Allowed

Abu Akram v. The Joint Registrar of Cooperative Societies/District

Telangana HC4 Sept 2014WP/15589/2006

Case brief

AI extract

What is this about?

Single judge held that ordering a second inspection under Section 52 of the Andhra Pradesh Cooperative Societies Act after a prior report was submitted without acting on it violated principles against double jeopardy and natural justice, quashing the order.

What did the court decide?

The writ petition is allowed and the proceedings in Rc.No.1326/2000/UB-L10 dated 20.02.2006 are set aside.

Abu Akram Vs The Joint Registrar of Cooperative… — Cooperative Societies | Telangana HC (2014)

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HON’BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.15589 of 2006

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O R D E R:

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This writ petition, filed under Article 226 of the Constitution of India, challenges the action of the first respondent/Joint Registrar of Cooperative Societies, District Cooperative Officer, Hyderabad in ordering second inspection under Section 52 of the Andhra Pradesh Cooperative Societies Act, 1964 (hereinafter called ‘the Act’) by virtue of proceedings in Rc.No.1326/2000/UB-L10, dated 20.02.2006 as illegal, arbitrary and unconstitutional and against the principles of natural justice.

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2. Heard Sri R.N.Hemendranath Reddy, learned counsel for the petitioners and the learned Government Pleader for Cooperation apart from perusing the material available on record.

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3. According to the petitioner, he was the Chief Promoter and Chairman of the third respondent/Cooperative Urban Bank, a society registered under the provisions of the Act. The third respondent society came into being in the year 1999 pursuant to a license granted by the Reserve Bank of India under the provisions of the Banking Regulation Act, 1949. The third respondent/Cooperative Urban Bank was liquidated in the year 2002 in view of cancellation of its license by the Reserve Bank of India on 05.04.2002 and the consequential decision of the Registrar of Cooperative Societies dated 24.07.2002. It is the case of the petitioner herein that earlier the first respondent/Joint Registrar of Cooperative Societies ordered a separate inspection of the third respondent/Cooperative Urban Bank under the provisions of Section 52 of the Act by appointing one Mr.M.A.Muqeeth, the Deputy Registrar of Cooperative Societies as Inspecting Officer, who conducted a detailed inspection by examining the petitioner and other Board of Directors. The said inspecting officer submitted the report in the year 2006. It is the case of the petitioner herein that in spite of the said inspection report, a

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decision was taken by the Registrar of Cooperative Societies to liquidate the bank by appointing the liquidator which made the Managing Committee unable to continue their efforts for recovery of the loan amounts. While the things being so, by virtue of an order vide proceedings Rc.No.1326/2000/UB-I-10, dated 20.02.2006, the Joint Registrar/District Cooperative Officer, (Urban District), Hyderabad, the first respondent herein ordered inspection into the constitution, working and financial conditions with special reference to loans sanctioned by the Ex-Managing Committee of the third respondent/Cooperative Urban Bank and appointed one Sri K.Janardhan, Assistant Registrar as inspecting officer under Section 52 of the Act.

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4. Calling in question the validity of the said action, initiating the proceedings under Section 52 of the Act as illegal, arbitrary, unconstitutional and against the principles of natural justice, the present writ petition has been filed.

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5. This Court, while issuing Rule Nisi on 31.07.2006 granted interim stay of all further proceedings pursuant to the impugned order. Responding to the Rule Nisi issued by this Court, a counter affidavit is filed by the first respondent herein, denying the averments made in the affidavit filed in support of the writ petition and in the direction of justifying the impugned action.

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6. It is contended by the learned counsel for the petitioner that the very action of initiation of inspection under Section 52 of the Act without taking any action on the report earlier submitted by the inspecting Officer in 2006 is highly illegal and arbitrary and totally one without jurisdiction. It is contended that the impugned action is opposed to the very spirit and object of the provisions of the Act and the same amounts to double jeopardy and violative of Article 14 of the Constitution of India.

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7. In support of his submissions and contentions, the learned counsel for the petitioner relies on the Judgments of this Court in the case of PRIMARY AGRICULTURAL CO-OP. SOCIETY v. B. MALLA

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REDDY .^[1] , CHOUTUPPAL HANDLOOM WEAVER'S CO-OP. SOCIETY LTD., NALGONDA DIST. v. COMMISSIONER OF HANDLOOMS AND DIRECTOR OF HANDLOOMS AND TEXTILES, A.P .^[2] and COOPERATIVE ELECTRIC SUPPLY SOCIETY LIMITED (CESS) v. THE STATE OF ANDHRA PRADESH^[3] .

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8. Per contra, it is vehemently argued by the learned Government Pleader for Cooperation that since earlier inspecting officer did not cover the details of fraud and unsecured loans sanctioned by the Management, the first respondent is perfectly justified in ordering fresh inspection and there is no prohibition under the provisions of Section 52 of the Act to order second inspection.

