WRIT PETITION 25007/06 on 16 October 2006

1. S.S.Karri,S/o.LateK.S. Sarma,Hindu, Aged 62 Years,RetiredEmployee R/o. Ring Road, Vizianagaram, Vizianagaram[District.]Employee R/o. Ring Road, Vizianagaram, Vizianagaram[District.]

2. K.S.Sarma S/o. S.S. Karri, Hindu, Aged 40 Years, Occ: Business, R/o.Ring Road, Vizianagaram, Vizianagaram District.Ring Road, Vizianagaram, Vizianagaram District.

AND

...PETITIONERS

1. Deputy Registrar, Co-operative Society, Vizianagaram, VizianagaramDistrict.District.

2. East Coast Railway Employees Consumer Co-operative Stores,Limited, Vizianagaram, rep by Sub-Divisional Co-operative[Officer-cum-]Liquidator, Vizianagaram, Vizianagaram District.Limited, Vizianagaram, rep by Sub-Divisional Co-operative[Officer-cum-]Liquidator, Vizianagaram, Vizianagaram District.

...RESPONDENTS

Petition under Article 226 of the Constitution of India praying that inthe circumstances stated in the affidavit filed therewith, the High Court maybe pleased to issue a Writ of Mandamus, or any other appropriate Writ,order or direction, declaring the action of the 1®* respondent in issuing theNotice U/Sec. 60(1) of the A.P.C.S. Act, in Rc. No. 2/3125/2002-C, dt 16-10-2006 as illegal, arbitrary and without jurisdiction and for a consequentialorder directing the respondents to drop all further proceedings pursuant to#{lie above Notice.

I.A. NO: 1 OF 2006(WPMP. NO: 32020 OF 2006)

Petition under Section 151 CPC praying thatin the[circumstances]statedin the affidavit filedin support of the writ petition, the High Courtmay be pleased grant stay of all further proceedings pursuant to the Noticeissuedby the1®‘ respondent inRc. No. 2/3125/2002-Cdt16-10-2006pending disposal of the above WP.

I-A. NO: 1 OF 2007(WVMP. NO: 56 OF 2007)

Between:

Deputy Registrar, Co-operative Society, Vizianagaram, Vizianagaram District.

...PETITIONER/RESPONDENT -1 in WPAND

1. S.S.Karri,S/o.LateK.S. Sarma,Hindu, Aged 62 Years,RetiredEmployee R/o. Ring Road, Vizianagaram, Vizianagaram[District.]Employee R/o. Ring Road, Vizianagaram, Vizianagaram[District.]

2. K.S.Sarma S/o. S.S. Karri, Hindu, Aged 40 Years, Occ: Business, R/o.Ring Road, Vizianagaram, Vizianagaram District.Ring Road, Vizianagaram, Vizianagaram District.

...RESPONDENTS/PETITIONERS

3. East Coast Railway Employees Consumer Co-operative Stores,Limited, Vizianagaram, rep by Sub-Divisional Co-operative[Officer-cum-]Liquidator, Vizianagaram, Vizianagaram District.Limited, Vizianagaram, rep by Sub-Divisional Co-operative[Officer-cum-]Liquidator, Vizianagaram, Vizianagaram District.

...RESPONDENTS

(Respondent No.2 in W.P. is not necessary party in this petition)

Petition under Section 151 CPC praying that in the[circumstances]stated in the affidavit filed in support of the petition, the High Court may bepleased to vacate the interim ordersin WPMP No. 32020/06in WP No.25007/06 dt. 1-12-2006.

Counsel for the Petitioners: SRI P. RAVI KANTH FORSRI VENKAT CHALLACounsel for the Respondents: SRI A. KRISHNA KISHORE,ASST.GP FOR COOPERATIONThe Court made the following: ORDER

APHC010450672006IN THE HIGH COURT OF ANDHRA PRADESHAT AMARAVATIr(Special Original Jurisdiction)

[3328]

MONDAY ,THE FIFTH DAY OF MAYTWO THOUSAND AND TWENTY FIVE

PRESENT

the honourable SRI JUSTICE GANNAMANENI RAMAKRISHNAPRASAD

WRIT PETITION NO: 25007/2006

Between;

1. S.S. KARRI & ANOTHER, RETIRED EMPLOYEE R/0 RING ROADVIZIANAGARAM,. VIZIANAGARAM DISTRICT.VIZIANAGARAM,. VIZIANAGARAM DISTRICT.

2. K.S.SARMAS/0S.S.KARRI,BUSINESSR/0RINGROADVIZIANAGARAM,. VIZIANAGARAM DISTRICT.VIZIANAGARAM,. VIZIANAGARAM DISTRICT.

...PETITIONER(S)

AND

1. deputy registrar 2 OTHERS, VIZIANAGARAM DISTRICT.

