HON’BLE SRI JUSTICE A. RAJASHEKER REDDY Writ Petition No.21095 of 2014 Date: 02-12-2014 Between:
Mekala Obula Reddy and 22 others .. Petitioners AND The Government of Andhra Pradesh, represented by its Secretary, Department of Cooperation, Hyderabad and 24 others .. Respondents HON’BLE SRI JUSTICE A. RAJASHEKER REDDY Writ Petition No.21095 of 2014 ORDER:
This writ petition is filed for declaring the action of the respondents in conducting an enquiry as directed by the Minister for Cooperation, Government of Andhra Pradesh, without issuance of any notice to the society and its members and also in violation of Section 51 of the A.P. Cooperative Societies Act, 1964, thereby depriving the members of Nallalingayapalle PACS, Kamalapuram Mandal, Kadapa District in becoming beneficiaries of the loan waiver scheme to be unveiled shortly by the Government of Andhra Pradesh, without following due process of law and also without following the principles of natural justice as illegal and arbitrary.
2. The case of the petitioners is that they are all members of Primary Agricultural Cooperative Society (PACS), Nallalingayapalli and their grievance is that an enquiry under Section 51 of the A.P. Cooperative Societies Act, 1964 was conducted pursuant to the order of the Minister for Cooperation on the representation submitted by the Ex-MLA, contrary to the said Act. It is stated that the enquiry was conducted for certain contingencies and unless the provisions contemplated in Section 51 of the Act have been complied with, no enquiry can be initiated. It is also stated that this Court on 25-07-2014 granted stay of all further proceedings and the enquiry was conducted as per the endorsement made by the Minister for Cooperation dated 18-07- 2014 and no notice was issued before conducting such enquiry. The enquiry is on the allegation that the loans were taken basing on bogus passbooks and on benami names of the members of the society. Aggrieved by the same, the present writ petition is filed.
3. The respondents 1 to 4 filed their counter admitting that the enquiry was conducted basing on the endorsement made by the Minister for Cooperation, Government of Andhra Pradesh, on the representation of Ex-MLA dated 18-07-2014 on the allegations made by the members of the society. It is further stated that basing on the marginal orders on 18-07-2014 on the representation dated 18-07-2014, a domestic enquiry was ordered to be conducted by one B. Ramesh, the Divisional Cooperative Officer, who was appointed as Enquiry Officer and who submitted his report vide Rc.No.936/2014-C2, dated 25-07-2014 stating that he has verified the pass books of the members, who have taken the loans and found that 60% of the pass books are bogus. It is also stated that the signatures of Tahsildar and Revenue Development Officer seems to have been forged and recommended for verification of the bogus pass books by the Revenue Authorities for taking stringent action against the persons those who are responsible in preparation of bogus Government documents. It is further stated that no benami loans are brought to his notice, but a detailed inquiry may be conducted as the loans are sanctioned to the farmers on fake or duplicate pass books and also large procedural gaps are caused in sanctioning the loans. It is also stated that due to lack of time, the Divisional Cooperative Officer has not issued notice to the society before conducting such enquiry and the sum and substance of the counter is that before conducting a statutory enquiry, a reasonable opportunity will be given to the petitioners as per the provisions of A.P. Cooperative Societies Act. It is also stated that the enquiry under Section 51 of the Act will be ordered only whenever necessary and reasonable opportunities will be given to the members of the society by the Inquiry Officer as per the principles of natural justice.
4. Some of the members of the society, who were impleaded as respondents 5 to 25 as per orders in WPMP.Nos.27372 of 2014 and 28706 of 2014, dated 25-08-2014 and 14-08-2014, also filed counter affidavit stating that they are members of Nallalingayapalle Primary Agricultural Cooperative Society, Kamalapuram Mandal, Kadapa District and since loans were sanctioned on bogus pass books, they made representations to the 2nd respondent and no action was taken by the 2nd respondent, for which they approached Ex-MLA, who in turn took them to the Minister for Cooperation on 18-07-2014, who made endorsement to the 4th respondent to order enquiry with regard to benami loans for which the petitioners have agreed for conducting the enquiry and that since there are serious allegations, a report was submitted stating that several irregularities were committed in sanctioning loans. It is further stated that there is no bar for the 2nd respondent to gather information on the affairs of the society from the newspapers or the enquiry report. It is also stated that what has been conducted by the 4th respondent is only a preliminary enquiry and basing on the said enquiry report, the 2nd respondent has to take action to order a statutory enquiry under Section 51 of the Act and the respondents 5 to 25 sought for dismissal of the writ petition.
5. Learned counsel for the petitioners submits that the official respondents 1 to 5 admitted that the conducting of enquiry basing on the endorsement made by the Minister for Cooperation on the representation of Ex-MLA dated 18-07-2014, is in violation of the provisions of Section 51 of the Act, which does not contemplate any such enquiry other than one under Section 51 of the Act. He also contends that the respondents 1 to 5 have also admitted that no notice was issued before conducting the enquiry and that this court on 25-07-2014 granted interim stay, but the 3rd respondent had conducted enquiry and submitted the report with ante-date and that the report submitted by the 3rd respondent is in violation of the provisions of Section 51 of the Act and against the principles of natural justice and placed reliance on Mandava Lakshmana Rao
[1]
v. Primary Agricultural Cooperative Society, Warangal .
