H. G. BALAKRISHNA, J. ( 1 ) SRI m. Jagannath, learned high court government pleader, is directed to lake notice for respondent-1. ( 2 ) 8 appeals were preferred under Section 105 of the Karnataka Co-Operative Societies Act, 1959, (hereinafter referred to as 'the act') against the common order passed by the deputy registrar of co-operative societies, dakshina kannada, mangalore (respondent-1) on 11-6-1980 in surcharge proceedings No. Msp/bscs/ 1015/79-80. All the appeals were dismissed by the Karnataka appellate tribunal, Bangalore, (respondent-3) on 6-11-1984 and the petitioners are aggrieved by the order of dismissal. 3, the petitioners were the members of the committee of management of the bajagoli service co-operative society, karkala taluk, dakshina kannada district (respondent-2 ). On allegation of misappropriation, an enquiry was held under Section 64 of the act and a report was submitted by the enquiry officer to the effect that a total sum of Rs. 2,11,793-35 had been misappropriated. The enquiry officer recommended surcharge proceedings and thereafter show cause notice was issued to the concerned calling upon them to give written reply or to appear before the authority with evidence, if any. The surcharge proceedings were taken up against the ex-directors, ex-secretaries and ex clerks of the society. Written objections were submitted and, after examining the objections, 5 issues were framed and, on all the 5 issues, adverse findings were given against the petitioners and others and ultimately an order was passed exercising powers under Section 69 of the act directing the petitioners to pay specified amounts of money with interest at the rate of 15% per annum with effect fix a 1-7-1976 till the date of payment. 4. Against this order of respondent-1, appeals were preferred before respondent-3 which confirmed the order appealed against. Being aggrieved, the petitioners have questioned the validity and propriety of the orders of respondents-1 and 3. 5. The point for consideration is whether the requirements of law have been duly complied with as contemplated under sections 64 and 69 of the act and whether the order of respondent- 3 deserves to be quashed for non-application of mind. 6. Section 64 of the act envisages an enquiry by the registrar either of his own motion, by himself or by a person authorised by him by an order in writing, to hold an enquiry into any matter specified in the order touching the constitution, working and financial condition of a co-operative society. 6. Section 64 of the act envisages an enquiry by the registrar either of his own motion, by himself or by a person authorised by him by an order in writing, to hold an enquiry into any matter specified in the order touching the constitution, working and financial condition of a co-operative society. Sub-section (3) of Section 64 of the act lays down the powers which could be exercised by the registrar or the person duly authorised by him. Section 64 (3) (b) of the act confers on the registrar or the person authorised by him the power to summon any person who, he has reason to believe, has knowledge of any of the affairs of the society to appear before him at public office at the headquarters of the society or any branch thereof and may examine such person on oath. Thus, it is seen that in the instant case the enquiry officer while holding an enquiry under Section 64 of the Act, has not summoned and examined on oath the petitioners against whom surcharge proceedings were sub-sequently launched. The power conferred on the enquiry officer under sub-section (3) (b) of Section 64 of the act is intended to be utilised for the purpose of summoning any person whom the enquiry officer believes has knowledge of any of the affairs of the society. The petitioners, who are members of the committee of management, could certainly be imputed with the knowledge of the affairs of the society. There is no material on record to show that these petitioners against whom ultimately surcharge proceedings were held were called upon by the enquiry officer to give their statements on oath so that the enquiry officer had some rational i basis for preparing a report of the enquiry. In fact, either from the order passed by respondent-1 or from the order of rcspondenl-3 is it discernible whether such a procedure was adopted at all and whether the procedure contemplated under Section 64 of the act was followed in preparing and submitting the report. The report of the enquiry officer is the foundation for action to be taken under Section 69 of the act. Unless the foundation is property laid in accordance with law, the edifice built on the basis of the enquiry report leading to surcharge proceedings and final fixation of responsibility on the petitioners, is susceptible to doubt. The report of the enquiry officer is the foundation for action to be taken under Section 69 of the act. Unless the foundation is property laid in accordance with law, the edifice built on the basis of the enquiry report leading to surcharge proceedings and final fixation of responsibility on the petitioners, is susceptible to doubt. It was rightly submitted on behalf of the petitioners that the petitioners did not have any access to the records, nor have been furnished with a copy of the enquiry officer's report. Submission is made on behalf of the petitioners that neither the petitioners were summoned to the enquiry and examined, nor did they have an opportunity to know and participate in the enquiry proceedings. 