HON’BLE DR. JUSTICE G. YETHIRAJULU W.P.No. 6226 of 2000 DATE: 06-02-2008 Between: Simhadri Venkata Rama Reddy ……………… Petitioner and 1. The Deputy Registrar of Co-operative Societies, Guntur, Guntur District and others. ………….. Respondents HON’BLE DR. JUSTICE G. YETHIRAJULU W.P.No. 6226 of 2000 ORDER: This writ petition is filed by the petitioner seeking to declare the action of the respondents in taking steps for realization of an amount of Rs.36,000/- said to be misappropriated by the Accountant by name M. Mallikarjuna Rao, who is no more, as illegal and arbitrary and consequently to set aside the order, dated 27-01-2000 passed in O.A.No.125 of 1996 on the file of the second respondent which confirmed the surcharge order, dated 09-09-1988 passed by the first respondent. 2. The petitioner is the son of the then Managing Director S.Venkata Ranga Reddy. During the course of inspection of the records, the concerned authorities found that the records were not properly maintained, therefore, an enquiry under Section 51 of the A.P.C.S. Act, 1964 was ordered into the affairs of the Mangalagiri Central Co-operative Stores Limited, Mangalagiri. In pursuance of that, the enquiry Officer-cum-Cooperative Sub-Registrar, Guntur, conducted a detailed enquiry and came to a conclusion that an amount of Rs.36,000/- was misappropriated by late Sri M. Mallikarjuna Rao, the then Accountant of the Co-operative Society. The amount was sought to be recovered from the properties of Mallikarjuna Rao. When the enquiry officer made enquiries from the legal heirs of late Malikarjuna Rao, he came to know that late Mallikarjuna Rao do not possess any properties for recovery and his children were doing some menial jobs for livelihood, therefore, the enquiry officer observed that it may not be possible for recovery of the amount from the legal heirs. He further observed that as per the by laws No.34 (d), the Managing Director shall receive all monies and securities on behalf of the stores and shall make arrangements for proper maintenance and custody of cash balance and other properties of the stores. Even though the then Accountant cheated the stores 27 times, the Managing Director could not detect the misleads and utterly failed to discharge his duties as a Managing Director, therefore, the enquiry officer held that the then Managing Director is also responsible for the misappropriation. 3. It is represented by the learned counsel for the petitioner that the then Managing Director died before the enquiry, therefore, the surcharge proceedings have been initiated against the son of the said Managing Director i.e., the petitioner herein. 4. After going through the record, it is observed that the amount was misappropriated by the then Accountant late Sri M. Mallikarjuna Rao only. The observation of the enquiry officer that there was no effective supervision over the affairs of the Co- operative Society cannot make the Managing Director liable for civil action for recovery of the amount. For failure to make effective supervision, he may be liable for departmental action for dereliction of his duty. But, it is not known whether any such action is initiated against him because the aspect of misappropriation came to light subsequent to his death. So, when there is no order indicating that the Managing Director misappropriated the amounts, the recovery proceedings initiated against the son of the then Managing Director is unwarranted and cannot be sustained. Unless it is made out clearly that the Managing Director is also responsible for misappropriation of the funds of the Society, the authorities cannot proceed against the son of the Managing Director i.e., the petitioner herein, therefore, the surcharge proceedings are liable to be set aside. 5. In the result, the writ petition is allowed. The order, dated 27-01-2000 passed in O.A.No.125 of 1996 by the second respondent and the order, dated 09-09-1988 passed by the first respondent are hereby set aside by holding that they are illegal and arbitrary and opposed to law to proceed against the petitioner. No order as to costs. ___________________ Dr. G. YETHIRAJULU, J Date:06-02-2008 YCR