- (1.) HEARD Mr. C.Aditya, the learned counsel for the petitioner and the Assistant Government Pleader for Co-operation.
(2.) THE writ petitioner worked as Secretary of the 3rd respondent - THE Primary Agricultural Co-operative Credit Society, Salampahad, Bodhan Mandal, Nizamabad, during the period from 1975 to 1987. While so, during the period from 1.7.1984 to 30.06.1985 there was deficit of stock in the rice, sugar, palm oil, wheat, kerosene, fertilizer and cloth, in the consumer shop run by the society and during the said period, one Rama Goud was the sales man, who worked from 5.3.1983 to 9.4.1985. On 9.4.1985, the said sales man proceeded on leave and though the leave expired on 14.4.1985, he did not return. As there was deficit in stock, the Divisional Cooperative Officer, Bodhan, conducted the enquiry under Section 51 of the A. P. Cooperative Societies Act, 1964 (for short 'the Act') and submitted report dated 31.1.1994, holding that the value of the deficit stock is Rs. 33,377-86 and fixed the liability on the petitioner at Rs. 16,688-93. Hence, the petitioner was given show cause notice under Section 60 of the Act, calling for his explanation and he submitted report and not being satisfied with the same, the Deputy Registrar of Co-operative Societies, Bodhan, passed surcharge orders under Section 60(1) of the Act on 29.3.1995. Challenging the same, petitioner filed appeal before the Co-operative Tribunal, Hyderabad under Section 76 of the Act in C.T.A.No.97/1995. By order dated 6.3.1997, the Tribunal remanded the matter for fresh disposal and thereafter, again the petitioner was issued fresh notice under Section 60(1) of the Act and he filed his explanation, denying the liability. As per the remand orders dated 6.3.1997 in C.T.A.No.97/1995 of the Tribunal, the report of the enquiry officer was placed before the general body, and the said body accepted the report and based on the same, the 2nd respondent - Deputy Registrar of Co-operative Societies, passed the surcharge proceedings in Rc.No.1319/95-D dated 11.6.1998. Aggrieved by the same, the petitioner filed appeal in C.T.A.No.1999/1998 and the Tribunal confirmed the surcharge proceedings passed by the Deputy Registrar by reducing the rate of interest. Now aggrieved by the same, the present writ petition is filed. The learned counsel appearing for the petitioner contended that the petitioner was only the Secretary and it is the salesman Rama Goud, who is looking after the affairs and he applied for leave and did not return on its expiry and that he is solely responsible for the deficit. He vehemently contended that before fixing the liability on the petitioner, no evidence was recorded and no opportunity was given to cross- examine the witnesses and without recording the evidence and giving opportunity to the petitioner, fixing the liability on the petitioner, is in violation of the principles of natural justice. He contended that filing of the civil suit is barred and hence the enquiry under surcharge shall be akin to that of civil court and in the present case, 2nd respondent, who passed the surcharge proceedings under Section 60, has concluded that there is no need to record the statement of the petitioner and no independent witnesses were examined, and in the appeal, the Tribunal has held that there is no need to record any evidence and the issue can be decided by hearing the arguments and considering the explanation filed by the delinquent and in support of this conclusion the Tribunal relied on the judgment of this court in Borusu Nageshwar Rao v. Secretary A.P. Co-op. Tribunal, Vijayawada and others (1) 2003 (4) ALT 220. He stated that the said judgment was passed while considering the proceeding issued under Section 51 of the Act, and whereas in the present case, the surcharge proceedings were passed under Section 60(1) of the Act and hence the said judgment cannot be relied upon. In support of his contention that before fixing the liability on the petitioner by passing the surcharge proceedings under Section 60 of the Act, an independent enquiry has to be conducted, he relied on the judgments of the learned single Judges of this court reported in S.Rama Subba Rao v. President, Kaikalur Irrigtion and Power Department (2) 1994 (1) APLJ 200 (HC), Lankala Koderu Co-op. Rural Bank Ltd. v. Ungarala Pullaiah Naidu (3) 2002 (6) ALT 380, S.Ramadas v. Subordinate Judge (4) AIR 1993 A.P. 6 and V.V.Satyanarayana v. Chebrolu Primary Agricultural Co-operative Society Ltd. (5) 2009 (5) ALT 92 = 2009 (2) ALD (NOC 23). With these submissions, he sought to set aside the impugned proceedings. The 2nd respondent - Divisional Cooperative Officer, filed counter affidavit on behalf of the respondents and justified the impugned order of the Tribunal and the surcharge proceedings and sought for dismissal of the writ petition. The learned Standing counsel appearing for the respondents reiterated the averments in the counter affidavit and stated that there is lapse on the part of the petitioner. He stated that even assuming that the salesman did not turn up after leave, before taking charge of the godown, the petitioner ought to