Andhra HC (Pre-Telangana)
Tammineedi Subba Rao vs Deputy Registrar Of Coop. Societies, ... on 23 June, 1998
Equivalent citations: 1998(4)ALD197, 1998(4)ALT293
ORDER
1. A short but an important question of law of general importance fells for decision in this writ petition. The question is whether a surcharge proceeding initiated by the Registrar of Co-operative Societies under Section 60 of the Andhra Pradesh Co-operative Societies Act, 1964, for short 'the Act', on the basis of the report of enquiry conducted under Section 51 of the Act becomes invalid and one without jurisdiction solely on the ground that such proceeding was initiated before the report of enquiry along with the findings of the Registrar thereon is placed before the general meeting of the concerned society.
2. The facts leading to the filing of the writ petition be stated briefly as under :
The Joint Registrar/District Co-operative Officer, West Godavari district, Eluru vide his proceedings R,C.(Coopn.) No.1974/95-A dated 13-3-1995 ordered an inquiry into the affairs of the Mrutyanjaya Cooperative Rural Bank Limited, Achanta, the fourth respondent herein. During the enquiry, it was found that Sri Tammineedi Subba Rao, the petitioner herein, as President of the fourth respondent-Society and one C. Umamaheswara Rao, as the Secretary invested a sum of Rs.3.45 lakhs in the Ajjaram Primary Agricultural Cooperative Society out of which a sum of Rs. 1.45 lakhs was recovered leaving a balance of Rs.2.00 lakhs. The amount was not realised till date causing erosion of assets of the fourth respondent Bank. It was found that the petitioner and the said C. Umamaheswara Rao were responsible for investment of funds of the Bank in violation of the provisions of Section 46 of the Act, and they failed to recover the balance amount from Ajjaram Primary Agricultural Cooperative Society. In view of the aforementioned finding recorded in the enquiry report, the first respondent-Deputy Registrar of Cooperative Societies, Bheemavaram, West Godavari District, thought it fit to initiate surcharge proceeding under Section 60 of the Act to recover the loss caused to the fourth respondent-society. Accordingly the first respondent has issued the show cause notice bearing R.C.No.289/ 96-B/D (Surcharge I) dated 4-10-1996 impugned in this writ petition calling upon the petitioner to show cause why a sum of Rs.2.00 lakhs with interest at 11.5% from 29-12-1989 till the date of realisation should not be recovered from the petitioner and C. Umamaheswara Rao, the then Secretary of the fourth respondent-bank jointly and severally.
3. The learned Counsel for the petitioner would contend that according to Section 51, the report of enquiry along with the findings of the Registrar thereon shall be placed before the next general body of the Bank, and in the instant case, the Section 51 enquiry report dated 31-5-1996 of the enquiry officer was not placed before the general body of the Bank along with the findings of the first respondent herein who is the Registrar for primary societies, before issuing the impugned notice dated 4-10-1996 under Section 60(1) of the Act, and as such the impugned notice should be held to be one without jurisdiction and competence. In support of his submission the learned Counsel for the petitioner placed reliance strongly on the two judgments of this Court, the judgment of M.N. Rao, J., as he then was, in B.Sreenivasulu and others v. The Government of Andhra Pradesh, represented by its Secretary, Food and Agriculture Department, Secretariat, Hyderabad and others (in W.P.No.6175/88 dated 27-3-1989), and the judgment of Dr. Motilal B. Naik, J., in Gundeti Dathadri and others v. The Assistant Director of Handlooms and Textiles, Nalgonda District (in W.P.No.13944/91 dated 14-7-1994). The learned Counsel also stated that I too following the aforementioned two judgments granted the relief in some writ petition without disclosing the details of the writ petition. I do not remember any such decision being rendered by me. Be that as it may, if the statement of the learned Counsel for the petitioner is correct, then, I should state that the decision rendered by me is wrong and I stand corrected myself for the reasons I propose to give in this judgment.
