petitioners. The counters filed by the respondents 1 to 4 and 5 to 7 are absolutely silent as to whether any such show cause notice or opportunity of being heard was provided to the petitioners. The said action, in the considered opinion of this Court is in total violation of principles of natural justice in view of the ratio laid down in the above referred judgments.

17. While dealing with the third point, the Tribunal held that when certain allegations are made after examining the record, the burden shifts on the appellant to explain as to how he is not liable and no specific effort of the appellant is found to explain the alleged misappropriations and the surcharge officer in the absence of the material in contra rightly decided the issue basing on the inspection report.

18. In W.A.No.1262/2004, a Division Bench of this Court by order dated 01.09.2004, held as under:-

Learned counsel for the appellant, before the learned Single Judge, with reference to Section 52 of the Act, urged that the said provision is not applicable, in case, Respondent No.2 had thought it appropriate to consider the representation dated: 17.7.2004 submitted by the members and residents of the colony. Section 52 of the Act could have been invoked by the second respondent on his own motion or on the application or a creditor of the society, and, Respondent No.2 would have thereafter either inspected or directed inspection of the books of the Society. Representation of the members of the society or allegation made therein will not empower the Registrar to order inspection. He also represented that, at the most, Section 51 of the Act would have been invoked. But, that was not invoked. The learned Single Judge turned down the request without even taking up the said question raised by the petitioner. When Appeal was taken up for consideration, we have asked learned counsel for the respondents to take appropriate instructions in the matter. Learned counsel for respondents, rightly and frankly, concedes that in the given facts and circumstances, orders could not have been passed by Respondent No.2 under Section 52 of the Act directing inspection of the books of the Society. We also find that on the given facts, order of the respondent No.2 is bad in law, and, contrary to the letter and spirit of Section 52 of the Andhra Pradesh Cooperative Societies Act, 1964. Consequently, we allow the appeal, and, set aside the impugned order with liberty reserved to the respondents to deal with the representation of members of the Society in accordance with law. No costs. In CHALLA SANYASINAIDU v. DEPUTY REGISTRAR OF CO-OP. SOCIETIES, SRIKAKULAM (supra 1), this Court at paragraph 11, held as follows:-

11. The Scheme of Section 60 of the Act in our view unfolds itself as follows:-

In the course of inspection under Section 52 of the Act, the Registrar may cause the inspection of Books of the Society with a view to find out the irregularities, acts of omission and commission. This enquiry is only administrative in nature, and if the Registrar prima facie is satisfied of the irregularities on the basis of the report of the enquiry officer, he may initiate surcharge proceedings under Section 60. That report may form the basis for the Registrar to proceed under Section 60 and issue a surcharge order eventually. The person against whom a report is sent under Section 52 has no opportunity to squarely meet the allegations against him at that stage. He is not allowed to cross examine the witnesses from whom statements are recorded implicating his involvement. He cannot also adduce rebuttal evidence. That is not the stage where a demand can be made against him to pay back the sum or liability fastened to him as per the report of the enquiry officer. On the contrary, Section 60 clearly contemplates an opportunity being given to the delinquent by making a representation. In our view, this is the proper occasion where the officer or the servant has to be given an opportunity of explaining his stand and allow him to participate in the enquiry before a final order is passed. This is a valuable right given to the delinquent which cannot be brushed aside in a routine manner. 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 shall 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. Therefore, we respectfully agree with the view taken by the learned Judge in S. Rama Subba Rao v. President, Kaikaluru Irrigation and Power Department Sub-Divisional Employees Co-operative Credit Society Limited (supra). Even in Mohd. Ghouse v. Deputy Registrar of Cooperative Societies, Vikarabad and others (supra) the learned Judge has rightly observed that the proviso to Section 60 mandates adequate opportunity before passing the order, and the issuance of notice proposing to fix the liability under Section 60 is imperative and as such there is no breach of principles of natural justice. Having said so, the learned Judge went on observing that Section 60 is an immediate and necessary consequence of enquiry and audit and inspection and the enquiry for the second round is considered to be superfluous and the affected person is not prejudiced or disadvantaged as the enquiry is done in anterior proceedings. These later observations of the learned Judge appear to strike a contrary note, and we do not therefore subscribe to the same.

