JUDGMENT - Tulpule R.D., J.J..-This petition came up for hearing before us and heard by us on 9-10-1981 at the end of which we pronounced our order allowing tke petition and setting aside the order passed by the Divisional Joint Registrar respordent No.1, dated 3rd February 1981 confirming the orders passed by the District Deputy Registrar and Assistant Registrar, respondents Nos. 2 and 3 to this petition. 2. The circumstances which gave rise to this petition are as follows: The petitioner was a Chairman of the Akola Taluka Co-operative Purchase and Sale Society Limited, Akola (hereinafter referred to as the Akola Society). This society, amongst other activities, it appears, was engaged in sel1ing fertilisers to agriculturists and others. There does not appear to be any restriction on the sale of these fertilisers by the Society. The society obtained those fertilisers through the agency of the District Marketing Officer, who in turn looked after the sales of the fertilisers on behalf of the Maharastra State Co-operative Marketing Federations, Bombay. 3. It appears that the prices of fertilisers were raised by the Government of India with effect from 8th June 1980. The petitioner avers that on the 9th of June] 980, the District Marketing Officer instructed the Manager of the Akola Society to inform him the stock position as of 7.6-] 980 as the rates of fertilizers were increased with effect from 8th of June 1980. The stocks were accordingly verified and information sent to the District Marketing Officer. According to the petitioner, on the 7th of June 1980, a sale was effected in nine instances in favour of 7 or 8 persons of fertilisers aggregating in price to a sum of Rs. 28,620. That this price of Rs. 28,620 was paid to Salesman Kakad on 7th of June 1980 itself in ,three sums, namely, cash amount of Rs. 3520, another cash amount of Rs. 7000 and cheque for Rs. 18,100. It is further stated that the Salesman handed over these amounts to the cashier on the 7th and 9th. That the sales were thus effected on the 7th itself However, entries thereabout in the stock book as well as in the cash register came to be made later, i.e. on the 9th, 8th being a holiday, being a Sunday. It appears that an enquiry was conducted by the Assistant Registrar through an Inspector into this transaction. That the sales were thus effected on the 7th itself However, entries thereabout in the stock book as well as in the cash register came to be made later, i.e. on the 9th, 8th being a holiday, being a Sunday. It appears that an enquiry was conducted by the Assistant Registrar through an Inspector into this transaction. As is later alleged, a similar enquiry was conducted in respect of two other societies also. On the basis of the enquiry report on 8th July 980. the impugned show cause notice came to be issued to the petitioner by the Assistant Registrar. A hearing was thereafter held on this show cause notice and by an order passed on the 3/5th November, 1980, the Assistant Registrar directed removal under section 78 of the Maharashtra Co-operative Societies Act of the petitioner from the chairmanship of the Akola Society. An appeal was filed by the petitioner. Chairman to the District Deputy Registrar, who is the appellate authority against that order, who confirmed the order of the Assistant Registrar. A revision application then came to be filed before the Joint Registrar, Co-operative Societies, Nagpur. 4. The Assistant Registrar by his order dated 5th November 1980 had held that the Chairman and his nearest persons have been benefited by the transaction and the transaction has caused a loss to the society. He also opined that continuation of the petitioner as Chairman of the Akola Society “was detrimental to the interest of the society”. The appellate order similarly says that the petitioner had taken “advantage of his influential position in the society and he could manage to show sales on dated 7-6-1980 though they were taken place subsequently”. This was held to be contravention of rule 57(a)(c) of the Maharashtra Co-operative Societies Rules and that the action on the part of the Chairman was “definitely detrimental to the interest of the society”. It may be mentioned that while deciding the appeal, the District Deputy Registrar went through the stock book and the account books and observed like the Assistant Registrar that there had been manipulations with regard to the transactions and the entries had been overwritten or scribbled with a view to accommodate the alleged transaction dated 7th June 1980. He also observed that “the Chairman himself and his nearest were benefited at the cost of loss to the society.” 5. He also observed that “the Chairman himself and his nearest were benefited at the cost of loss to the society.” 5. Before the Divisional Joint Registrar an additional ground was raised in the revision application filed before him that the orders passed by the District Deputy Registrar are discriminatory. That the petitioner Chairman has been discriminated against, as he belongs to the opposite party while the President of the Balapur Society belonging to the ruling party in similar circumstances and in respect of the transaction of that society which was similar has been exonerated. A copy of that decision was also filed before him. 6. The Divisional Joint Registrar while disposing of the revision application observed “It was argued on behalf of the appellant that no financial loss has been caused to the society because the fertilisers were under the godown scheme and that the society has already received its legitimate commission. Even presuming that what he says is correct and presuming that the society was not made to suffer any financial loss by showing ante-dated sales, in my opinion, this does not dilute the seriousness of the transactions.” He opined, therefore, that the Chairman had taken undue advantage of his office and has exercised undue influence over the staff working in the society, which was an act