4. The Registrar of Co-operative Societies is an important statutory functionary under the Act on whom important regulatory and controlling powers are conferred. Power under Section 60 of the Act is one such important power, Section 51 provides that the Registrar may, of his own motion and shall, on the application of a society to whim 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. Section 51 further mandates that such inquiry shall be completed within a period of four months from the date of commencement of the enquiry and the report of enquiry along with the findings of the Registrar thereon shall be placed before the next general meeting of the society. The object behind the insistence that the report of enquiry along with the findings of the Registrar thereon shall be placed before the next general meeting of the society is to apprise the members of the society about the constitution, working and financial condition of the society, and to aid and help the general body to efficiently supervise over the functionaries of the Committees of the society. Section 51 does not deal with what the general body or the Committee should do after the report of the enquiry along with the findings of the Registrar is placed before the general meeting of the society. But, it is permissible for the general body or the Committee to move the Registrar to take action under Section 60 of the Act to recover the loss caused to the society from the concerned officer or servant of the society. But, there is no legal compulsion cast on the general body or the Committee of the society under Section 51 to do so. It is a matter left to their discretion.
5. Sub-section (1) of Section 60 reads as under :
60. Surcharge :-(1) Where in the course of an audit under Section 50 or any 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 organisations, affair or management of the society or any part or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or has been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made any payment contrary to the provisions of this Act, the rules or the bye-laws the Registrar himself, or any person specially authorised by him in this behalf, of his own motion or on the application of the Committee, liquidator or any creditor or contributory, 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 retainer, 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 subsection unless the person concerned has been given an opportunity of making his representation.
6. The provisions of sub-section (1) make it abundantly clear the Registrar can initiate surcharge proceeding under a variety of circumstances, not necessarily only when he is moved by the committee or the general body of the concerned society by way of an application. The Registrar can initiate surcharge proceeding suo moto or on the application of liquidator or any creditor or contributory. The power to initiate surcharge proceeding is an important power vested in the Registrar to recover the loss caused to a society from the concerned officer or servant of that society. There is nothing explicit in sub-section (1) of Section 60 or anywhere else in the Act or the Rules framed thereunder to suggest that the Registrar cannot invoke his power under Section 60(1) of the Act unless the report of enquiry conducted under Section 51 of the Act along with the findings of the Registrar thereon is placed before the general meeting of the society. Alternatively, there is no warrant or rationale to read this condition into the provisions of sub-section (1) of Section 60 as a condition precedent for initiating surcharge proceeding by way of interpretation/construction by the Court. When the legislature in its wisdom has conferred the power on the Registrar to initiate surcharge proceedings suo moto also, the Court by way of interpretation cannot either condition or curtail or limit that power. The power vested in the Registrar under Section 60(1) of the Act is an independent power and it has nothing to do with, nor is it controlled by, the obligation cast on the Registrar or the person authorised by him to place the report of enquiry conducted under Section 51 along with his findings thereon before the general meeting of the society. If the argument of the learned Counsel for the petitioner is accepted, that would tantamount to the Court modifying the statute, and such a course is impermissible for the Court where the statute is plain and unambiguous, and it does not admit more than one meaning. The Court cannot cause violence to the statute, and language of the statute should be read as it is. There is no scope for application of the mischief rule. On the other hand, if the interpretation placed by the learned Counsel for the petitioner is accepted that would add mischief to the statute instead of avoiding it
7. Strictly speaking, and construing the provisions of sub-section (1) of Section 60 of the Act by applying the "golden rule" of interpretation, it can be said that the Registrar need not await even the submission of the report of enquiry conducted under Section 51 of the Act before he initiates surcharge proceeding. I say this because of the phrase "in the course of" occurring in sub-section (1) of Section 60 of the Act. The phrase "in the course of has got several meanings and in fact may mean different things in different contexts. But looking to the context in which it is used in sub-section (1) of Section 60 of the Act and gathering the natural meaning of the phrase in the context, the phrase "in the course of" must be held to mean in the process of the enquiry. The Supreme Court in State of Travancore v. Shanrnugha Vilas Cashewnut Factory, Quilon, AIR 1953 SC 333 held that the word "course" etymologically denotes movement from one point to