THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.10050 OF 2004 9th September, 2010 Between :- Ch.Jayapal .. Petitioner And Deputy Registrar of Cooperative Societies, Machilipatnam, Krishna District and others .. Respondent THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.10050 OF 2004 ORDER : By order dated 24.06.2002 the 1st respondent – Deputy Registrar of Co-operative Societies, Machilipatnam - made a surcharge order under Section 60 (1) of the A.P. Co-operative Societies Act, 1964 (for short, ‘the Act’) for restoration of a sum of Rs.60,070/- from the petitioner herein with interest at 18% p.a. The petitioner preferred CTA.No.88 of 2002 before the A.P. Cooperative Tribunal, Vijayawada (for short, ‘the Tribunal’) which was dismissed by order dated 15.3.2004. Aggrieved by the same, the present writ petition is filed. The facts, in brief, are as under: The petitioner herein was appointed as Part-time Person In- charge of the 2nd respondent society and worked as such during the period from 7.9.1990 to 2.5.1991. Having conducted an inspection into the affairs of the 2nd respondent society under Section 52 of the Act, the Cooperative Sub-Registrar, Machilipatnam submitted a report dated 30.11.1992, which contained certain findings against the petitioner including that the petitioner had sold different stocks of Urea, DAP and Seed at the rates lesser than the permissible rates and thus caused loss to the society to the tune of Rs.9,310/-. It was also alleged that the petitioner was responsible for the unsold stocks of Zinc worth Rs.2,56,000/- which remained as dead stock in the godown. On the basis of the said report, the Deputy Registrar of Cooperative Societies, Machilipatnam having conducted an enquiry under Section 60 (1) of the Act passed a surcharge order dated 2.9.1993 for recovery of a sum of Rs.2,62,570/- making the petitioner as well as one M.S.S. Gopala Prasad, Ex. Secretary of the 2nd respondent society jointly and severally liable. Aggrieved by the same, the petitioner preferred a Statutory Appeal (O.A.No.22 of 1995) before the 3rd respondent Tribunal under Section 76 of the Act. The said Appeal was dismissed by the Tribunal by order dated 18.1.2000. Challenging the same, the petitioner filed W.P.No.5165 of 2000. By order dated 8.10.2000 the said writ petition was allowed by this Court on the ground that no independent enquiry was conducted before passing surcharge order. Accordingly, while quashing the surcharge order as confirmed by the Tribunal, the matter was remitted to the Deputy Registrar of Cooperative Societies, Machilipatnam, with a direction to the respondent to issue show-cause notice to the petitioner and pass appropriate orders afresh after giving an opportunity to the petitioner. Thereafter, a show-cause notice dated 20.05.2002 was issued by the 1st respondent under Section 60 (1) of the Act. The petitioner submitted his explanation dated 11.6.2002. After due enquiry, the 1st respondent by order dated 24.6.2002 dropped the proposed action to the tune of Rs.1,21,500/- and another sum of Rs.81,000/- against the petitioner. However, it was held that the responsibility should be fixed on the petitioner for the loss caused to the society to the tune of Rs.60,070/- spent for purchase of Zinc from Raja Agro Chemicals, Vuyyur. Accordingly it was ordered under Section 60 (1) of the Act that the petitioner should restore a sum of Rs.60,070/- to the assets of the 2nd respondent society together with interest at 18% from the date of payment of cost of Zinc to Raja Agro Chemicals till the date of realization of the amount in full. Against the said order, the petitioner preferred O.A.No.88 of 2002 before the Tribunal. The said appeal was dismissed by the Tribunal by order dated 15.3.2004 upholding the surcharge order dated 24.6.2002. Aggrieved by the same, the present Writ Petition has been filed. It is contended by the learned counsel for the petitioner that in view of the specific finding recorded by the respondent No. 1 that the petitioner had no intention to cause deficiency in the assets of the society by breach of trust or wilful negligence and none of the ingredients prescribed under Section 60 of the Act were attracted, no surcharge order could be made against the petitioner. I have also heard the learned counsel for the respondents and perused the material available on record. The petitioner worked as part-time Person In-charge of the 2nd respondent society from 7.9.1990 to 2.5.1991. As noticed above, the surcharge order was made only on the allegation that the Zinc purchased during that period remained unsold causing loss to the