Judgment :- 1. This revision arises out of an Original Petition filed by the revision petitioner under S.49(2) of the Madras Co-operative Societies Act (Act VI of 1932), hereinafter referred to as the 'Act'. The learned single judge before whom it came up for bearing had adjourned the case for being posted before a Bench; and that is how it has come before us now. 2. The revision petitioner was the President of the Kottakkal Producers-cum-Consumers Society, hereinafter referred to as the 'Society', which subsequently was converted into the Kottakkal Co-operative Rural Bank Ltd., hereinafter referred to as the 'Rural Bank', from 25-11-1950 to 28-1-1958. The Society, and later, the Rural Bank in succession, had an account with the Kottakkal Co-operative Urban Bank Ltd., hereinafter referred to as the 'Urban Bank'. 3. The Registrar of Co-operative Societies ordered an enquiry into the constitution, working and financial conditions of the Rural Bank under S.38 of the Act. It would appear that the said order for enquiry was passed on certain allegations made in the report of the Inspector of the Calicut District Cooperative Bank. During the course of the enquiry it was found that there bad been misappropriation of the funds of the Society and the Rural Bank. Criminal cases were filed against the revision petitioner and three others, alleging misappropriation and criminal breach of trust. All the cases, however, ultimately ended in acquittal. Thereafter the Deputy Registrar of Co-operative Societies passed a surcharge order under S.49(1) of the Act, requiring the revision petitioner to pay a sum of Rs. 59,000/-. Aggrieved by this order, the revision petitioner filed O. P. No. 48 of 1963 on the file of the District Judge, Kozhikode, under S.49(2) of the Act. After the formation of Malappuram District, the O. P. was transferred to the file of the District Judge, Manjeri at Kozhikode on whose file it was numbered as O. P. No. 3 of 1970. The learned District judge by her order dated 7 41972 dismissed the original petition. Hence this revision. 4. As per CMP. After the formation of Malappuram District, the O. P. was transferred to the file of the District Judge, Manjeri at Kozhikode on whose file it was numbered as O. P. No. 3 of 1970. The learned District judge by her order dated 7 41972 dismissed the original petition. Hence this revision. 4. As per CMP. No. 12940 of 1972 permission is sought by the revision petitioner to raise the following additional ground: "The lower Court ought to have held that the Registrar had no jurisdiction to take surcharge proceedings inasmuch as there was no proper enquiry under S.38 of the Madras Co-operative Societies Act and inasmuch as the Enquiry Report does not contain any finding that the petitioner has misappropriated or fraudulently retained any money or other property or that he has been guilty of any breach of trust." The learned counsel appearing for the Rural Bank opposes this petition on the ground that the attempt of the revision petitioner is to urge a new point before this Court. We do not think that this contention of the respondent is quite correct. The third ground given in the original petition for quashing the impugned order reads as follows: "III. The circumstances of the case do not bring the matter within the ambit of S.49(1) of the Co-operative Societies Act. The petitioner has not been negligent nor is he responsible for any misappropriation or misdemeanour; and as such he ought not to have been surcharged for any of the losses said to have been sustained by the society." In fact, the learned District Judge herself has in Para.6 of the order briefly referred to this contention while narrating the facts of the case. In view of the fact that this contention has already been raised, bat not considered or decided by the learned District Judge, and also taking into consideration the fact that this goes to the very root of the case and has bearing on the question of jurisdiction, we are of the opinion that leave to raise the additional ground has to be granted. The petition is, therefore allowed. 5. Though several grounds have been raised in the memorandum of revision, having beard the counsel appearing for both sides at some length, we find that consideration of the additional ground, to which reference has been made above, would suffice to dispose of this revision, 6. The petition is, therefore allowed. 5. Though several grounds have been raised in the memorandum of revision, having beard the counsel appearing for both sides at some length, we find that consideration of the additional ground, to which reference has been made above, would suffice to dispose of this revision, 6. In this context it would be profitable for us to examine the scheme of the Act with reference to the surcharge proceedings. The impugned order under S.49(1) of the Act is based on the report of an enquiry under S.38. S.49(1), under which the surcharge order is passed, is as quoted below: "49. In this context it would be profitable for us to examine the scheme of the Act with reference to the surcharge proceedings. The impugned order under S.49(1) of the Act is based on the report of an enquiry under S.38. S.49(1), under which the surcharge order is passed, is as quoted below: "49. (1) Where in the course of an audit under S.37 or an inquiry under S.38 or an inspection under S.39 or the winding up of a society, it appears that any person who has taken part in the