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9. In the light of the pleadings, submissions and contentions of the respective parties to the present litigation, now the question that emerges for consideration of this Court is whether the impugned order passed by the first respondent herein, ordering inspection under Section 52 of the Act is sustainable and permissible under the provisions of the Act?

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10. The material available before this Court manifestly discloses that earlier by virtue of proceedings in Rc.No.1326/2000/UB-L10 dated 08.06.2000 the first respondent herein pressed into service the provisions of Section 52 of the Act and appointed one Mr.Muqheed, the then Deputy Registrar of Cooperative Societies as Inspecting Officer. It is also not in dispute that the said Inspecting Officer submitted his report. The justification sought to be offered by the first respondent in his counter for ordering inspection once again under Section 52 of the Act is that the earlier inspecting Officer did not cover the details of fraud and unsecured loans sanctioned by the Management. In the counter affidavit filed by the third respondent it is also stated that the inspecting officer earlier appointed did not conduct inspection into the affairs of the bank and did not go into all the details and did not specifically fix the

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responsibility against the persons in the management of the bank. The said action of ordering inspection under Section 52 of the Act once again is required to be assessed and analyzed in the light of the judgments cited on behalf of the petitioner herein by the learned counsel.

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11. In the case of PRIMARY AGRICULTURAL CO-OP. SOCIETY (supra 1), a Division Bench of this Court while dealing with the provisions under Section 52 of the Act, at paragraph 2, held as follows:

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"2. After a thorough examination of the case we are in respectful agreement with the learned single Judge. It is a well known proposition that a second enquiry or successive enquires are hit by the theory of double jeopardy to which a person cannot be subjected to. Apart from the reasons advanced by the learned single Judge, the further fact that remains is that the report of the enquiry officer is only recommendatory in nature and the authority to initiate enquiry has himself the power to either accept the enquiry report or reject it either fully or in some respects and in the event he disagrees with any part of the enquiry report, he can call upon the person proceeded to explain his conduct and in the course of such proceedings may also call upon him to explain any evidence, documentary or oral, appearing against him. The authority is not bound to accept the views expressed by the Enquiry Officer and can also take a different view on the same set of materials. It was hence not necessary for the District Cooperative Officer to direct a second enquiry if he was dissatisfied with the first enquiry report but could have proceeded in respect of matters which he felt were left untouched by the Enquiry Officer on his own, and called upon the respondent to explain such facts. In that view of the matter, the second proceedings was misconceived and has been rightly quashed. We, however, make it clear that the District Cooperative Officer can take action as is available to him as explained above."

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12. In the case of CHOUTUPPAL HANDLOOM WEAVER'S CO-OP. SOCIETY LTD., NALGONDA DIST. (supra 2), this Court held that though it is settled principle that the theory of double jeopardy which is a principle applicable to convictions in criminal law as provided under the Constitution may not be applicable to administrative of quasi-judicial proceedings, the underlying principle of irrational successive enquiries by statutory authorities being hit by the vice of arbitrariness would be

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applicable to vitiate any successive enquiries which are ordered without any rational reasons.

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13. In the case of COOPERATIVE ELECTRIC SUPPLY SOCIETY LIMITED (CESS) (supra 3), this Court at paragraph 10, held as under:

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“10. Once a report is submitted under Section 51 of the Act, it is required to be placed before the general body of the society and steps, as may be directed by the general body, are to be taken. The respondents, including the 5th respondent, are silent as to the nature of steps, that were taken in pursuance of the report dated 30-06-2010. Once an enquiry under Section 51 of the Act was ordered and a report is submitted, it is not competent for the respondents 2 and 3 to order fresh enquiry. The only occasion can be, when the competent Court passes an order, setting aside the report and directing fresh enquiry. The impugned order is so callous, that even a reference was made to the enquiry, that was already made, under Section 51 of the Act, and the report submitted therein.”

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14. From a reading of the principles laid down in the above referred judgments, it would be manifestly evident that the present impugned order, ordering inspection under Section 52 of the Act without taking any action on the earlier report cannot be sustained in the eye of law. It is also brought to the notice of this Court that the third respondent bank is already liquidated.

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15. For the aforesaid reasons and having regard to the principles laid down by this Court in the above referred judgments, the writ petition is allowed and the proceedings in Rc.No.1326/2000/UB-L10, dated 20.02.2006 are hereby set aside. As a sequel, pending miscellaneous petitions, if any, stand closed. No order as to costs.

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Date:04.09.2014 grk

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_______________ A.V.SESHA SAI, J

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HON’BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.15589 of 2006

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Date : 04-09-2014

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Between:

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Abu Akram s/o Late Md. Bin Qasim, Aged about 52 years, r/o.301, Minar Apartments, Deccan Towers, Basheer Bagh, Hyderabad.