have conducted panchanama. Since the petitioner is the Secretary of the Society and is the Chief-Executive in so far as the affairs of the society and in-charge of the maintenance of the accounts and also in-charge of the supervision over the employees of the society, there is lapse on his part. Since, he has taken the charge without panchanama and sold the stock, there is lapse on his part, and this is evident from the material available on record and hence there is no need to record any evidence and both the primary authority and the Tribunal, appreciating this aspect, fixed the liability on the petitioner, which is only half of the deficit amount on the ground of joint and several liability. He further contended that the petitioner has not taken the grounds which he is taking in the present writ petition and hence, he cannot be permitted to raise the said grounds. Relying on the Division Bench judgment of this court reported in Kolluri BhaskaraRao v. Dy. Registrar of Co-op. Societies, Gudivada, Krishna Dist. (6) 1998 (4) AID 154 (DB) the learned counsel submitted that the petitioner was given a show cause notice before passing the surcharge orders under Section 60 and he was afforded every opportunity and re-appreciating the entire material available on record, the Tribunal has confirmed the surcharge order and as there are no violation of the principles of natural justice, the impugned orders cannot be interfered with under Article 226 of the Constitution of India. With these submissions, he sought to dismiss the writ petition.
(3.) FROM the material available on record, the charges against the petitioner are that (1) being a chief-executive officer of the society, he failed to check up the stock registers, sales registers and sales bills and took the sale proceeds from the sales man without verifying the sales register with reference to the sales bills and (2) though the keys of godown were with him, he failed to conduct panchanama before he took charge of the stock in the godown and started selling it, when the sales man did not turn up to the duty after expiry of his leave. These charges were held proved in the surcharge proceedings. But from a perusal of the material papers available on record, it could be seen that before holding the petitioner guilty of the said charges, no evidence was recorded and no opportunity was given to the petitioner to cross- examine any witnesses and only based on the explanation submitted by the petitioner, the charges were held proved. Further, the primary authority and the Tribunal concluded that there is no need to record any evidence and the liability can be fixed based on the material available on record. It is to be noticed that there is express bar of the jurisdiction of civil court under Section 121 of the Act and, therefore, the enquiry under Section 60, for fixing the liability, should be akin to civil court enquiry, since the surcharge proceedings are fastening the liability on the petitioner, which have got the effect of depriving the right of property of the petitioner. Therefore, without conducting independent enquiry by recording evidence and giving the opportunity to the petitioner to cross- examine such witnesses, concluding that the charges against the petitioner were proved, is contrary to the principles of natural justice. A learned single Judge of this court in the decision reported in S.Rama Subba Rao v. President, Kaikaluru Irrigation and Power Department (2 supra) held as under: "3. ... It is pertinent to mention that surcharge order fastening liability on any person including that of the petitioner in such a fashion has got the effect of depriving the right to property which was hitherto a fundamental right guaranteed under Art. 31 of the Constitution of India, now transformed into a constitutional guarantee under Article 300-A by which no person can be deprived of his property save by authority of law. The authority of law being in the instant case the statutory provision contained under Section 60(1) of the Act, the rules of fair-play have got to be followed. The rules of fair-play imply that there should be an enquiry wherein opportunity is given to elicit the truth by adduction of oral and documentary evidence, opportunity of cross-examination, opportunity to advance arguments and then passing of a well reasoned order. Dealing with analogues principles of law it was held by a Division Bench of this Court in M.Chennakesava Reddy v. DVL. Co-op. Officer {1972(2) APLJ 16} that a statute requiring affording of opportunity has got to be construed that it implies adherence to the rules of fair-play. 4... Even if the opportunity is afforded at the appellate stage that is not a sufficient compliance of rules of fair- play. It was mandatory on the part of the second respondent herein to conduct enquiry by calling upon the subject society to lead evidence both oral and documentary affording opportunity to the petitioner to cross- examine and also to lead rebuttal evidence and hear the arguments and pass well reasoned order. These aspects have not been considered in proper perspective by the lower appellate tribunal." ;