IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY THIRD DAY OF SEPTEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION NO:8677 of 2005 Between: Sri Vijaya Visakha District Milk producers Mutually Aided Cooperative Union Ltd., (Visakha Coop Dairy) Visakhapatnam rep.by its Managing Director, Dr.N.V.Venkatarao, S/o.Ramanna, Visakhapatnam. ..... PETITIONER AND 1 The State of Andhra Pradesh, rep.by its Prl. Secretary, Cooperation, Secretariat Buildings, Hyderabad. 2 The Commissioner and Registrar of Cooperative Societies, Hyderabad. 3 The Joint Collector, Visakhapatnam. .....RESPONDENTS Counsel for the Petitioner:MR. E.MANOHAR, SENIOR COUNSEL assisted by DR.P.B.VIJAY KUMAR Counsel for the Respondents: GP FOR COOPERATION The Court made the following : ORDER: This writ petition is ﬁled for a writ of mandamus to quash proceedings, dated 15.03.2005 of respondent No.2. The petitioner was a society formed under the provisions of the Andhra Pradesh Cooperative Societies Act, 1964 (for short ‘the 1964 Act’). With eﬀect from 08.07.1999, it has got converted itself into the mutually aided cooperative society under the provisions of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 (for short ‘the 1995 Act’). The petitioner society claimed that with eﬀect from 06.01.2006, it has got converted itself into a producer company under the provisions of Part IXA of the Companies Act, 1956. For the purpose of adjudication of this writ petition, it’s status, as Producer Company has no relevance. By proceedings, dated 15.03.2005, respondent No.2 authorised the Joint Collector to conduct an enquiry into the Constitution, working and ﬁnancial position of the petitioner society with particular reference to the alleged lapses pointed out against it’s Chairman. The said proceedings are assailed in this writ petition. Sri E.Manohar, learned Senior Counsel submitted that in ordering enquiry into the Constitution, working and ﬁnancial position of the petitioner society, respondent No.2 far too exceeded his jurisdiction under Section 29(2) of the 1995 Act. He pointed out that though the petitioner society has got converted into a mutually aided cooperative society, respondent No.2 has literally borrowed the language of Section 51 of the 1964 Act in instituting an enquiry into various aspects, which are not covered by the provisions of Section 29(2) of the 1995 Act. The learned Government Pleader for Cooperation, however, sought to support the impugned proceedings by stating that the language of Section 29(2) of the 1995 Act is wide enough to include any matter, which not only relates to the commissions and omissions by the cooperative society, but also matters, which relate to the irregularities committed by any person in the performance of his duties. In this regard, he relied on Section 29(6) of the 1995 Act. In order to resolve the controversy, it is necessary to consider the scope and purport of Section 29 of the 1995 Act, which reads as under: 29. Inquiry:- (1) Every Co-operative Society shall furnish any relevant information required by the Registrar in order to enable him to satisfy whether the Co-operative Society has conducted its aﬀairs in accordance with the cooperative principles and the provisions of this Act. (2) The Registrar may, of his own motion, and shall on the application, of a federation to which the Co- operative Society concerned is aﬃliated, or of a creditor to whom the Cooperative Society is indebted or of not less than one-third of the Director, or of not less than one-tenth of the members, hold an inquiry or cause an inquiry to be made into the speciﬁc matter or matters relating to any gross violation of any of the provisions of this Act by the Cooperative Society. (3) The inquiry shall be completed within a period of one hundred and twenty days from the date of ordering the inquiry. (4) If the inquiry is not completed within the time speciﬁed in sub-section (3) it shall lapse at the end of the said period and the Registrar shall refund to the applicants, the fee collected from them. (5) The Registrar shall, within a period of thirty days from the date of the completion of the inquiry, as speciﬁed in sub-section (3) or of the lapse of the inquiry as speciﬁed in sub-section (4), communicate the report of the inquiry or the reasons for the non- completion of the inquiry, as the case may be. (a) to the Cooperative Society concerned; (b) to the applicant federation if any; (c) to the applicant-creditor, if any; (d) to the person designated by the applicant- directors, if any; (e) to the person designated by the applicant- members, if any; (f) to any person, on payment of free ﬁxed by the Registrar; and (g) to the Cooperative Tribunal where necessary. 6. The inquiry oﬃcer acting under this section shall, among others, speciﬁcally state the amount of deﬁciency, waste or loss which appears to have been caused by the gross negligence or misconduct of any person in the performance of his duties. Under Sub-Section (2) of Section 29 of the 1995 Act, the Registrar is conferred with the jurisdiction to hold an inquiry or cause an inquiry to be made into the speciﬁc matter or matters relating to any gross violation of any of the provisions of the Act by the Cooperative Society. The expression “the speciﬁc matter or matters” have to be conjunctively read and so read, it shall mean that the speciﬁc matter or matters should relate to any gross violation of any of the provisions of the Act by the Cooperative Society. Therefore, the enquiry envisaged under Sub-Section (2) of Section 29 of the 1995 Act shall relate to any gross violation with regard to a speciﬁc matter or matters, indulged in by the cooperative society. Sub-Section 6 of Section 29 of the 1995 Act makes it obligatory for the Enquiry Oﬃcer to point out the amount of deﬁciency, waste or loss, which appears to have been caused by the gross negligence or misconduct of any person in the performance of his duties. A conjoint reading of these two Sub-Sections discloses that while the jurisdiction of the Registrar in holding or instituting enquiry is conﬁned to the speciﬁc matter or matters involving gross violation of the provisions of the Act by the Cooperative Society as a body, the enquiry Oﬃcer while holding inquiry into the same, shall point out the individual deficiencies, lapses, gross negligence or misconduct etc., if any, of person connected with the society in the performance of his duties. In the impugned proceedings, respondent No.2 pointed out the alleged ﬁnancial irregularities or administrative lapses on the part of an individual, namely, the Chairman of the petitioner society and appointed the Joint Collector, Visakhapatnam to hold an enquiry into the alleged ﬁnancial irregularities / administrative lapses of the Chairman. He delineated the jurisdiction of the Joint Collector by directing him to hold an enquiry into the Constitution, working and ﬁnancial position of the petitioner society. In my considered view, in doing so, respondent No.2 has exercised his jurisdiction, which is not vested in him under Section 29(2) of the 1995 Act, as such, an inquiry is not envisaged under Section 29(2) of the 1995 Act. As rightly pointed out by Sri E.Manohar, learned Senior Counsel, respondent No.2 literally borrowed the language of Section 51 of the 1964 Act, which relates to the enquiry to be held in respect of a Cooperative Society registered and functioning under the said Act. Therefore, the impugned proceedings cannot be sustained in law. The writ petition is accordingly, allowed. Proceedings, dated 15.03.2005 issued by respondent No.2 are quashed. This order, however, does not preclude respondent No.2 from initiating proceedings afresh strictly within the parameters of Section 29 of the 1995 Act and in the light of the observations made hereinabove with reference to the scope of Section 29 of the 1995 Act. It is needless to observe that in the event of fresh proceedings being initiated against the petitioner society, it’s right to avail the appropriate legal remedy against such proceedings is preserved. C.V.NAGARJUNA REDDY, J 23rd SEPTEMBER, 2008. kvni