IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY FOURTH DAY OF OCTOBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION NO:21070 of 2002 Between: 1 The Dy.Registrar of Coop .Societies/Divisional Coop.Officer Nizamabad. 2 The R.D.O.-cum-Chairman, Nizamabad Coop.Town Bank Ltd. 3 The Sale Officer, Nizamabad Coop.Town Bank Ltd, Nizamabad. ..... PETITIONERS AND Dilip Pawar, S/o.Narayana Rao Pawar, R/o.H.No.61176/5, Gurbadi Road, Nizamabad. .....RESPONDENT Counsel for the Petitioners:GP FOR AGRICULTURE Counsel for the Respondent:MR.K.MANIK PRABHU The Court made the following : ORDER: This writ petition is ﬁled for a writ of certiorari to quash judgment, dated 18.04.2002 passed in CTA.No.98 of 2001 by the Andhra Pradesh Cooperative Tribunal, Hyderabad (for short ‘the Tribunal’). Heard the learned Government Pleader for Agriculture for the petitioners and Sri K.Manik Prabhu, learned counsel for the respondent. The respondent was the President of the Nizamabad Cooperative Town Bank Limited, Nizamabad (for short ‘the Bank’). An audit was conducted from 01.04.1999 to 31.10.1999 into the accounts of the Bank and on the basis of the audit report, petitioner No.1 issued show cause notice, dated 24.04.2000 to the respondent to show cause why sums of Rs.50,000/-, Rs.3,00,000/-, Rs.75,000/-, Rs.2,15,000/- and Rs.2,00,000/- shall not be recovered from him. The respondent submitted his explanation, dated 20.05.2000 to the said show cause notice. Purporting to have considered the said explanation, petitioner No.1 passed surcharge order, dated 24.04.2001, whereby he directed recovery of the above-mentioned amounts from the respondent. The said order was questioned by the respondent before the Tribunal by way of an appeal ﬁled under Section 76(1) of the Andhra Pradesh Cooperative Societies Act, 1964 (for short ‘the Act’). The said appeal was allowed by the Tribunal vide its judgment, dated 18.04.2002 on the short ground that petitioner No.1 failed to conduct enquiry as envisaged under Section 60 of the Act before passing the surcharge order. The same is assailed in this writ petition. The averments contained in the aﬃdavit ﬁled in support of the writ petition show that the surcharge order was passed after considering the explanation submitted by the respondent. Under Section 60 of the Act, where an audit report is submitted under Section 50 or inspection reports submitted under Sections 51, 52 or 53 of the Act, and it appears from the said reports that any person, who is or was entrusted with the organization, aﬀairs or management of the society, or any past or present oﬃcer or servant of the society has misappropriated or fraudulently retained any money or other property or has been guilty of breach of trust in relation to the society or has caused any deﬁciency in the assets of the society by breach of trust or willful negligence or has made any payment contrary to the provisions of the Act or the Rules or the Bye-laws, the Registrar or the person authorized by him may inquire into the conduct of such person or officer or servant and make an order requiring him to repay or restore the money or property or any part thereof with interest. Considering this provision, in S.Ramadas v. Subordinate Judge, Kothagudem and others[1], this Court held that Section 60 clearly contemplates an opportunity being given to the person against whom the surcharge order is proposed to be passed, to make his representation to explain his stand and allow him to participate in the enquiry before passing the ﬁnal order. The same view is reiterated in S.Rama Subba Rao v. President, Kaikaluru Irrigation and Power Department Sub-Divisional Employee’s Cooperative Credit Society Limited [2]. A Division Bench of this Court in Challa Sanyasinaidu v. Deputy Registrar of Cooperative Societies, Srikakulam [3] held that the reports referred to above form basis for the Registrar to proceed under Section 60 and after show cause notice is served and explanation is called for, an opportunity should be given to the aﬀected person to cross-examine the witnesses examined in the course of enquiry under any of the above-mentioned Sections or permit him to examine his witnesses to rebut their evidence. It further held that until this procedure is followed, the spirit of the provisions of Section 60 of the Act cannot be complied with. It observed that though Section 60 of the Act does not prescribe any particular procedure before passing surcharge order, nonetheless, it is mandatory that principles of natural justice shall be followed in the enquiry. In view of the above-mentioned authoritative pronouncements of this Court, the procedure followed by petitioner No.1 in passing the surcharge order against the respondent cannot be sustained. The Tribunal, therefore, rightly set aside the surcharge order and remitted the matter to petitioner No.1 for holding an enquiry and passing a fresh order. I do not, therefore, ﬁnd any error of law or jurisdiction contained in the judgment of the Tribunal requiring this Court’s intervention in exercise of its jurisdiction under Article 226 of the Constitution of India. Before parting with this case, it is necessary to observe that while remanding the matter, in the impugned judgment, the Tribunal recorded the ﬁnding that the allegation of misappropriation against the respondent is unsustainable. In the view of this Court, this observation is absolutely unwarranted. The Tribunal has ignored the fundamental jurisprudential principle that while remanding the case to the lower authority to decide the case afresh, no observations touching the merits of the case can be made, because the authority being subordinate to the higher authority making such observations is bound to be inﬂuenced by the same. This Court is surprised that the Tribunal being headed by a Judicial Oﬃcer ignored this fundamental principle of jurisprudence. The said observation contained in the impugned judgment is set aside and petitioner No.1 shall hold an enquiry without being inﬂuenced by any of the ﬁndings contained in the impugned judgment of the Tribunal touching the merits of the case. With the above observations, the writ petition is disposed of. As a sequel to disposal of main petition, interim order, dated 25.10.2002 is vacated and WPMP.No.26374 of 2002 is dismissed. C.V.NAGARJUNA REDDY, J 24th OCTOBER, 2008. kvni [1] 1992(3) ALT 50 [2] 1994(2) ALT 39 [3] 1998(1) ALT 482 (D.B.)