2. EAST COAST RAILWAY EMPLOYEES CONSUMER COOPERATIVEstores, limited, VIZIANAGARAM, REP BY SUB-DIVISIONAL[CO]OPERATIVEOFFICER-CUM-LIQUIDATOR,VIZIANAGARAMVIZIANAGARAM DISTRICT.stores, limited, VIZIANAGARAM, REP BY SUB-DIVISIONAL[CO]OPERATIVEOFFICER-CUM-LIQUIDATOR,VIZIANAGARAMVIZIANAGARAM DISTRICT.

...RESPONDENT{S):

Counsel for the Petitioner(S):

1. VENKATCHALLA

Counsel for the Respondent(S):

-I GP FOR COOPERATION

The Court made the following ORAL ORDER:

Heard Sri P. Ravi Kanth, learned Counsel appearing on behalf of SriVenkat Challa, learned Counsel for the Writ PetitionersandSri A.KrishnaKishore, learned Assistant Government Pleader for Co-operation.

2. The present Writ Petition is filed seeking following[relief:]

to issue a Writ of Mandamus or any other appropriateWrit, order or direction, declaring the action of the1respondentinissuingtheNoticeU/Sec.60(1)oftheA.P.C.S. Act,in Rc.No.2/3125/2002-C, dt 16.10.2006asillegal,arbitraryandwithoutjurisdictionandforaconsequential order directing the respondents to dropallfurther proceedings pursuant to the above Noticeand topass such other order or orders as may deemfit andproper in the circumstances of the case”

3. The facts as projected in the present Writ Petition are as under:

3.1. The Surcharge Proceeding has beeninitiatedagainst theWritPetitionershereinvideProceedingsdated29.03.2004bearingRc.No.3/3125/2002-C.ThisProceedingwaschallengedbytheWritPetitioners before the A.P Co-operative Tribunal, Visakhapatnam(for short theTribunal’) in O.A.No.2 of 2005.Vide Order dated 18.05.2006, the Tribunalwas pleased to allow O.A.No.2 of 2005 filed by the Writ Petitioners byremanding the matter to the Deputy Registrar of CooperativeSocieties,Vizianagaram with a direction to make a fresh enquiry in the light of theobservations made by the Tribunal.

3.2. The Tribunal in the said Order dated 18.05.2006 had held thatanopportunity like supply of copy of Enquiry Report, Statementsof witnessrecorded during the said enquiry and alsoan opportunity to cross-examinethose witnesses or permit the Writ Petitioners toexamine their own witnessesby way of rebuttal should be allowed beforean Order under Section 60ispassed.

3.3. During the pendency of the O.A.No.2 of 2005 beforethe Tribunal,Liquidator was appointed under Section 65 of A.P CooperativeSocieties Act,1964 (for short the ‘Act’).Thereafter, the notice came to be issued by the Deputy Registrar of Co-operative Societies under Section[60(1)][ of][ the][ Act on]'I0.10.2006 (Ex.P.2) once again initiated Surcharge Proceedings[ as][ indicated]by the Tribunal in O.A.No.2 of 2005, thereby directing[the][ Writ][ Petitioners][ to]file the written counter and also statement on oathin connectionwiththeSurcharge trial.

4. At this stage, the alleged delinquents have filed the present Writpetitionon24.11.2006.ThisCourthadpassedanInterimOrderin\/V.p.M.P.No.32020 of 2006 by suspending the Impugned[Proceeding][ dated]^6.10.2006 vide Order dated 01.12.2006.

5. The contention of the Writ Petitionersis two-fold.Learned Counselfor the Writ Petitioners would contend that the Official[Respondents][ have][ not]furnished any Surcharge Proceeding on 16.10.2006.

6. The second contention is to the effect that when once Liquidator hasbeen appointed under Section 65 of the Act,the SurchargeProceedinginitiated against the Writ Petitioners does not survive,[and]therefore,theSurcharge Proceeding must be dropped.

7. Section 60 of the Act empowers the competent authority[to]initiateSurchargeProceeding.For readyreference.Section60oftheActisextracted hereunder;

60. Surcharge:

(1) Notwithstanding anything contained in any other law[ for] the time beingin force wherein the course of an audit under Section 50 or an inquiryunder Section 51 or an inspection under Section 52[or] Section[ 53,][ to] thewinding up of a society,it appears that any person[who]isor wasentrusted with the organisation,affairs or management of the society orany past or present officer or servant of the society[has][ misappropriated]or fraudulently retained any money or other property or has been guilty ofbreach of trust in relation lo the society or has caused any deficiency inthe assets of the society by breach of trust or willful negligence or hasmade any payment contrary to the provisions of this[Act,][ the][ rules][ or][ the]bye-laws, the Registrar himself, or any person specially authorised by himin 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]

repay ormstoe thf"•»such rL as .1 Rr*'™«' '"'srest atsuch rate as the Registrar or the person authorised as aforesaid think,us, or ,0 contribute such sum to the assets of the socie,b Jaocompensation ,n respect of the misappropriation, misapplicatL of fundffrauduien, retention, breach of trust, or willful negligence as the ReSShall be passed against any person referred to in this sub-section unlessrepre"sent°ation°''"'''"^^^ing his