organisation or management of the society or any past or present officer of the society has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society, the Registrar may, of his own motion or on the application of the committee or liquidator or of any creditor or contributory, examine into the conduct of such person or officer and make an order requiring him to repay or restore the money or property or any part thereof with interest at such rate as the Registrar thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, fraudulent retention or breach of trust as the Registrar thinks just." It is fairly clear, on a reading of the sub-section, that to sustain an order of surcharge under S.49(1), three conditions are to be satisfied: (1) in the course of an audit under S.37 or an inquiry under S.38 or an inspection under S.39 or the winding up of a Society, it should appear that any person who had taken part in the organisation or the management of the Society or any past or present officer of the Society had misappropriated or fraudulently retained any money or other property or had been guilty of breach of trust in relation to the Society; (2) the Registrar, thereafter, on bis own motion or on application of the committee or liquidator or any other creditor or contributory has to examine into the conduct of such person with reference to the report of audit, inquiry or inspection, as the case may be; and (3) the Registrar has to quantify the amount to be contributed by the delinquent to the assets of the Society. It is the admitted case here that there was an inquiry under S.38. It is the admitted case here that there was an inquiry under S.38. Ext. A-8 is the report of the said inquiry. The learned counsel appearing for the revision petitioner has taken us through the contents of Ext., A-8. We do not find any definite finding as to the culpability or liability of the revision petitioner with respect to the amount that is alleged to have been misappropriated from the Rural Bank. As a matter of fact, the inquiry officer did not even record the statements of the material witnesses cited before him on the ground that the witnesses were not willing to give any statement when parallel proceedings In the criminal court were pending. In the light of the provisions contained in S.49 (1), unless there is a definite finding regarding the alleged misappropriation or fraudulent retention of money or other property of the Rural Bank, or breach of trust in respect thereof, having been committed by the revision petitioner, the surcharge order cannot sustain. It has to be noted that after the receipt of the report of the inquiry under S.38, the Registrar is required to examine the conduct of the person concerned. The words "examine into the conduct of such person" are used with reference to the words "any person who has taken part in the administration " indicating that the Registrar is to examine the conduct of only such person as has been found in the report of audit, enquiry or inspection to have misappropriated money or property of the Society. The view we are inclined to take on this question is fortified by the decision of the Supreme Court in Sriramulu v. Co-op. Marketing Society (AIR. 1965 SC. 621), wherein it has been held as follows: "It is true that there was an enquiry conducted into the affairs of the Society under S.38, but that by itself is not sufficient. It has further to be proved that the facts alleged in the claim, and on which it is based, were disclosed at that enquiry Mr. Ram Reddy admitted that the enquiry report was not before the Court and is not in the record of these proceedings. It has further to be proved that the facts alleged in the claim, and on which it is based, were disclosed at that enquiry Mr. Ram Reddy admitted that the enquiry report was not before the Court and is not in the record of these proceedings. It is not therefore, possible to say that there is correspondence between the facts disclosed in that report as a result of the enquiry under S.38 and those found in the statement of claim which was referred by the Registrar to the Deputy Registrar for arbitration under S.51. The case must therefore, be held not to fall under S.49 of the Act." The above cited Supreme Court decision emphasizes that there should be correspondence between the facts disclosed in the report of enquiry under S.38 and those found in the statement of claim forming the basis of the surcharge order under S.49 (1) of the Act. By no stretch of imagination could it be said in the instant case that this primary condition is fulfilled. 7. We are also satisfied from certain facts disclosed by the documentary evidence in this case that the Rural Bank has no definite case as to who misappropriated the amount and what exactly was the amount that had gone out of the funds of the Rural Bank. Some of the claims, we find, really relate to what the Urban Bank bad lost by its employees resorting to daring malpractices, presumably in collusion with some persons holding responsible posts in the Rural Bank. The surcharge order, as we have already stated, does not conform to the requirement of S.49 (1) of the Act, and therefore it is bound to be set aside for that reason alone. It is, therefore, not necessary for us to go into the other questions raised in this revision. The revision petition is accordingly allowed and the impugned surcharge order is set aside. There will, however, be no order as to costs.