society. It was alleged that the petitioner had purchased Zinc worth Rs.2,94,300/- out of which stock worth Rs.2,56,000/- remained unsold and became dead stock. Admittedly the stocks of Zinc were purchased in accordance with the requisition letter dated 30.01.1999 of the Agricultural Department and the resolution passed by the General Body of the Society dated 27.9.1999 directing the petitioner to purchase Zinc since the lands in area of the society were effected with saline water due to cyclone. The said Zinc was meant for distribution to ryots on 50% subsidy. However substantial part of the Zinc so purchased remained unsold. The petitioner was made responsible for the loss suffered by the society and the cost of the Zinc remained unsold was sought to be recovered from him under the impugned surcharge order alleging that he made purchases without observing the local conditions and needs of the ryots and without waiting for complete disposal of previous stocks. It is relevant to note that in the impugned surcharge order itself a specific finding was recorded by the 1st respondent that the petitioner had no intention to cause deficiency in the assets of the society by breach of trust or wilful negligence in purchasing Zinc. On appreciation of the evidence available on record, it was also observed by the 1st respondent that since the Agricultural Department had supplied Zinc to the ryots free of cost, the same might have hampered the sale of Zinc available with the society. It was also found that the petitioner was a non-technical officer and due to failure of supervision by the then Agricultural Officer on the distribution of Zinc on 50% subsidy and supply of Zinc by the Agricultural Department on 100% subsidy, the stocks purchased by the society were held up. The above said findings clearly go to show that the petitioner had not caused any loss to the society by breach of trust or wilful negligence or with fraudulent intention. In the light of the said findings, no order can be made under Section 60 (1) of the Act against the petitioner for making good the loss suffered by the society. As a matter of fact, on the very same ground the action proposed for recovery of Rs.81,000/- so far as the purchase made from Nandini Fertilizers was dropped. However strangely the responsibility was fixed in respect of Zinc purchased from Raja Agro Chemicals, Vuyyur, worth Rs.60,070/- on the ground that the said Raja Agro Chemicals, Vuyyur, was not an approved firm by the Agricultural Department. Once it is found that no dishonest intention or wilful negligence could be attributed to the petitioner, he cannot be made liable under Section 60 (1) of the Act and there is absolutely no justifiable reason to draw a distinction on the ground that the firm from which the stock was purchased was not an approved firm. It is also relevant to note that the Proprietor of Raja Agro Chemicals in his deposition dated 26.5.1992 before the Inspecting Officer stated that the Zinc supplied to the society can be sold in the months of July, 1992 and August, 1992 and also promised that if the stock was not disposed of by August, 1992, it would be taken away and the amount of Rs.60,070/- would be repaid to the society. No reasons are forthcoming for the failure of the society to take necessary steps for recovery of the said amounts from Raja Agro Chemicals, Vuyyur. Yet another aspect is that the surcharge order was initially passed on 2.9.1993 making the petitioner as well as one M.S.S. Gopala Prasad, Ex. Secretary of the Society jointly and severally liable. However the Statutory Appeal (O.A.No.21 of 1995) preferrerd by the said Gopala Prasad was allowed by the Tribunal by order dated 29.4.2000 and the said order became final. Apparently the said order was not considered at all by the 1st respondent while passing the impugned surcharge order. The said aspect was not considered even by the 3rd respondent Tribunal and the statutory appeal was dismissed merely observing that the 1st respondent passed a detailed order which did not suffer from any defect or deficiency in the procedure followed. As could be seen, the 3rd respondent Tribunal failed to appreciate the relevant factors independently and confirmed the order passed by the 1st respondent without application of mind to the essential question whether the ingredients of Section 60 of the Act were satisfied or not. For the aforesaid reasons, the impugned orders being contrary to law cannot be sustained. Accordingly, the impugned orders are hereby set aside and the Writ Petition is allowed as prayed for. No costs. ____________ G. ROHINI, J. Dt. 09.09.2010 smr