prejudicial to the interest of the society and was liable to be visited with a penalty under section 78 of the Maharashtra Co-operative Societies Act. 7. Mr. Manohar appearing for the petitioner firstly contended that the show cause notice had charged the petitioner only with having caused a loss to the society and benefited himself and his nearest persons. The benefit to the petitioner and his nearest persons is related to the loss to the society. He is not charged nor was he required to show cause against the charge of unlawful use or exercise of undue influence, obtaining entries made in the cash book or the stock book and thereby acting in a manner detrimental to the interest of the Society. He is not charged nor was he required to show cause against the charge of unlawful use or exercise of undue influence, obtaining entries made in the cash book or the stock book and thereby acting in a manner detrimental to the interest of the Society. The only charge as the show cause notice Annexure-A to the petition says and he emphasised the words used in the show cause notice and sequence that it follows the charge of benefit and loss to the society, and resultant satisfaction of the Assistant Registrar that this was detrimental to the interest of the society.” There was no charge, it was contended, of any falsification of the records or their manipulation. The reference to rule 57 (1) (c) in the show cause, he pointed out, is wholly irrelevant. Rule 57 (1) (c) reads thus: “57 (I): No officer of a society shall have any interest, directly or indirectly otherwise than as such officer- (a) * * * (b) * * * (c) in any other transaction of the society, except as investment made or as loan taken from the society or the provision of residential accommodation by the society to any paid employee of the society.” 8. It was, therefore, contended by Mr. Manohor that though the Assistant Registrar and District Deputy Registrar found the first charge proved against the petitioner, as we have extracted above, such was not the finding of the Divisional Joint Registrar. The Divisional Joint Registrar does not hold the petitioner guilty of the charge of having benefited himself in the transaction or caused a loss to the society. Mr. Manohar submitted that it was not possible to show that any such loss had been caused as no loss in fact had been caused. The Divisional Joint Registrar's finding in the revision application, therefore, that the act of the petitioner was prejudicial to the interest of the society, in that, he had exercised undue influence over the staff and manipulated entries in the stock book or cash book is a charge with which he was never confronted. He, therefore, submitted that the first and the only charge having not been found to be proved, and the second charge which was found proved by the ultimate authority not having been a subject of a show cause notice, the entire enquiry is vitiated and must be struck down. He, therefore, submitted that the first and the only charge having not been found to be proved, and the second charge which was found proved by the ultimate authority not having been a subject of a show cause notice, the entire enquiry is vitiated and must be struck down. A person must have notice and must have an opportunity of showing cause against a proposed action, particularly when it visits him with civil consequences and is of a judicial nature. He cannot be charged with one thing and found guilty 0f another. 9. As an additional submission and a part of the above, Mr. Manohar also submitted that the petitioner had no opportunity of cross-examining any of the persons whose statements are said to have been recorded and have formed the basis of the conclusions and findings of the authorities. There is a reference in the show cause notice to the statement of Kakad, the salesman of the society, Belkar, the cashier of the society and the Manager of the society as well as enquiry report. None of these persons, nor the enquiry officer was made available for cross-examination and their statements were not recorded in the presence of the petitioner. It is further his submission that though these statements were relied upon for the purpose of holding that the transaction of the sale of fertilisers did not take place on the 7th as was contended by the petitioner, but took place on the 9th and thereafter, these statements were not the basis of a finding that there was undue influence used. It was submitted that if the petitioner had an opportunity of cross- examining these persons, then he would have shown that there was neither any exercise of influence much less undue influence and that the statements made by Belkar were contrary to the actual state of affairs and were not true and that Kakad in his statement was inaccurate. 10. It was further made a grievance that the petitioner was wholly unaware of any statement of Bhanudas Jadhav, clerk and Suresh Haroe also another clerk, whose statements are relied upon substantially for the purposes of founding the charge by the Divisional Joint Registrar of use of “undue influence over the staff working in the society”. 10. It was further made a grievance that the petitioner was wholly unaware of any statement of Bhanudas Jadhav, clerk and Suresh Haroe also another clerk, whose statements are relied upon substantially for the purposes of founding the charge by the Divisional Joint Registrar of use of “undue influence over the staff working in the society”. There was no reference to the statements of these two persons in the show cause notice nor is the order passed by the Assistant Registrar or in the order passed by the District Deputy Registrar in appeal. They were obviously not referred to as they were not used in the inquiry. They were also not referred to in the show cause notice and were not relied upon. The revisional authority for the first time used them without any opportunity to the petitioner of explaining them, and also as in the case of other persons, of cross-examining these two persons and thereby causing a travesty of justice and denial of natural justice. It was, therefore, submitted that looked at from any point of view, the order passed cannot be sustained and must be struck down. There is a denial of even ordinary justice to the petitioner. We are inclined to think that these contentions are sound. 