AP Cooperative Societies Act | Surcharge Proceedings Can Be Initiated Even During Liquidation Of Society: Andhra Pradesh High Court

The Andhra Pradesh High Court has dismissed a writ petition challenging the initiation of Surcharge Proceedings under Section 60 of the A.P Cooperative Societies Act on the ground that such proceedings are legally permissible even during the liquidation of a cooperative society.After perusing Section 60 of the Act, which empowers the competent authority to initiate Surcharge Proceeding during the winding up of a society, Justice Gannamaneni Ramakrishna Prasad in his order said:“The above provision clearly indicates that the Surcharge Proceeding can be initiated even by the Liquidator. The said provision would also clearly indicate that the Surcharge Proceeding would go on even during the process of winding up of the Society. In view of the very clear wording indicated in Section 60 of the Act, the submission of the learned Counsel for the Writ Petitioners pales-away, inasmuch as the said submission is directly in conflict with the Section 60 of the Act. Unfortunately, the impugned proceeding that was challenged way back in the month of November, 2006, stood suspended by an Interim Order on 01.12.2006 (almost 19 years ago). In view of the above analysis, this Court is of the considered view that the Surcharge Proceeding under Section 60 of the Act can be initiated by the competent authority and to be proceeded with even during the course of the liquidation process.”BackgroundInitially, Surcharge Proceedings had been initiated against the writ petitioners vide proceedings dated 29.03.2004, which were challenged before the Andhra Pradesh Co-operative Tribunal, Visakhapatnam (“Tribunal‟). The Tribunal, by an order dated 18.05.2006, allowed the same and remanded the matter to the Deputy Registrar of Cooperative Societies, Vizianagaram, with a direction to make a fresh enquiry in the light of the observations made by the Tribunal. The Tribunal had ordered that an opportunity like supply of copy of Enquiry Report, Statements of witness recorded during the said enquiry and also an opportunity to cross-examine those witnesses or permission to examine their own witnesses by way of rebuttal should be allowed before an order under Section 60 of the Act is passed.Consequently, the Deputy Registrar of Cooperative Societies had issued notice under Section 60(1) on 16.10.2006 and thereafter initiated proceedings in accordance with the directions issued by the Tribunal. The alleged delinquents filed the present writ petition on 24.11.2006 praying before the Court to declare these proceedings as illegal, arbitrary and without jurisdiction. The Court had passed an interim order by suspending the proceedings dated 16.10.2006 vide Order dated 01.12.2006.It was the case of the petitioners that the Official Respondents had not furnished any Surcharge Proceeding on 16.10.2006. Additionally, it was argued that once Liquidator was appointed under Section 65 of the Act, the Surcharge Proceeding initiated against the petitioners must be dropped. The petitioners further argued that the Liquidator shall have the power to institute and defend suits and other legal proceedings on behalf of the society by the name of his office under Clause (a) of Sub-clause (1) of Section 66 of the Act.For reference, Section 60 of the Act empowers the competent authority to initiate Surcharge Proceeding during the winding up of a society. It clearly stipulates that the Registrar, or any person specially authorised by him on this behalf, of his own motion or on the application of the Committee, Liquidator or any Creditor or Contributor, may inquire into the conduct of such person or officer or servant and make an order requiring him to repay or restore the money, etc.The Court held that the Surcharge Proceeding under Section 60 of the Act can be initiated by the competent authority and to be proceeded with even during the course of the liquidation process.In conclusion, dismissing the writ petition, the Court held,“…the present Writ Petition is not only devoid of any merit but also an abuse of process, inasmuch as the Writ Petitioners have approached this Court challenging the very impugned notice dated 16.10.2006, which notice is in fact issued as per the direction of the Tribunal in O.A.No.2 of 2005 on 18.05.2006. The contention of the Writ Petitioners is that the material has not been supplied to the Writ Petitioners. The same is also frivolous in nature, inasmuch as the Writ Petitioners have never made any application to the competent authority namely the Deputy Registrar of Co- operative Societies seeking any material documents after the impugned notice came to be issued. Even on this score, the present Writ Petition is devoid of any merit and also an abuse of process. Accordingly, the Writ Petition is dismissed. There shall be a direction to both the Writ Petitioners to pay Costs of Rs.10,000/- each within three weeks from today. There shall be a direction to deposit the Costs in favour of A.P High Court Advocates‟ Association, High Court Buildings,...

AP Cooperative Societies Act | Surcharge Proceedings Can Be Initiated Even During Liquidation Of Society: Andhra Pradesh High Court

Saahas Arora

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AP Cooperative Societies Act | Surcharge Proceedings Can Be Initiated Even During Liquidation Of Society: Andhra Pradesh High Court

Saahas Arora

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