THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY W.P.No.600 of 2004 Dt:23-09-2010 Between : Adduri Varahalamma, Visakhapatnam ..Petitioner And The Deputy Registrar of Coop. Societies, Yelamanchali, Visakhapatnam and others .. Respondents Counsel for the petitioner: Sri D.V. Nagarjuna Babu Counsel for respondents : G.P. for Cooperation for RR1 & 2 < GIST >HEAD NOTE: ? CASES REFERRED : THE HON’BLE SRI JUSTICE L. NARASIMHA REDDY Writ Petition No.600 of 2004 ORDER: The husband of the petitioner by name, A. Jogarao was employed as a Clerk in the Kothakota Primary Agricultural Co-operative Society, the 3rd respondent herein. An enquiry under Section 51 of the A.P. Co-operative Societies Act, 1964, (for short ‘the Act’) was ordered into the management and affairs of the society by the Divisional Cooperative Officer, Yelamanchali. In the report, it was pointed out that Jogarao was entrusted with the supervisory work in respect of certain villages, within the area of operation of the society, and that he is responsible for not recovering a sum of Rs.1,78,285/- from 23 members. It was also pointed out that, by 05-09-1998, a sum of Rs.1,686/- was outstanding against him. The report was submitted on 30-11-2001. However, it emerged that, even before the initiation of enquiry under Section 51 of the Act, Jogaarao died, on 02-04-2000. Taking the report of the Enquiry Officer into account, the Deputy Registrar of Cooperative Societies, Yelamanchali, the 1st respondent, initiated surcharge proceedings under Section 60 of the Act, against the petitioner. Stating that the petitioner did not submit the explanation to the show cause notice, the 1st respondent passed an order dated 29-05-2003, directing recovery of a sum of RS.1,25,071/- from the petitioner, with interest at 18% per annum. The same is challenged in this writ petition. Heard the learned counsel for the petitioner and learned Government Pleader for Cooperation. None appears for the 3rd respondent-Society. The Act provides for enquiry, inspection and audit, under the relevant provisions, into the affairs of any society, registered under it. In case any deficiencies or acts of malfeasance are noticed in the enquiry, the general body of the society is vested with the power to initiate proceedings under Section 60 of the Act. In a given case, the Registrar of Co-operative Societies can also order further steps. In the instant case, the enquiry was, no doubt, conducted into the affairs of the society. The fact, however, remains that the person against whom certain allegations were made, viz., the husband of the petitioner, who was working as a Clerk; was no more. He died in the year 2000 itself, whereas the enquiry was initiated and concluded in the year 2001. There does not exist any basis for the findings. The findings in an enquiry, audit or inspection are almost unilateral in nature, and not based upon any response from the affected persons. It is only when the steps in the form of surcharge proceedings are initiated, that the affected person is issued notice. Here again, the findings recorded in the enquiry would not constitute basis by themselves, and the society has to independently plead and prove the acts of misappropriation, or misutilisation of funds. The actual determination as to the misappropriation etc., would take place, only in the proceedings under Section 60 of the Act. In case, it is ultimately found that an employee or other person connected with the society is responsible for making good the amount, the steps for recovery thereof have to be initiated. It is a matter of record that the husband of the petitioner died much before the initiation of enquiry under Section 51 of the Act. In fact, any determination as to his being liable to pay the amount could have taken place, only in the proceedings under Section 60 of the Act. That possibility did not exist, since he was no more, even by the time the enquiry under Section 51 was initiated. Section 60 of the Act neither expressly, nor by necessary implication provides for initiation of proceedings against the legal heirs of a person, named in an enquiry or audit. The exercise undertaken by the 1st respondent is akin to the one, in proceedings against legal representatives of an employee, for acts of misconduct. Such a course is impermissible. As pointed out earlier, things would have been different altogether, had the husband of the petitioner been held liable to pay any amount, during his lifetime. In such an event, it would have been competent for the respondents to take steps for recovery of such determined amount. Viewed from any angle, the impugned order cannot be sustained in law. The writ petition is accordingly allowed, and the impugned order is set aside. There shall be no order as to costs. _______________________ L. NARASIMHA REDDY, J. Dt.23-09-2010 Note: L.R copy to be marked. (B/O) KO