11. It is also clear that the very basis of the show cause notice is not clearly made out and did not exist in fact. The allegation is that the petitioner benefited himself in effecting transactions and sale of fertilisers and this, it is said, he did not in order to benefit himself as soon as the prices of the fertilisers were raised from the 8th of June. In order further to show that the transaction was of the 7th and not subsequent to the 8th either on the 9th or thereafter, the books were manipulated. It is an admitted position that these fertilisers. were received against an indent made to the District Marketing Officer and were sold to the Akola Society on the 7th or prior thereto. The procedure for sale of fertilisers to the society is that the society makes an indent to the District Marketing Officer and the District Marketing Officer passes that indent and issues an order. The good may not, however, be received immediately in the godown of the society. Sometimes they are received the same time and on occasions later on. The procedure for sale of fertilisers to the society is that the society makes an indent to the District Marketing Officer and the District Marketing Officer passes that indent and issues an order. The good may not, however, be received immediately in the godown of the society. Sometimes they are received the same time and on occasions later on. 'However, according to the practice set out by the society in its return and also as is contended by the petitioner, the salesman of the society begins to effect sales whether the goods are actually received in the Akola Society's god own or not. The sales in such cases are against the purchases made by the Society already. Therefore, the stock position it was contended may not actually reflect, the actual state of affairs on a given occasion. Further the society was entitled to commission according to the weight of the fertilisers sold for each type and quality of fertilisers. There was a different rate of commission, but the rate of commission was not related to the price, but to the tons of fertilisers sold. Whatever there may have been or may be, the price of the fertilisers sold, so far as the society was concerned its commission was secured. It was however pointed out that the sale in this case to the society having taken place on the 7th, the rise of rates effective from 8th could not have attracted to these prior sales. It was also pointed out that the societies were not clear at the time when the fertilisers were sold whether the price to be realised in respect of fertilisers sold earlier was according to the former rates or the new rates. 12. This position that there was no financial loss caused to the society is not disputed in the return filed on behalf of respondents 1 to 4. In para 6 it was stated that “the fact that subsequently the bills have been revised by the Marketing Federation as a matter of general policy does not take away the illegal transactions done on 9-6-1980. Only because the loss is covered up it cannot be said that there is no loss to the society.” The position, therefore is that though initially enhanced rate was intended to be made applicable to stocks held as on 8th, subsequently the Federation decided not to charge at the enhanced price. Only because the loss is covered up it cannot be said that there is no loss to the society.” The position, therefore is that though initially enhanced rate was intended to be made applicable to stocks held as on 8th, subsequently the Federation decided not to charge at the enhanced price. That is also clear from the letter dated 20th January 1980, which is Annexure-5 to the return of the society. When the appeal, therefore, was decided by the District Deputy Registrar, this fact was already known. Besides the return does not dispute that the commission was to be charged according to the tonnage. There is therefore, really no loss to the society in its earning of commission and since no loss in fact has been caused it could not be said that there was any loss at all. 13. It was further pointed out in this connection that the question whether the old rates were to be applicable to sales effected prior to 8th of June or new rates were applicable was itself not clear and not known to the society. In this connection reliance was placed upon documents 3 and 4 which were filed by respondent No.5-Society, both of which are dated 12th June 1980. These letters say that even old stocks were to be sold at the new fates. It is, however, stated that this knowledge reached the society when it received the letter document No.4 on 13-6-1980. In other words, therefore, it was contended that till 13th June 1980, there was no intimation that the revised rates raised from 8th of June were also to apply to stocks held by the societies though purchased by the societies prior to 8th. Therefore, it was contended there could have been no intention or design in manipulating the accounts or the entries in the stock book or cash book. If it was not known that even the old sales of fertilisers and the old stock of fertilisers was to be sold at the new rates prior to 13th, then there was no reason to manipulate or ante-date the sales so as to make them look as if made on the 7th though actually made as found by the authorities on the 9th. It was pointed out in this connection that receipt of the moneys and the cheque on the 9th is beyond dispute. It was pointed out in this connection that receipt of the moneys and the cheque on the 9th is beyond dispute. That the cheque was not sent by the Manager for realization to the bank was no fault of the person who gave