HON’BLE SRI JUSTICE V.ESWARAIAH W.P.NO.5951 OF 2002 Dt.19.8.2010 Between: N.S.V.Subba Rao ..Petitioner And The Deputy Registrar of Cooperative Societies, Bhimavaram and others ..Respondents HON’BLE SRI JUSTICE V.ESWARAIAH W.P.NO.5951 OF 2002 ORDER: This writ petition is filed questioning the order of the A.P. Cooperative Tribunal, Vijayawada, in O.A.No.12 of 2000, dated 25.8.2001, confirming the surcharge order under Section 60(1) of the Andhra Pradesh Cooperative Societies Act 7 of 1964 (for short, the Act) passed by the Deputy Registrar of Cooperative Societies, Bhimavaram, in Rc.No.898/98-B/D, (S.XIII), dated 24.7.1999. The 1st respondent issued the surcharge order after conducing enquiry for recovery of three items of amount along with interest at the rate of 18% per annum from the date of each transaction till the date of realization. The said three items are – (a) Rs.24,529/- being the worth of deficit stock, (b) Rs.350/- being the worth of deficit stock and (c) Rs.3,11,132/- being the interest. The perusal of the surcharge order goes to show that after conducting the enquiry, the enquiry officer submitted report under Section 51 of the Act and thereafter notice under Section 60(1) of the Act was issued on 26.11.1998. But, the petitioner failed to avail the opportunity by filing any objections to the proposed action. Therefore, the surcharge order was passed on 24.7.1999. So far item No. (a) is concerned, it is stated that the quantity of 66-17 quintals of paddy was reduced in the stock register and the percentage of weightage of reduction is 3.52% which is very high and as per the standards prescribed by the Food Corporation of India, the loss can be allowed up to 1.5%. Therefore, after allowing 1.50% weightage loss, the deficit of weight is to an extent of 2.02% which amounts to Rs.24,529/- being the deficit stock. So far as item No. (b) is concerned, it is stated that as per stock register the raw rice of 1350 Kgs. should be there, but on verification there was only 1300 Kgs and therefore the deficit of 50 Kgs., is valued at Rs.350/-. During the enquiry proceedings, it was revealed that the said 50 Kgs., of rice was taken away by the ex-Director of the bank. Therefore, the persons in the management of the 3rd respondent bank are liable for payment of worth 50 Kgs deficit stock of rice, which amounts to Rs.350/-. So far as items (a) and (b) which relate to deficit stock of paddy and rice are concerned, I am of the opinion that the surcharge order is based on the enquiry and after giving reasonable opportunity it was rightly confirmed by the Tribunal. So far as item (c) is concerned, it is the case of the bank that the persons in management of the bank are entitled to utilize the bank amount for purchase of paddy and sell the same. The petitioner being President and two other Directors are entrusted with the affairs of the bank to procure paddy and rice and sell the same. It is stated that the Sub Committee including the petitioner have spent Rs.12,14,480/- on paddy which was kept idle for a period of nine months and another amount of Rs.19,62,360/- was spent for purchase of paddy and kept idle for a period of five months and by reason of the said action the bank sustained loss to a tune of Rs.3,11,132/- in the shape of interest by not utilizing the stock of paddy purchased during khariff and rabi seasons in the years 1996- 97. Therefore, the Sub Committee members of the rice mill are held liable for the said loss. It is not clear or specific from the surcharge order or the enquiry report about the manner and method and the responsibility of the Sub Committee with regard to the procedure to be followed for purchase of paddy and sale of the same. In the absence of failure on the part of the Sub Committee in following any procedure prescribed, it may not be just and proper to fix up responsibility on the Sub Committee for recovery of loss. It is not known what was the actual loss sustained by the bank for purchase of paddy and sale of the same. If there is any standing instruction requiring that the paddy cannot be kept idle for five months or nine months, then it amounts to negligence on the part of the Sub Committee. But, in the absence of any specific procedure, it cannot be said that the loss sustained by the bank is recoverable from the Sub Committee. The original order itself does not indicate about the responsibility of the Sub Committee in dealing with the manner and procedure about the purchase of paddy and sale of the same. Having regard to the facts and circumstances of the case, I am of the opinion that it is just and proper to remit the matter back so far as it relates to item No. (c) is concerned for recovery of the amount of Rs.3,11,132/- being the loss of interest said to have been caused to the bank. Accordingly, the order impugned so far as it relates to recovery of the amount of Rs.3,11,132/- under item No.(c) of the surcharge order is set aside and the matter is remitted back for conducting fresh enquiry and to pass appropriate orders in accordance with law, after giving reasonable opportunity to the petitioner. The writ petition is allowed to the extent indicated above. No order as to costs. _________________ V.ESWARAIAH, J. 19.8.2010 kpr