In S.RAMADAS v. THE SUBORDINATE JUDGE, (CO-OPERATIVE TRIBUNAL), KOTHAGUDEM AND OTHERS (supra 2), this Court at paragraph 2, held as follows:

2. In-so-far as the misappropriation aspect is concerned, it is alleged that Rs. 100/-towards sales-tax which is said to have been collected, is not reflected in the account books. The other acts relate to dereliction of duties. The acts relating to dereliction of duties re not stated with precision. The explanation of the petitioner is that he is not liable for payment of any of the amounts claimed against him including the above amount of Rs. 100/- found to be deficient on account of the sales tax collection. His explanation is that there was a regular accountant who was managing the accounts and that he was no way concerned with any of the amounts mentioned in the surcharge proceedings. 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. That apart, the initiation of proceedings under S. 60 are hopelessly time barred. It is curious to note that the petitioner was on deputation for the period from 10-12-1965 to 25-7-1967, allegations were levelled against him with regard to the dereliction of duties for the above said period. The petitioner was repatriated on 25-7-1967, promoted as a Tahsildar during the year 1975 and had also retired from service with effect from 30-11-1978. Admittedly, a show cause notice was issued for the first time under S. 60 of the Act and served on the petitioner only on 27-8-1980. By no stretch of imagination can the authorities be permitted to sleep over the matter that long and then initiate proceedings, that too, penal in nature, at their sweet will and pleasure and as and when they want. Even according to the Society, because of the long lapse of time, most of the records were not traceable. For the reasons that no independent enquiry which ought to be conducted by the second respondent was not conducted in exercise of his powers under Sec. 60 of the Act and that the surcharge proceedings under Sec. 60 of the Act were initiated at a much belated stage, that too, after the retirement of the petitioner-from service, the same are held as unsustainable. In the circumstances, the orders passed by the second respondent and partially confirmed by the first respondent are set aside and consequently the petitioner is exonerated of the financial liability. In A.N.RAO v. DISTRICT CO-OPERATIVE OFFICER/JOINT REGISTRAR, KRISHNA DISTRICT (supra 3), this Court at paragraphs 8, 9 and 10, held as follows:

8. From a perusal of this, it is evident that inquiry under Section 51 can be initiated under four circumstances, viz., (a) suo motu, by the Registrar, (b) on a petition submitted by a society, to which the other society is affiliated,

(c) on a requisition by one third of the members of the Managing Committee, or, (d) at the instance of the one fifth of the members of the General Body.

9. In the instant case, the 1st respondent ordered inquiry suo motu. The petitioner contends that an inquiry caused, at the instance of the local Legislator; cannot be treated as suo motu.

10. Basically, the allegation of the petitioner, that the inquiry was initiated at the instance of the local Legislator; is denied, and it is categorically pleaded that the 1st respondent took the step on the basis of the report submitted by the Audit Officer. In this regard, it needs to be noted that, once the 1st respondent is conferred with the power to order enquiry suo motu, the information that can constitute the basis for such initiation, cannot be restricted to any source. As long as the suo motu power is conferred, even a representation received from any source, can be treated as the basis. The very purpose of conferring suo motu power, is to relieve the concerned authority from the rigor of depending any definite source, for initiation of the proceedings. Therefore, this Court is not inclined to accept the contention, advanced on behalf of the petitioner.

In the case M.V.R.REDDY v. DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES (supra 4), this Court at paragraph 12, held as follows:-

I am of the considered opinion that even the aforesaid two judgments may not render any assistance to the submissions made on behalf of the petitioner. Here is a case, where an independent enquiry has been initiated under section of the Act and reasonable opportunity was afforded to the petitioner, proceedings were repeatedly adjourned at the instance of the petitioner and yet the petitioner has chosen not to submit his explanation. There was no other material before the authority concerned, except the material on record made available to the authority prepared under section 52 of the Act. The material could definitely constitute reason for initiating action.

Even the showcause notice dt.25.8.1990 does not say as to why the order of surcharge should not be passed against the petitioner, as he is found responsible for mis-appropriation of the funds of the society in terms of Inspection report under Section 52 of the Act. The showcause notice, on the other hand, gives details of the amounts alleged to have been misappropriated by the petitioner. Nothing prevented the petitioner to raise an objection and no reason is forthcoming from the petitioner as to why he had failed to peruse the records inspite of an opportunity given to him.

The conduct of the petitioner suggests that he was making an attempt for eternal postponement of the proceedings initiated against him under Section 60 of the Act.

The material available on record against the petitioner, including the Inspection report prepared and submitted under section 52 of the Act could not have been ignored by the Registrar and the same was taken into consideration and rightly so, in my considered opinion, the petitioner could have satisfied the Registrar as to why such material should not be taken into consideration. Having failed to do so, the petitioner cannot be allowed to raise hue-and-cry in this writ petition. Fairness is not one was affair.

In the case KOLLURI BHASKARA RAO v. DEPUTY REGISTRAR OF CO- OPERATIVE SOCIETIES, GUDIVADA, KRISHNA DISTRICT (supra 5), this Court at paragraph 8, held as follows:-

8. The grounds on which the petitioners have disowned their liability are that there was no entrustment of work; no deficiency of the funds of the society caused at their instance and for the loss caused by others, the petitioners should not have been made responsible. The management did not supply the material to the petitioners which was the basis for the management to initiate the proceedings in question. They also contended that during enquiry no opportunity of either adducing evidence of hearing has been given to them. The same contentions were raised before the tribunal. The tribunal found that the orders passed by the Co-operative Authorities fixing the liability on the petitioners based on proper appreciation of evidence. The tribunal being an appellate authority again went through the entire material and found that there is no illegality or irregularity in the orders passed by the authorities fixing the liability on the petitioners. The findings given by the tribunal are on reappreciation of evidence and consideration of all the contentions which were raised by the petitioners. The tribunal and the Co-operative authorities serutinised the material properly and reached correct conclusion fixing the liability on the petitioners. The petitioners have not shown how the orders under challenge have resulted in depriving of their fundamental rights or violation of any legal or statutory right nor they are result of non-compliance of principles of natural justice. Thus, the liability part on the petitioners is concerned.