the cheque, namely, the Chairman-petitioner. It was actually sent to the bank on the 12th and that is also prior to the receipt of information on the 13th. Therefore, it was urged that the transaction has been looked at unnecessarily suspiciously. The circumstance that the sale had been effected even before any knowledge of the new rate being applicable to old stocks of fertilisers, even according to the findings of respondents I to 3, totally destroys the conclusion. It was urged that the manipulation is wholly unnecessary unless it was motivated. If there is no motive, then there would not be any manipulation or use of influence or undue influence. Indeed, it was contended in this connection by the petitioner that if an opportunity had been given to the petitioner, the petitioner would have shown from this stock book or cash book that overwriting and scribbling which have been considered to be suspicious, have occurred on numerous -occasions in respect of transactions the genuieness of which has been never challenged. The denial of an opportunity to show that the scribblings and erasures or overwriting firstly was not unusual and consequently was not motivated and could not have been intended was altogether denied. 14. It was, therefore, urged that if the two basic conditions and facts are not found, or are found without a fair and proper opportunity to the petitioner to disprove them and without the knowledge to him of the material which was intended to be used against him, then the very inference or conclusion that this was against the interest of the society and detrimental to its affairs is vitiated and becomes perverse. The conclusion, therefore, being perverse and reached in violation of the principles of natural justice without the petitioner knowing the material which was sought to be used against him, on a charge which was not made known to him, and he had no opportunity to show cause cannot be permitted, to result in consequences which are drastic. An action under section 78 is a very drastic action. An action under section 78 is a very drastic action. It harms injuriously the reputation of the person concerned and deprives him of his elected office as well as status and image in the affairs of the society and constituents of the society. Action under section 78 is capable of causing irreparable damage. Unless, therefore, the safeguards which are built in such an eventuality are provided unless the person knows what is specifically charged against him and on the basis of what material, unless he is all owed a fair opportunity to meet those charges and to disprove them, no order under section 78 can be passed. Action under section 78 is an extreme action and is a weapon intended to be used sparingly. It cannot be used for ulterior purpose and can only be used to bring erring societies and their office bearers to book. 15. We may in this context refer to the provisions of section 78. The opening words of section 78 go to show that the Registrar has to form an opinion that “the committee of any society or any member of such committee persistently makes default, or is negligent in the performance of the duties imposed on it or on him by the Act,” or commits any “act which is prejudicial to the interests of the society or its members or wilfully disobeys directions”. It is then that the Registrar is empowered, after giving an opportunity “of stating its or his objections”, either to remove the Committee in the case of a committee and /or remove the member as the case may be. It would therefore be clearly seen that the Registrar can act under section 78 in case of persistent default or negligence in performance of duties, or commission of any act which is prejudicial to the interest of the society or is otherwise not discharging duties or functions properly. It is not in the present case alleged that there has been any persistent default or negligence. The only allegation, if at all, would be commission of an act which is prejudicial to the interest of the society or there is otherwise improper discharge of the functions. It may be possible to bring, if the charge was such, the action of the Chairmanpetitioner under either of these clauses. The only allegation, if at all, would be commission of an act which is prejudicial to the interest of the society or there is otherwise improper discharge of the functions. It may be possible to bring, if the charge was such, the action of the Chairmanpetitioner under either of these clauses. It could be said that he had committed an act prejudicial to the interest of the society or had not otherwise discharged his functions properly provided that was the charge and the charge was made specifically known to him. Causing financial loss to the society and improper benefiting of oneself can constitute an act prejudicial to the interest of the society or an improper discharge of functions by the Chairman. But that is not the final finding, nor can such a finding be reached. If the Chairman-petitioner were similarly by use of his influence to manipulate the records of the society his aft could also come under the very wide phrase. But that was not the charge. Besides this charge if made would have been closely linked with the first one and would equally hold or fall with the first. 