IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE FOURTEENTH DAY OF OCTOBER TWO THOUSAND AND NINE PRESENT THE HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION NO : 22594 OF 2000 Between: K.Satyanarayana …Petitioner And The A.P.Cooperative Tribunal and others …Respondents Counsel for the petitioner : Sri Sreemannarayana Vattikuti Counsel for respondent No.1 : None appeared Counsel for respondent No.2 : G.P.for Cooperation Counsel for respondents 3 and 4 : Sri Polisetty Radha Krishna The Court made the following O R D E R: This writ petition has been filed for issuing a Writ of Certiorari to quash order dated 21.04.1997 passed by respondent No.2 and confirmed by order dated 28.07.2000 in O.A.No.14 of 1998 by respondent No.1-Tribunal. On the directions given by respondent No.2, the Cooperative Sub-Registrar held an enquiry under Section 51 of the Andhra Pradesh Cooperative Societies Act, 1964 (for short “the Act”) and submitted his report on 27.02.1996. Evidently another report was submitted on 29.04.1996, which was said to be clarificatory in nature. On the basis of the said reports, proceedings under Section 60 of the Act were initiated and order dated 21.04.1997 was passed by respondent No.2 against the petitioner ordering the petitioner to pay a sum of Rs.19,002-97 ps with 22% interest towards unauthorised expenditure incurred by him as the President of respondent No.3- Society. The said order was carried in appeal by the petitioner before respondent No.1-Tribunal, which by its order dated 28.07.2000, in O.A.No.14 of 1998, dismissed the same. Assailing these two orders, the petitioner filed the present writ petition. At the hearing, Sri Sreemannarayana Vattikuti, learned counsel representing Sri K.Chidambaram, learned counsel for the petitioner, raised two contentions, namely; (1) the action of respondent No.2 in calling for a second report from the Enquiry Officer is illegal and (2) denial of opportunity to the petitioner to adduce evidence under Section 60 of the Act by respondent No.2 vitiates the surcharge order passed by him. Sri Polisetty Radha Krishna, learned Standing Counsel for respondent No.3, however, submitted that the second report dated 29.04.1996 was only clarificatory in nature and that therefore, there was no illegality in the surcharge order passed by respondent No.2 based on report dated 27.02.1996 as clarified in report dated 29.04.1996. He further submitted that a written statement was called for under Section 60 of the Act by respondent No.2 from the petitioner and thereby, respondent No.2 has followed the principles of natural justice. I have carefully considered the submissions of the learned counsel and perused the record. As far as the first contention is concerned, the petitioner failed to file the two reports dated 27.02.1996 and 29.04.1996. Therefore, it is not possible for this Court to pronounce upon the nature of the two reports and to arrive at the conclusion that under the first report, the petitioner was exonerated as contended by the learned counsel for the petitioner. In paragraph 5 of the order passed by the Tribunal, it is stated that on receipt of first report dated 27.02.1996, the Divisional Cooperative Officer issued a memo to the Enquiry Officer to submit a further report to clarify certain aspects and meet the deficiencies pointed out in the first enquiry report. In the absence of any contra material produced by the petitioner, I have no reason to come to a different conclusion from the one arrived at by the Tribunal that the second report was only clarificatory in nature. Viewed from this angle, the order of this Court in Choutuppal Handloom Weavers’ Cooperative Society Limited, Nalgonda District v. Commissioner of Handlooms and Director of Handlooms and Textiles[1], relied on by the learned counsel for the petitioner, is of no help to the petitioner. That was a case where after receipt of the first report, the Registrar has instituted a second enquiry and called for a fresh report. This Court, therefore, held that successive enquiries were not permissible. The facts of this case, therefore, bear no similarity to the facts of the case in Choutuppal Handloom Weavers’ Cooperative Society Limited. For the aforementioned reasons, the first contention of the learned counsel is rejected. As regards the second contention, I find substance in the same. The petitioner specifically pleaded before the Tribunal that except calling for an explanation, no opportunity was given to him to adduce evidence. In Challa Sanyasi Naidu v. Deputy Registrar of Cooperative Societies, Srikakulam[2], the Division Bench held as under- “The scheme of Section 60 of the Act in our view unfolds itself as follows:- In the course of inspection under Section 52 of the Act, the Registrar may cause the inspection of books of the society with a view to find out the irregularities, acts of omission and commission. This enquiry is only administrative in nature, and if the Registrar prima facie is satisfied of the irregularities on the basis of the report of the Enquiry Officer, he may initiate surcharge proceedings under Section 60. That report may form the basis for the Registrar to proceed under Section 60 and issue a surcharge order eventually. The person against whom a report is sent under Section 52 has no opportunity to squarely meet the allegations against him at that stage. He is not allowed to cross-examine the witnesses from whom statements are recorded implicating his involvement. He cannot also adduce rebuttal evidence. That is not the stage where a demand can be made against him to pay back the sum or liability fastened to him as per the report of the Enquiry Officer. On the contrary, Section 60 clearly contemplates an opportunity being given to the delinquent by making a representation. In our view, this is the proper occasion where the officer or the servant has to be given an opportunity of explaining his stand and allow him to participate in the enquiry before a final order is passed. This is a valuable right given to the delinquent which cannot be brushed aside in a routine manner. After the show cause notice is served and an 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 Section 52 or permit him to examine his witnesses to rebut their evidence. Until this is done, the spirit of making a representation, as contemplated under Section 60, cannot be fulfilled. Although Section 60 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. Evidence recorded behind the back of the defaulter cannot be relied upon to fasten the liability on him without giving him an opportunity to cross- examine the witnesses. The Registrar in his surcharge proceedings is a Court whose order can very well form the subject matter of judicial review under Article 226 of the Constitution of India. Therefore, it is in the fitness of things that an opportunity like supply of copy of enquiry report, statements of witnesses recorded during the said enquiry, and also an opportunity to cross-examine those witnesses, or permit him to examine his own witnesses by the delinquent by way of rebuttal should be allowed before an order under Section 60 is passed. Therefore, we respectfully agree with the view taken by the learned Judge in S.Rama Subba Rao vs. President, Kaikuluru Irrigation and Power Department Sub-Divisional Employees Cooperative Credit Society Limited- 1992(3) ALT 50. Even in Mohd. Ghouse vs.Deputy Registrar or Co-operative Societies, Vikarabad and others – 1986 (2) ALD 108 (NRC), the learned Judge has rightly observed that the proviso to Section 60 mandates adequate opportunity before passing the order, and the issuance of notice proposing to fix the liability under Section 60 is imperative and as such there is no breach of principles of natural justice. Having said so, the learned Judge went on observing that Section 60 is an immediate and necessary consequence of enquiry and audit and inspection and the enquiry for the second round is considered to be superfluous, and the affected person is not prejudiced or disadvantaged as the enquiry is done in anterior proceedings. These later observations of the learned Judge appear to strike a contrary note, and we do not therefore subscribe to the same.” Admittedly, the petitioner was not allowed to adduce evidence to rebut the contents of the report submitted by the Enquiry Officer under Section 51 of the Act. Therefore, following the dictum laid down in Challa Sanyasi Naidu, the impugned orders are set aside. Respondent No.2 is directed to hold an enquiry afresh under Section 60 of the Act by following the procedure indicated in the judgment of this Court in Challa Sanyasi Naidu, and pass an order afresh within a period of eight (8) weeks from the date of receipt of a copy of this order. C.V.NAGARJUNA REDDY, J Dated 14th October, 2009 vrn [1] 1999 (5) ALD 146 [2] 1998 (1) ALT 482