7. I hopefully looked into the surcharge proceedings produced as Annexure-A to the writ petitions. Even these surcharge proceedings do not divulge the nature of the enquiry conducted nor refer in detail to the report submitted by the enquiry officer in respect of relevant material particulars. Ah that is said in the first para of the surcharge proceedings under Annexure-A is that the enquiry officer submitted his report which reveals misappropriation of Rs. 2,11,793- ( 3 ) IT is also forthcoming from para-1 of the said proceedings that the enquiry officer suggested surcharge proceedings. It is only in the course of the surcharge proceedings held under Section 69 of the act that an opportunity was given to ihe petitioners to submit their objections or reply to the allegations made against them. The pelilioners and others were not examined, but their written replies were taken into account and, based on ihe written replies, issues were framed and order passed by respondent-1. Thus, it is seen that neither the enquiry officer nor respondent-1 examined the petitioners and others before proceeding to pass an order in regard to the allegations made against them. 8. Section 69 of the act relates to surcharge proceedings. Thus, it is seen that neither the enquiry officer nor respondent-1 examined the petitioners and others before proceeding to pass an order in regard to the allegations made against them. 8. Section 69 of the act relates to surcharge proceedings. Among other things, it lays down that if in the course of an enquiry, it is found that the committee of management of a society or the president or the vice-president or the chairman or vice-chairman or any other member of the committee of management or any person who is or was entrusted with the organisation or management of such co-operative society or who is or has at any time been an officer or an employee of a co-operative society has made any payment contrary to ihe Act, the rules or the bye-laws or has caused any deficiency in the assets of the co-operative society by breach of trust or negligence or has mis-appropriated or fraudulently retained any money or other property belonging to such co-operative society, the registrar may frame charges against such persons and after giving such persons an opportunity of making representation, make an order calling upon them to pay or restore the money or property or any part thereof with interest at such rate as he may determine. In the alternative, he may direct them to contribute such sum to the assets of the co-operative society by way of compensation to such extent as he may consider jusl and equitable. 9. Assuming for a moment that based on the enquiry report it was found that the committee of management of the society or the members of such committee of management had made any payment contrary to the Act, rules or bye-laws or had caused any deficiency in the assets of the society by breach of trust or negligence or has misappropriated or fraudulently retained any money or other property belonging to such co-operative society, charges could be framed against them. 10. It is seen from the surcharge proceedings that the enauirv officer who held the - enquiry under Section 64 of the act not only suggested surcharge proceedings, but also issued show cause notice to the concerned directing them to give written reply or to appear together with evidence to face Section 64 inquiry. The enquiry officer directed the concerned persons o appear before respondent-1. The enquiry officer directed the concerned persons o appear before respondent-1. The ex-directors, ex-secretaries and ex-clerks submitted then- written reply pleading their innocence. Finally it is seen that respondent-1 issued a show cause notice on 26-5-1980 to appear either in person or in writing together with evidence on or before 11-6-1980 calling them to show cause why an action should not be taken under Section 69 of the act for recovery of Rs. 2,11,793-35 jointly and severally with interest thereon at the rate of 15% from the date of commitment to the date of payment. Replies were submitted in writing denying liability. I am unable to see from the surcharge proceedings vide Annexure-A the charges that were framed against the petitioners. What i see is only a show cause notice issued by respondent-1 dated 26-5-1980 fixing the date of hearing as 11-6-1980 and on receipt of the replies he proceeded to frame the issues. After framing the issues, respondent-1 proceeded to give his findings, 11. In the absence of specific and clear framing of charges and not framing of issues against each person who is supposed to be a delinquent, I can not persuade myself to accept that the surcharge proceedings took place in accordance with the strict requirements of Section 69 of the act. I am of the opinion framing of charges is mandatory. Equally mandatory is an opportunity of making representation against the charges so framed. It is only thereafter on receipt of objections or reply to the charges levelled, that respondent-1 could proceed to frame the issues and give his findings on each issue. The proceedings in the instant cases do not satisfy the mandatory requirements of Section 69 of the act. At the risk of repetition, I may observe that no charges were framed against the petitioners, no opportunity to meet the possible charges was afforded to the petitioners and surcharge proceedings were held contrary to the requirements of Section 69 of the act and ultimately liability fixed on the petitioners. I am afraid that the surcharge proceedings do not conform to the requirements of law and, therefore, deserve to be quashed. 