another and the expression "in the course of" not only implies a period of time during which the movement is in progress but also postulates a connected relation in Webster's New International Dictionary Volume II, besides other things, the word "process" has been defined to mean "the course of procedure, something that occurs in the series of action". The words "course" and "process'' do not pin point a point or a stage, but consist of many points or stages. Every course or process must have a beginning and an end, and in between the two, a series of action take place. Therefore, a course or a process is a gradual movement from point to point or stage to stage, from the beginning to the end. The end or culmination of the course or process cannot be equated to the course or process itself The process or course of enquiry under Section 51 of the Act may culminate in the report of enquiry, but the report of enquiry cannot be equated to the enquiry itself Course or process of enquiry is transitive whereas the report of the enquiry is not. Therefore, it is permissible for the Registrar to initiate surcharge proceeding under Section 60(1) of the Act even before preparation and submission of the report of enquiry by the enquiry officer, if the Registrar thinks that any delay in initiating the proceeding under Section 60(1) of the Act would cause prejudice to the interest of the concerned society or if there is likelihood of the concerned officer or servant of the society disposing of or alienating the ill-gotten property in favour of third parties to defeat the legitimate claims of the society,
8. Section 60(1) does not mandate that the Registrar shall initiate surcharge proceeding only after the report of enquiry conducted under Section 51 is placed before the general meeting of the society. In W. P.No.6175/88, the Court directed that "unless the report of the fifth respondent (i.e., the report of enquiry) is placed before the general body meeting of the society, no steps under Section 60 of the A.P.Co-operative Societies Act or under any other provisions of the Co-operative Societies Act shall be taken against the petitioners," If the statute does not so direct, but the Court has to direct, then, there must be valid reasons for the Court to do so. Since no reason is given by the Court in the judgment to issue such direction, what weighed with the Court to issue such direction remains unknown, and is left to one's imagination. Is it because of the reason that the Registrar cannot initiate surcharge proceeding without application of the Committee of the concerned society ? Answer to this question shall be emphatic "no'' because Section 60(1) specifically empowers the Registrar to initiate surcharge proceeding suo moto also, as well as on the application of the liquidator or any creditor or contributory, and not necessarily on the application of the Committee of the concerned society. If that is not the valid reason, is there any other reason to support such direction ? The learned Counsel for the petitioner is not in a position to state any reason or ground why this Court should direct the Registrar not to initiate surcharge proceeding under Section 60(1) of the Act before the enquiry report is placed before the general meeting of the society. I, too, do not find any valid ground or reason to condition or limit the exercise of the power specifically granted to the Registrar under Section 60(1) of the Act.
9. Now let me consider the two decisions on which the learned Counsel for the petitioner placed strong reliance. In W.P.No.6175/88 many reliefs were sought. Among them, the petitioners therein sought for declaration that "the action of the second respondent-Registrar in not placing the report of the enquiry of the fifth respondent along with his recommendations before the general body of the third respondent in discharge of mandatory functions as contemplated under Section 51 of the A.P. Cooperative Societies Act, 1964 and any action of the respondents in the light of the report of Respondent No.5 before the same is placed before the general body of the third respondent society as illegal and void, without power and jurisdiction, mala fide and opposed to the earlier judgments of this Court". That judgment does not refer to the contentions of the parties, if any, nor the issues before the Court. There is no discussion on any point. The order reads :
"The Court made the following order :
After hearing the learned Counsel for the petitioner Sri M.R.K. Chowdary, learned Advocate General for the State Government and Sri D. Sudharshan Reddy for the third respondent Co-op. Society and considering all the facts and circumstances of the case, I am of the view that the following direction would meet the ends of justice.
The petitioners shall be permitted to peruse the report of Sri M. Krishna Swamy, 5th Respondent, and whatever portions thereof the petitioners want, the third respondent shall make available one xerox copy of the same on payment of the necessary expenses in that regard. For this purpose it is agreed that the petitioners should go to the office of the third respondent society on 2-4-89 at 11.00 a.m. within one week from the date of the request of the petitioners after perusing the report, one copy, of the relevant portions shall be made available to all the three petitioners. Unless the report of the fifth respondent is placed before the "General Body Meeting of the Society" no steps under Section 60 of the A.P. Coop. Societies Act or under any other provisions of the Cooperative Societies Act shall be taken against the petitioners. The third respondent shall take immediate steps to call for the General Body meeting for the purpose of placing the report of the fifth Respondent before the General Body.