16. For the respondents it was contended that the petitioner was fully aware of the material and he had inspected the entire record of the case on 21st and 22nd of December. In paragraph 14 of the return it is said that the petitioner was “informed of the document on which the order was passed. In fact, the show cause notice itself refers to the enquiry report and all other documents which have been taken into consideration while passing the orders against the petitioner. The counsel for the President has in fact inspected the entire record of the case for two days”. It was, therefore, urged that since the petitioner was aware of the entire record and had inspected it before the order was passed by the Divisional Joint Registrar in revision, no grievance could be made. We think this contention is wholly unsound on principle and also on facts. It is incorrect to say that the enquiry report or other such documents, namely, the stock book, the cash book or the statements of two clerks Jadhav and Bhanudas referred by the Divisional Joint Registrar were either intended to be relied upon or referred as such in the show cause notice. It is incorrect to say that the enquiry report or other such documents, namely, the stock book, the cash book or the statements of two clerks Jadhav and Bhanudas referred by the Divisional Joint Registrar were either intended to be relied upon or referred as such in the show cause notice. The show cause notice also does not say that the enquiry report as well as the statements recorded by the enquiry officer would be considered during the enquiry or relied upon. It is elementary that if that was sought to be done, a notice thereof ought to have been given to the petitioner. There does frat appear anything in the record from which it could be inferred why such a notice was not given. The mere circumstance that the counsel for the petitioner had inspected the record does not satisfy the requirement of the principles of natural justice or the principle or rule audi alteram partern. 17. Reliance- in this behal f was placed on behalf of the petitioner on the decision in (Swadeshi Cotton Mills v. Union of India)1. In that case a grievance was made that before the take-over of the industrial undertaking under section 18AA of the Industries (Development and Regulation) Act, 1951 no opportunity or hearing was given It was contended that the action was taken on the basis of two documents namely, copy,-of the Survey Report of Messrs Swadeshi Cotton Mills Company and Annual Report for the year ending 31st March 1971 (1977). The question which arose and which had also earlier arisen in (Keshav Mills v. Union of India)2 was whether an enquiry report or investigation report prior to the action impugned was necessary to be made available The Supreme Court pointed out that it was not laid down in that case “as an invariable rule that where a full investigation after notice” is given to the person concerned is made, such person “is never entitled on grounds 0 f natural justice to a copy of the investigation report”. The Court on the contrary held that “this rule of natural justice will. Apply at that stage in cases where unless the report is given the party concerned cannot make any effective representation about the action”. The Court on the contrary held that “this rule of natural justice will. Apply at that stage in cases where unless the report is given the party concerned cannot make any effective representation about the action”. We think that unless it was made out that at the time when the enquiry report Was made, the petitioner had a full opportunity of participating in the investigation, so that giving of subsequent opportunity to him after a show cause notice is issued in regard to the correctness of the conclusions of the enquiry report is necessary. A copy may not have to, be given. Even there it cannot be laid down as an absolute rule that it must not be given as the notices. Would be entitled to show cause against the conclusions also. It only means that in such a case it may be possible to contend that giving of a further opportunity of examining the evidence and the statements or document would be repetitions and an empty formality. 18. In the present case, the petitioner urged that the statements were not recorded in his presence. That he was also unaware which of these statements were going to be used against him except the three statements which Were referred in the show cause notice. Even the falsity or incorrectness of the statements he had no opportunity to demonstrate. There was no reference to the documents at an. The final authority i. e. the Divisional Joint Registrar did not refer to any of the three statements referred in the show cause notice, but altogether to two other statements. The circumstance that he had taken inspection of all those documents can hardly be a substitute for the right to the rule audi alteram partem in such a case. We think that this contention must be accepted and the argument that the petitioner had no opportunity to look into these papers' is of no avail and wholly irrelevant. 19. It seems to us quite plain that if the question as to whether the fertilisers sold to the Akola Society prior to 8th June 1980 may attract the new rates or no, was a question that strikes at the root of the suspicion that the entries in the stock book or cash books were manipulated. 19. It seems to us quite plain that if the question as to whether the fertilisers sold to the Akola Society prior to 8th June 1980 may attract the new rates or no, was a question that strikes at the root of the suspicion that the entries in the stock book or cash books were manipulated. The petitioner has averred that there are numerous other such occasions and entries which are scribbled over or overwritten and corrected. If that was so, the picking out of a particular entry as suspicious and basing one's conclusion thereupon without affording an opportunity to the person against whom it is used to demonstrate otherwise, is denial of justice to him. We think that in the present case, the petitioner has been visited with a consequence without giving him a fair opportunity and, therefore, the enquiry as well as the order passed therein must be struck down and quashed. It is not necessary in the circumstances for us to consider whether there was any discrimination or malajides in passing the concerned order against the petitioner, or in passing a similar order in the case of Chairmen of Balapur Society. 20. As we had already expressed at the end of the arguments, the petition would be allowed and rule made absolute. The petitioner will get his costs from the respondents. Petition allowed.