6. On the other hand, the learned Government Pleader for Cooperation states that the enquiry conducted is a preliminary enquiry for ascertaining the information and whenever a statutory enquiry is initiated under Section 51 of the Act, the provisions thereof will be followed and the affected parties will be issued notices. Smt. Bobba Vijayalakshmi, learned counsel for respondents 5 to 25 submits that there is nothing wrong in conducting the enquiry and there is no bar in conducting such enquiry under the Act to get preliminary information and it is only an enquiry conducted basing on the endorsement made by the Minister for Cooperation on the representation of the Ex-MLA and whenever a statutory enquiry is conducted under Section 51 of the Act, the procedure contemplated under the said provision will be followed.
7. From the pleadings of the parties and on perusal of the material on record, the issue that arises in this writ petition is whether the respondents 1 to 5 can order an enquiry basing on the endorsement made by the Minister for Cooperation on the representation of Ex-MLA under the provisions of the A.P. Cooperative Societies Act. Though it is argued and alleged in the writ petition that such enquiry cannot be ordered, nothing was stated in the counter or contended that ordering of such an enquiry dehors the provisions of the Act is permissible. In the counter of the respondents 1 to 5, it is stated that the enquiry initiated under the provisions of Section 51 of the Act is not the enquiry contemplated under the Act. When once the enquiry is not under the provisions of Section 51 of the Act, there is no other provision brought to the notice of the court for ordering such enquiry. Even as per counter of the official respondents 1 to 5, it is admitted that no notice was issued to the affected parties and it is not the case of the respondents that the enquiry was ordered suo motu under Section 51 of the Act.
Section 51 of the Act reads as follows:
“The Registrar, may of his own motion and shall, on the application of a society to which 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. Such inquiry shall be completed within a period of four months and the report of inquiry along with the findings of the Registrar thereon shall be communicated to the managing committee of the society. It shall be the responsibility of the managing committee to place the inquiry report before the General Body or Special General Body convened for the purpose for its information, within a period of one month from the communication of the inquiry report by the Registrar. The Registrar shall be competent to initiate action under the provisions of this Act, if the committee fails to take action as aforesaid…….”
In Mandava Lakshmana Rao v. Primary Agricultural Cooperative Society, Warangal (1 supra), wherein it is held as follows:
“ As per the above Section the inquiry may be held on the following grounds, viz., (1) the Registrar's own motion i.e. suomotu; (2) on the application of a Society to which the Society concerned is affiliated or of not less than one-third of the members of the Committee; (3) or of not less than one-fifth of the total number of members of the Society. In the present case admittedly the Inquiry proceedings were initiated basing on the application of one of the members of the first respondent Society dated 23-6-1985 submitted to the Hon. Minister for Co-operation requesting him to order an enquiry into the affairs of the first respondent Society with special reference to the misappropriation of the funds of the said Society by the petitioner herein, on which the Hon. Minister ordered enquiry, and the Special Grade Deputy Registrar/District Co-operative Officer, Warangal on the next day itself i.e. on 24-6-1985 authorized the Deputy Registrar/Officer on Special Duty, District Co- operative Central Bank Ltd., Warangal to conduct the enquiry in the said alleged misappropriation of funds of the first respondent Society. So admittedly the inquiry proceedings were not initiated suomotu by the Registrar as it was done under the directions of the Hon. Minister on the application. Neither one-third of the members of the committee nor of not less than one-fifth of the total number of members of the Society made an application to the Registrar making allegations against the petitioner about the alleged misappropriation of the funds of the first respondent-society. So none of the grounds mentioned in Section 51 of the Act were satisfied making a ground to initiate the enquiry proceedings in question. I see some force in the contention of Sri Movva Chandrasekhara Rao, learned Counsel for the petitioner that the initiation of the proceedings is ab initio void as no just or reasonable grounds are made out attracting the provisions of Section 51 of the Act…….”
The above decision is rendered in almost similar circumstances as in the present case, as such, the ratio laid down therein applies to the facts of the present case.
8. In view of above facts and circumstances, the action of the respondents 1 to 5 in initiating the enquiry is in violation of Section 51 of the Act, pursuant to the report of the 3rd respondent dated 25-07-2014 and the same has to be declared as illegal, arbitrary and null and void.
Accordingly, the writ petition is allowed declaring the action of the respondents in conducting the enquiry pursuant to the enquiry report dated 25-07-2014 of the 3rd respondent-Divisional Cooperative Officer, Proddatur, Kadapa District as arbitrary and illegal. No costs.
As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed.
A. RAJASHEKER REDDY, J Date: 02-12-2014 Ksn [1] 1996 (4) ALD 141