We see no reason to interfere with the impugned orders. So far as interest ordered by the tribunal and the authority is concerned, we think that justice will be met if the same is reduced to 10% instead of 18%. Thus, we direct the petitioners in both the writ petitions to pay the amount ordered to be due from them with 10% interest in eight equal installments with a single default clause. First installment commencing from First July, 1998.

19. It is to be noted that the proceedings under Section 60 of the Act are independent in nature and they are original proceedings and it is the duty of the officer authorised under the said Section to consider the entire material available on record independently by duly observing the principles of natural justice also. The Tribunal in the instant case completely lost sight of the basic reality that it was dealing with the proceedings having civil consequences. A reading of the order of the Tribunal clearly and manifestly shows that the Tribunal did not take into consideration the principles laid down by this Court in the above referred judgements and the very object and intention of the legislature behind Section 60 of the Act. Non appreciation of the issue involved in the case would be Writ large on the face of the order of the Tribunal since the Tribunal, while dealing with the point of jurisdiction raised by the petitioner, held that the same is a technical one. In fact, the said aspect touches the very root of the matter if it is tested in the light of the ratio laid down by this Court in the judgment in W.A.No.1262/2004 when it is the categorical case of the petitioner herein that the provisions of Section 52 of the Act cannot be pressed into service based on the complaint/petition made by the members of the society and the Tribunal ought to have considered the said aspect and ought to have recorded a finding on the same by taking into consideration the principle laid down by this Court in the above referred judgment. The said important and indispensible aspect is obviously lacking in the order passed by the Tribunal.

20. It is also the contention of the petitioner herein that even though, he issued a telegram on 26.03.2003, requesting the officer under Section 60 of the Act to grant 20 days time in view of the illness of his son and no further notice was given to him indicating the date of enquiry, the Tribunal ought to have considered the said aspect in the light of the principles of natural justice.

21. On the directions of this Court, record pertaining to O.A.50/2007 has been sent which contains grounds of appeal filed by the petitioner herein, the letter addressed by the Sub-Divisional Cooperative Officer, Narsipatnam requesting the President of the Society to provide all the books and records of the society for inspection, letter addressed by the Sub-Divisional Cooperative Officer, Narsipatnam to the Secretary of the Society requesting to hand over the records contained therein and the records referred therein, the receipt containing the signatures of the petitioner and the Sub-Divisional Cooperative Officer, handing over the audit reports for the year 1997-1998, 1998-1999 and 1999-2000, loan Ledger I issued up to 197 pages, loan Ledger II issued from 1 to 3 papers, Cash Book Volume No.1 from pages No.12 (23-5-1997 to 31.03.2001) to 172, Cash Book No.II from 3-4-2001 to 8.3.2002 (page No. 1 to 27) and receipts 29 for the year 2001-2002, the telegram dated 26.03.2003 issued by the petitioner requesting 20 days time on the ground that his son was under treatment, the surcharge order dated 28.06.2003, the order of this Court dated 13.12.2006 in W.P.Nos.7762 of 2002 and 17915 of 2003, summons dated 17.10.2006 issued by the Enquiry Officer, sworn statement of the petitioner, demand notice dated 13.2.2006, legal notice dated 11.03.2007 issued by the counsel for the petitioner, Form No.14 (a) dated 01.06.2007 and the representation dated 10.06.2007 submitted by the petitioner to the Deputy Registrar.

22. The said record does not contain the summons dated 19.04.2003, penal notice dated 02.06.2003 and the telegram dated 10.06.2003. The Tribunal in the impugned order recorded a finding that the record is evidencing issuance of summons and telegram after service of surcharge notice.

23. In view of the above factual situation and contentions and submissions of the petitioner, this Court has no hesitation to come to a conclusion that the Tribunal failed to consider the issue from proper perspective and in accordance with the provisions of the legislation. The Tribunal, in the considered opinion of this Court did not consider the issue of jurisdiction in the light of the provisions of Section 52 of the Act and the also failed to consider the ratio laid down by this Court in the Judgment in W.A.No.1262/2004 and also failed to consider the impact and the effect of the principles of natural justice, as such, this Court deems it appropriate to remand the matter for fresh consideration by the Tribunal by setting aside the Judgment dated 13.07.2009 passed by the A.P. Cooperative Tribunal, Visakhapatnam in O.A.No.50/2007.