The Writ Court dismissed the petition challenging an order holding a former Cooperative Societies President liable for deficit caused mismanagement. The Court modified the order reducing interest from 18% to 9% per annum.
The writ petition is dismissed except to the extent of reducing the interest rate from 18% to 9% per annum.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO
WRIT PETITION No. 14762 of 2000
O R D E R :
The 2nd respondent Deputy Registrar of Cooperative Societies passed orders on 25.03.1996 holding the petitioner herein, who was the former President of Nagarjuna University Employees’ Cooperative Credit Body Limited, Nagarjuna Nagar, accountable for having caused deficit to the assets of the society in a sum of Rs.28,867.50Ps. The petitioner was directed to remit this amount together with interest at 18% per annum till its realization. The petitioner has challenged the correctness of this order by instituting O.A. No. 141 of 1996 on the file of the A.P. Cooperative Tribunal, Vijayawada, which, by its judgment, dated 24.04.2000 dismissed the Appeal.
The case of the petitioner is that based upon certain unfounded allegations that the funds of the 3rd respondent Cooperative Society have been misappropriated when the petitioner was its President, an enquiry under Section 51 of the A.P. Cooperative Societies Act, 1964 (for short, ‘the Act’) was initiated by the 2nd respondent. The enquiry officer submitted his report on 15.05.1995 holding the petitioner responsible and liable for the loans granted to the various persons and thus became liable to make good the loss of Rs.28,872.50 ps. suffered by the society. The petitioner was elected as the President of the Managing Committee of the Cooperative Society during the period 06.01.1991 up to 26.04.1994. The Cooperative Society secured a loan of Rs.12 lacs from Tenali Cooperative Central Bank. The petitioner has appointed one Ms. A. Sumathi as Record Assistant in the society on a monthly consolidated payment of Rs.825/-. When the proposals have been sent up to the Commissioner for Cooperation
and Registrar of Cooperative Societies for ratification of the appointment of the said Record Assistant, the Registrar has approved the same. Subsequently, she was promoted as a Junior Assistantcum-Typist on a consolidated pay of Rs.935.60 Ps. with effect from 29.09.1993. After the tenure of the petitioner as the President of the Cooperative Society ended, the services of Ms. A. Sumathi came to be terminated with effect from 15.07.1994. Alleging that the said individual is only pursuing education, but was never appointed either as a Record Assistant or as a Junior Assistant-cum-Typist to render services to the society, the enquiry was initiated. The Deputy Registrar of Cooperative Societies, based upon the enquiry officer’s reports, dated 15.05.1995 and 18.09.1995, issued a show cause notice to the petitioner on 25.11.1995, for which the petitioner filed his explanation on 08.12.1995. The petitioner has booked the following expenditure to the society:
Towards stationery and other contingent charges : Rs.4,982-25 Loan amount issued to Sri N. Bala Kotaiah : Rs.4,000-00 Expenditure towards salaries paid to Ms. A. Sumathi:Rs.20,214-00 Stationery and typing charges : Rs. 3,031-25 Amount shown as remitted on 13.08.1992 in the : Rs. 1,300-00 cash book without actually remitting the same
After deducting the advance amount, which is to be refunded to the President, in a sum of Rs.4,660/-, the Deputy Registrar concluded that the petitioner is liable to make good the loss of Rs.28,867-50 Ps. together with interest at 18% per annum till its realization.