The writ petition is accordingly disposed of. No costs."
10. W.P.No. 13933/97 was directed against the order dated 19-9-1991 in S.A.No.4 of 89 on the file of the Co-operative Tribunal (Principal District Munsif) Bhongir, Nalgonda District confirming the proceedings of the Assistant Director of Handlooms and Textiles, Nalgonda district in RC.No. 285/8 8-C, dated 10-8-89 and seeking a consequential direction to the Assistant Director of Handlooms and Textiles, Nalgonda district to place the report of the enquiry officer along with his recommendations before the General Body of M/s. Bandasomaram Tern Cotton and Silk Handloom Weavers' Cooperative Production and Sales Society Limited, Bandadomaram. The learned Judge after referring to Section 51 of the Act was pleased to observe the following and pass the following order as under :
"The requirement of this provision makes it very clear that once an enquiry report is available pursuant to the initiation of enquiry, such report shall necessarily be placed before the next general body meeting.
The specific case of the petitioners is to the effect that though the enquiry report was available, the same has not been placed before the general body and therefore, action pursuant to the enquiry report initiated, vitiates and cannot have legal sanctity.
In the counter-affidavit, the respondents have now come forward stating that the general body meeting has been convened after the filing of the writ petition and the report of the enquiry officer was also placed before the general body and therefore, such an action would amount to complying with the provisions contemplated under Section 51 of the Act.
The Court below before whom the petitioners chose to challenge the order of recovery of the amount, though specific plea of violation of Section 51 of the Act has been agitated, had failed to address itself on this aspect and had not rendered a decision in this behalf.
Having regard to the provisions contemplated under the Act, I am of the view that the orders impugned cannot sustain and accordingly, they are set aside. Even though a belated attempt has been made by the respondents to place the matter before the general body after giving a clean-chit to the petitioners. Therefore, looking from any angle, the report submitted by the Enquiry Officer could not be of any assistance to the respondents seeking recovery of the amount from the petitioners.
In view of these factors, the writ petition is allowed. No costs."
11. From these two judgments, it is quite clear that the learned Judges did not construe/ interpret the provisions of Section 60 of the Act nor the learned Judges have given any reason to uphold the contention of the petitioners therein that the Registrar has no power to initiate surcharge proceeding under Section 60 of the Act before the report of enquiry along with the findings of the Registrar thereon is placed before the general meeting. At the most, one can say that since the relief was granted in those writ petitions, the learned Judges must be deemed to have accepted the contentions of the petitioners therein. A deemed acceptance of a contention can never be equated to a reasoned decision or treated as a binding precedent. When the Court pointedly asked the learned Counsel for the petitioner to show or demonstrate how the Registrar of Cooperative Society has no competence to initiate surcharge proceeding under Section 60(1) of the Act before placing the report of enquiry along with the findings of the Registrar thereon is placed before the general meeting of the society, the learned Counsel was not able to say anything except stating that the facts of this case are similar to those in W.P.No.6175/88 and W.P.No.13944/91 and therefore the petitioner herein is also entitled to the same relief. The submission of the learned Counsel is quite startling, and the Court cannot grant a relief to a party without assigning reasons.