12. Respondent-3, in disposing of the appeals preferred by the petitioners, has focussed on the procedural aspect. But, at the same time, has lost sight of non-compliance with the requirements of Section 69 of the act which i have pointed out earlier. 12. Respondent-3, in disposing of the appeals preferred by the petitioners, has focussed on the procedural aspect. But, at the same time, has lost sight of non-compliance with the requirements of Section 69 of the act which i have pointed out earlier. Further, the tribunal has lost sight of its mandatory duty as a quasi judicial body statutorily created for the purpose of reviewing in appeal, orders of subordinate authorities under the act. The relevant portion which deserves attention from the order of respondent-1 is as follows:- ". . . . . . we have seen in the records that although the opportunity was given to the appellants, they chose to make written representations which were duly considered by the deputy registrar of co-operative societies who in his discretion passed the order holding the appellants severally and jointly responsible for the mis-appropriation amount pointed out in the enquiry report. After examination of all the connected papers we do not feel inclined to interfere with the order of the learned deputy registrar of co-operative societies. We are satisfied that the deputy registrar of co-operative societies has complied with the legal requirements of Section 69 quoted above. We, therefore, reject these appeals. 13. The order and the observations contained in the order are self-explanatory. There is no application of mind and there is no discussion leading to the findings and there are no cogent reasons to support the findings. The observation of respondent-3 that respondent-1 has complied with the legal requirements of Section 69 of the act has to be swiftly rejected. On the other hand, there is non-compliance with the requirements of Section 69 of the act and this has escaped the notice of respoudent-3 unfortunately. The order of respondent-3 in appeals should comply with fair administrative procedure apart from statutory compulsions. Nonconsideration of statutory postulates by a quasi-judicial body would result in inversion of Justice and would result in failure to review an order in appeal in the scale of reasonableness and fairness. When neglect enters, discretion retires. I am of the opinion that respondent-3 has foiled to take notice of the implications of law as well as requirements of a fair and just en- quiry and this includes the surcharge proceed- ings too. In the circumstances of the case, it is well nigh impossible to accept the order of respondent-3 and also the report of the enquiry officer. 14. In the circumstances of the case, it is well nigh impossible to accept the order of respondent-3 and also the report of the enquiry officer. 14. Under Section 69 (1) of the Act, charges have to be clear and specific because, surcharge proceedings could be held only when the alleged conduct of the petitioners discloses.- (1) that the petitioners made any payment contrary to the Act, rules or bye-laws or (2) that the petitioners caused any deficien- cy in the assets of the society by breach of trust or by wilful negligence or (3) that the petitioners misappropriated or fraudulently retained any money or other proper- ty belonging to such society. From the records made available, no such allegations or charges are forthcoming. The inference therefore is that surcharge proceedings are based on un-disclosed assump- tions. There is no communication of any of the charges fitting into the description given above. Hence, in my opinion, even the surcharge proceedings are vitiated by illegality. The officer holding inquiry under Section 69 has rglied on the enquiry report made under Section 64 of the act. But the petitioners were denied access to the inquiry report. The denial in effect is a denial of natural Justice and therefore vitiates the in- quiry held under Section 69 of the act. 15. For the reasons stated above, the writ petitions are allowed. The impugned order dated 11-6-1980 passed by respondent-1 in No. Msp/bscs/1015/79-80 vide Annexure-A and the order dated 6-11-1984 passed by respondent-3 in appeal nos. 1099 to 1106 of 1980 vide an- ocxure-b, are hereby quashed. However, it is open to the concerned authorities to hold a fresh enquiry under Section 64 of the act and, if a case is made out, for action to be taken under Section 69 of the act against the petitioners and others on merits and in accordance with law. In the circumstances of the case, there will be no order as to costs. 16. Sri m. Jagannath, learned government pleader, is permitted to file his memo of ap- pearance within two weeks from today. --- *** --- .