(2) Any sum ordered under thissection to be repaid to a society orrecoveredasacontributionto3ssetsmayberecoverednnatherequisition same manner being made as arrears in this of behalf land revenue. by the Registrar to the Collectorin Si-r/STvisiLrcriSssiy-trht or act.

(emphasis supplied)

8. Learned Counsel for the Writ Petitionershas also taken this Courtthrough the relevantprovisions of law with regard to the,■,-appointment ofL,u,da,Of (Section 65 of the AC, and the Powers of the Liquidators (Section66 of the Act). Learned Counsel for the WritPetitioners would submit that theLiquidator shall have thepower to institute and defend suits and other legalproceedings on behalf of the society by thename of his office (Clause (a) ofSub-clause (1) of Section 66 of the Act).

9. Learned Counsel for the Writ Petitionershas submitted that in asimilar matter, this Court had allowed W.P.No.23337 of 2006, where similarnotice issued by the Respondent No.1 under Section 50 of the Act has beenquestioned.

10. Admittedly, the impugned proceedings are not issued under Section50 of the Act,butitwas issued under Section 60 of the Act initiatingSurcharge Proceeding, and thereafter, the Order passed by this Courtinnoetfect on the impugned proceeding dated 16.10.2006.iinasmuchastheimpugned proceeding is initiated under Section 60of the Act.

11. Section 60 of the Act, extracted hereinabove, specifically[refers][ to]the power of the competent authority to initiate Surcharge Proceeding duringthe winding up of a society. The said provision clearly stipulates that theRegistrar himself, or any person specially authorised by him in this behalf, ofhis own motion or on the application of the Committee, Liquidatoror anyCreditor or Contributor, may inquire into the conduct of such person or officeror servant and make an order requiring him to repay or restore the moneyetc.,.

12. The above provision clearly indicates that the Surcharge Proceedingcan be initiated even by the Liquidator. The said provision would also clearlyindicate that the Surcharge Proceeding would go on even during the processof winding up of the Society.

13. In view of the very clear wording indicated in Section 60 of the Act,the submission of the learned Counsel for the Writ Petitioners pales-away,inasmuch as the said submission is directly in conflict with the Section 60 ofthe Act.Unfortunately, the impugned proceeding that was challenged wayback in the month of November, 2006, stood suspended by an Interim Orderon 01.12.2006 (almost 19 years ago).

14. In view of the above analysis, this Court is of the considered viewthat the Surcharge Proceeding under Section 60 of the Act can be initiated bythe competent authority and to be proceeded with even during the course ofthe liquidation process.

15. In this view of the matter, the present Writ Petition is not only devoidof any merit but also an abuse of process, inasmuch as the Writ Petitionershave approached this Court challenging the very impugnednoticedated16.10.2006, which notice is in fact issued as per the direction of the Tribunal inO.A.No.2 of 2005 on 18.05.2006. The contention of the Writ Petitioners is thatthe material has not been supplied to the Writ Petitioners.The same is alsofrivolous in nature, inasmuch as the Writ Petitioners have never made any application to thecompetent authority namely the Deputy Registrarof Cooperative Societies seeking any materialdocuments after the impugned noticecame to be issued.Evenon this score, the present Writ Petition is devoid ofany merit and alsoan abuse of process.dismissed. There shall beAccordingly, the Writ PetitionISia direction to both the Writ Petitionersto pay Costsof Rs. 10,000/- each within threeweeks from today. There shall bea directionto deposit the Costsiin favour of A.P High Coun Advocates'Association, HighCourt Buildings, Amaravati.ThePresident, A.PHigh Court Advocates’addAssociation them to is the directed Association'^ to purchasei n the Law Books fromm the the e saida amount[and]'''copy Of this order to the President, A.P HighTo^rtAssociation foreffective compliance. No Orderas to Costs.

16. Interlocutory Applications, if any

, stand closed in terms of this order.

//TRUE COPY//

To,

T OneCCto Sri Venkat ChallaI Advocate fOPUCJI Advocate fOPUCJ

ASSISTA^ir^^aa

MSECTION OFFICER

Buildings, Amarava?f ^Association, High Court 5- Three C.D. Copies.

Cnr e Association, High Court

HIGH COURT

DATED;05/05/2025

ORDERWP.No.25007 of 2006

DISMISSING THE W.P.WITH COSTS