12. It is needless to state that the orders of the learned single Judges passed in writ petitions filed under Article 226 of the Constitution of India arc subjected to further judicial review by way of Writ Appeal to the Division Bench and by the Supreme Court under Article 136, The Courts in India have spelled out a general obligation for adjudicatory bodies and Courts to give reasons for their decisions arising out partly from natural justice, and partly from Constitutional provisions, viz., Articles 32, 136, 226 and 227 which provide for judicial review. When the order, of a single Judge of High Court is subjected to further judicial review by the Court above, i.e., Division Bench or Full Bench of the High Court, and the Supreme Court, and if single Judge does not give reasons for his or her decision, the Courts above and the Supreme Court cannot exercise power of judicial review effectively and they will be at a loss to understand the working of the mind of the concerned Judge, and so it will not be possible to decide whether there is any legitimate ground for the Court above or the Supreme Court to interfere with the decision of the single Judge of the High Court. In Maneka Gandhi v. Union of India, , Bhagwathi, J, stressed that giving of reasons is a healthy check against abuse or misuse of power. High Courts are not exempted from this requirement of giving reasons in support of the decisions when their decisions are subjected to further judicial review by the Court above or by the Supreme Court. Added to this Constitutional requirement, the duty to give reasons in support of the decision is a safeguard against arbitrariness. Compulsion of disclosure of reasons in support of decision or conclusion guarantees consideration, and minimizes chances of unconscious infiltration of personal bias and extraneous considerations. Above all, if a party who loses his case in a litigation knows the reasons which weighed with the Court in rejecting his claim, and if he is satisfied with the reasons, he may not pursue further legal remedies and accept the decision as valid. On the other hand, if no reasons are given in support of the decision, he is likely to think that the decision, is arbitrary and unreasonable, and pursue further legal remedies. The Court should not grant a relief without assigning reasons for grant of the relief There are many pronouncements of the Supreme Court and this Court cautioning against exercise of jurisdiction characterised more by benevolence than on settled legal principles. A relief must be such as could be considered permissible in law and worked out by the application of legally recognised principles. The decision must have legitimacy of legal reasoning and should not incur the criticism of lacking objectivity of purpose, and rational and legal justification.
13. Adverting to the argument of the learned Counsel for the petitioner that the facts of this case are "fully covered" by the decisions delivered in W.P.No.6175/88 and W.P. No.13944/91. suffice it to repeat what I said in Sujana Granites v. Mandava Rambabu, and G Sambasiva Rao v. A.P. State Road Transport Corporation and others, . Dealing with a similar submission, in para 26 of the judgment delivered in Sujana Granite's. case I observed thus :
"A statement in a judgment, in order to be a ratio, a particular point or question should be addressed to the Court for consideration and resolution; the Court should apply its mind to that question in the premise of the law governing the question, and state the principle to resolve that question and pronounce its opinion on the basis of such principle. Then only such statement becomes a ratio, not otherwise. A ratio is the rationale of a decision; the decision itself is not the ratio. Therefore, mere conclusion of a Judge without stating the principle as the basis for the conclusion cannot be a ratio. Similarly, the relief granted to a party without the involvement of any principle cannot be equated to a ratio."
14. The following observations of the Supreme Court in State of U.P. v. Synthetics and Chemicals Ltd, are quite apposite :
"...... the English Courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. A decision passes sub-silentio in the-technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind". (Salmond on Jurisprudence 12th Edn., p.153). In Lancaster Motor Company (London) Ltd., v. Bremith Ltd., (1941) 1 KB 675, (1941)2 All ER 11) the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words of the ride and without any citation of the authority'. It was approved by this Court in Municipal Corporation of Delhi v. Gurnam Kaur, . The Bench held that, 'precedents sub-silentio and without argument are of no moment'. The Court thus have taken recourse to this principle for relieving from injustice prepetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decidendi".
15. The Supreme Court in B. Shama Rao v. Union Territory of Pondicherry, held that "a decision is binding not because of its conclusions but in regard to its ratio and the principle laid down therein".
Ratio decidendi is rationale of a decision and I do not find any rationale in the two decisions cited by the learned Counsel for the petitioner, and therefore there is no scope for application of the Stare decisis doctrine.
16. In the result and for the foregoing reasons, the question posed to the Court and noted at the beginning of the judgment is answered negatively. Consequently the writ petition is dismissed with no order as to costs. However, the petitioner is granted three weeks time from today to file his reply, if not already filed. The Deputy Registrar of Co-operative Societies, Bheemavaram, West Godavari district is at liberty to take further steps under Section 60 of the Act in pursuance of the impugned show cause notice R.C.No. 289/96-B/D (Surcharge I) dated 4-10-1996.