The order of the Deputy Registrar was passed, in exercise of the power available to him under Section 60 of the 1964 Act. In terms of Section 76, any person or any society aggrieved by any decision rendered in terms of Section 60 of the Act has the right of appeal to the Tribunal constituted under Section 75 of the said Act. Accordingly, the
petitioner has preferred the appeal to the Cooperative Tribunal by way of O.A.No.141 of 1996. With regard to the appointment of Ms. A. Sumathi, the Tribunal has found that the prior approval of the Registrar of Cooperative Societies, as is required in terms of Section 116(C) of the Act, has not been obtained. Therefore, the very appointment of the said individual was found to be irregular and consequently, making payments to her can only be construed as a wasteful expenditure indulged in by the petitioner, thus causing loss to the society. More importantly, the said Sumathi, as a matter of fact, was found studying B.A. degree course at the relevant point of time. Thus, the expenditure booked on the count of payment of salaries effected to the said individual has not inspired much of a confidence in the mind of the Tribunal to accept the same as a legitimate expenditure incurred by the Society. The petitioner has booked nearly Rs.5,000/of expenditure towards stationery and contingent charges. The area of operation of the society in question is extremely limited. Its financial resources are also very meager. Therefore, the expenditure towards stationery and contingent charges running to nearly Rs.5,000/- could not be believed as a genuine expenditure. This apart, a little more than Rs.3,000/- was once again booked towards stationery and typing charges. Having already booked expenditure of nearly Rs.5,000/towards stationery and contingent charges, once again trying to book further sum of Rs.3,031/- towards stationery and typing charges was so plainly unbelievable. Far from that, if truly the services of Ms. A. Sumathi were used as a Junior Assistant-cum-Typist, the question of incurring typing charges separately would not have arisen. Thus, there is any amount of doubt about the genuineness of the expenditure booked to the society. Since the expenditure did not inspire confidence to pass off a legitimate expenditure, the assessment of the Deputy Registrar of Cooperative Societies that it amounted to causing
loss to the society, cannot be said to be a perverse or unjust or unreasonable finding. Insofar as loan amount of Rs.4,000/- said to have been advanced to the member of the society, by name Sri Bala Kotaiah is concerned, it was found, as a fact, that the said loan was sanctioned to Sri Bala Kotaiah, but however, no bonds have been obtained from him. As a result, when Sri Bala Kotaiah committed default in repayment, the society could not take any effective or legal measures for recovering the said money in the absence of bonds. Thus, for the corresponding loss sustained by the society, the petitioner has been held accountable. With regard to Rs.1,300/- shown as to have been remitted on 13.08.1992 in the cash book, no material worth the credence was placed before the Deputy Registrar of Cooperative Societies or the Cooperative Tribunal. If truly the amount is remitted, the method in which it was remitted and as to how the cash balance of the society has risen by Rs.1,300/- should have been demonstrated. In the absence of any such feature, the Deputy Registrar has rightly found fault with the entry of remittance of Rs.1,300/- without the physical payment being made. Thus, looked at from any angle, the view taken by the Deputy Registrar of Cooperative Societies for surcharging the petitioner and which was upheld by the Tribunal does not call for any interference at my hands.
Section 60 of the Act clearly discloses that whether in the course of an audit undertaken under Section 50 or an inquiry under Section 51 or an inspection under Section 52 or Section 53 of the Act, it appears that any person, who is or was entrusted with the organization, affairs or management of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property, or has been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or willful negligence or
made any payment contrary to the provisions of the Act, the rules or the bye-laws, the Registrar may make an order requiring him to repay or restore the money or property to the society. It is not disputed before me that during the course of enquiry under Section 51 of the Act, the deficiency/loss caused to the society at the behest of the petitioner as the President of the Managing Committee of the said society, has come to light. The petitioner could not demonstrate with any credible material that he is not guilty of causing the said deficiency or loss to the society. Therefore, I cannot find fault with the exercise of power carried out by the Deputy Registrar of Cooperative Societies, who answers the description of the expression “Registrar” as defined in Section 2(n).
However, the Registrar of Cooperative Societies has imposed interest at 18% per annum. At the relevant point of time, no nationalized bank was according interest at 18% on any fixed deposit of money. Therefore, imposing 18% of interest is on the high side. Perhaps, the ends of justice would have been adequately met if the Registrar of Cooperative Societies has ordered for recovering the monies due together with interest at 9% instead. Therefore, to the extent of reducing the rate of interest from 18 to 9%, the order made under Section 60 of the Act by the 2nd respondent Registrar stands modified. Excepting to the extent indicated supra, the order made under Section 60, which was confirmed in appeal by the Cooperative Tribunal, does not call for any interference at my hands.
Sri K. Rajanna, learned Standing Counsel appearing for the society has drawn my attention to a judgment rendered by a Division Bench of this Court in Kolluri Bhaskara Rao v. Dy. Registrar of Cooperative Societies, Gudivada[1] , wherein the Division Bench of this Court has also taken a similar view with regard to the jurisdiction
of this Court under Article 226 of the Constitution to interfere with the order of the Registrar as confirmed by the A.P. Cooperative Tribunal, Vijayawada.
For the aforementioned reasons, this Writ Petition stands dismissed, except to the extent of reducing the rate of interest to 9%. No costs.
Consequently, the miscellaneous applications, if any shall also stand dismissed.
---------------------------------------------(NOOTY RAMAMOHANA RAO, J)
30th August 2012
ksld
[1] 1998 (4) ALD 154
2 issues framed by the court
Whether the Deputy Registrar's order holding the petitioner liable for loss of society assets was sustainable in law.
Whether the interest rate of 18% per annum imposed on the recovery order was unreasonable.
Colour shows how this judgement treated each authority
Kolluri Bhaskara Rao v. Dy. Registrar of Cooperative Societies, Gudivada [1]Referred¶16
2 provisions across 1 enactments
Former President of Nagarjuna University Employees Cooperative Credit Body Limited
Deputy Registrar of Cooperative Societies
Nooty Ramamohana Rao
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
