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2005 DIGILAW 2998 (RAJ)

. v. State of Rajasthan

2005-11-16

KRISHAN KUMAR ACHARYA, S.N.JHA

body2005
Judgment S.N. Jha, CJ.-This appeal is directed against the order of the learned Single Judge dated 13.07.2004 is S.B. Civil Writ Petition No.2255/2003 dismissing the writ petition of the appellant. 2. The appellant had filed the writ petition for quashing the order by which he was held liable to recovery of sum of Rs. 1, 36,331.29 with interest @ 18% from 01.04.1991 in a surcharge proceeding under Rule 74 of the Rajasthan Co-operative Societies Rules, 1966 and the orders dismissing the appeal and revision arising therefrom. 3. The appellant at the relevant time was Cashier in the Sardarshahar Marketing Co-operative Society. The special audit of the Society for the year 1990-1991 revealed large scale of irregularities and misappropriation of funds, and the appellant was found to have misappropriated sum of Rs. 1,36, 329.89. On receipt of the report notice was issued for initiating surcharge proceeding. Despite service of notice the appellant did not appear and in the circumstances the inquiry was completed on the basis of record and charges were framed and a fresh notice was issued. Despite service of said notice, again, the appellant did not appear. On 10.12.1993 finally the case was heard in presence of the representative of the Society and order was passed holding the appellant liable to sum of Rs. 1,36,331.29 with interest as indicated at the outset. The appellant filed appeal before the Additional Registrar, Co-operative Societies, Rajasthan some time in 2002 which was registered as Appeal No. 18/2002. The appeal was dismissed as time barred vide order dated 12.04.2002. The appellant then moved the Minister Incharge in revision which too was dismissed on 26.08.2002. The appellant thereafter filed the writ petition which was dismissed by the learned Single Judge observing that having ignored statutory notices and chosen not to participate in the proceedings he cannot make any grievance of the conduct of the proceeding and/or the final order. 4. Shri Rajesh Joshi, learned Counsel for the appellant submitted that even where the person to whom the notice is issued under Rule 74 of the Rules does not respond to the notice and proceeding is held ex parte, the Society is required to adduce evidence and examine witnesses to prove its case, and without doing that on the basis of the audit report the person cannot be held liable to or accountable for the misfeasance. Counsel submitted the neither any charge was framed nor the same was communicated to the appellant as required under the rules and there was violation of the statutory provisions. The impugned order, therefore, cannot be said to have been passed in accordance with law. Counsel alternatively submitted that in a similar matter a Division Bench of this Court has set aside the appellate order dismissing the appeal on the ground of limitation and remitted the matter back to the Additional Registrar for decision on merit. Counsel urged that a similar order may be passed in the present case too. 5. Section 74 of the Act provides that if in the course of an audit, inquiry, inspection or the winding up of a co-operative society, it is found that any person, who has taken any part in the organization or management of such society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to this Act, the rules or the bye-laws or has caused any deficiency in the assets of the society by breach of trust or willful negligence or has misappropriated or fraudulently retrained any money or other property belonging to such society, the Registrar may, of his own motion or on the application of the committee, liquidator or any creditor, inquire himself or direct any person authorized by him by an order in writing to inquiry into the conduct of such person. Rule 74 of the Rajasthan Co-operative Societies Rules, 1966 lays down the procedure for assessing surcharge. Since, the submission of the Counsel relates to the violation of procedure-specially at the stage referred to in Sub-sections (3) and (4) it would be appropriate to quote the rule in extenso as under:- “74. Rule 74 of the Rajasthan Co-operative Societies Rules, 1966 lays down the procedure for assessing surcharge. Since, the submission of the Counsel relates to the violation of procedure-specially at the stage referred to in Sub-sections (3) and (4) it would be appropriate to quote the rule in extenso as under:- “74. Procedure for assessing surcharge under Section 74.- .(1) On receipt of a report referred to in Section 74 or otherwise the Registrar or any other person authorized by him may make such further inquires as he may deem necessary regarding the extent to which the person who has taken any part in the organization or management of a society or any deceased, past or present officer or employee of the society has misapplied or retained, or become liable or accountable for any money or property of the society, or has committed misfeasance or breach of trust in relation to the society or has made any payment contrary to the Act, these rules or bye-laws. .(2) On the completion of the further inquiries under Sub-rule (1), where necessary, the Registrar or any other person authorized by him shall issue a notice to the person or persons concerned furnishing him or them with particulars of the acts of misapplication, retention, misfeasance or breach of trust and the extent of his or their liability involved therein and calling upon him or them to put in statements in his or their defence within fifteen days of the date of issue of the notice. (3) On receipt of the statement referred to in Sub-rule (2), the Registrar or the person authorized by him, he is satisfied that there are reasonable grounds for holding the person or persons liable, shall frame charges. .(4) Theperson or persons concerned shall, after the charges are framed, be asked to put in his statement in defence and to indicate the documentary or oral evidence which he would like to produce. The Registrar or the person authorized by him may permit production of other documentary or oral evidence, if considered necessary, subsequently, .(5) TheRegistrar or the person authorized by him shall thereafter record the evidence led by the society or the person or persons concerned and take on record the documents proved by them and shall thereafter fix a date for hearing arguments of both the parties. .(6) On the day fixed for hearing under Sub-rule (5), the Registrar, or the person authorized by him, shall hear the arguments and may pass his final orders on the same day or on any date fixed by him within sixty days from the date on which the hearing was completed. On the day fixed for hearing under Sub-rule .(5) the Registrar or the person authorised by him shall make his final order either ordering repayment of the money or return of the property to the society together with interest at such rate as may be specified by him or to contribute such amount to the assets of the society by way of compensation in regard to misapplication, retention, misfeasance or breach of trust as may be determined or may reject the claim submitted on behalf of the society. .(7) TheRegistrar or the person authorized by him, may also provide in his order for the payment of the cost of the proceeding under this rule or any part or such cost as he thinks just. .(8) TheRegistrar or the person authorized by him shall furnish a copy of his order, under Sub-rule (6) to the party concerned within ten days of the date on which he makes his final order.” 6. On reading of rule it would appear that it contemplates two notices - one, the preliminary notice informing the person/persons about the result of inquiry, if any, held under Sub-rule (1) and making available to him the particulars of the alleged acts or misapplication, retention, misfeasance or breach of trust and the extent of liability involved therein, and further, calling upon him to put in statement in defence. The second notice referred to in Sub-section (4) is issued where on receipt of the statement i.e., the defence of the person, the Registrar is satisfied that there are reasonable grounds to proceed against the person concerned. He is then required to frame charges and communicate the same with a show-cause notice. 7. In the instant case, preliminary notice was issued to the appellant and the same was served on him on 27.09.1993 but he did not respond to it and in the circumstances the preliminary inquiry was completed ex parte. He is then required to frame charges and communicate the same with a show-cause notice. 7. In the instant case, preliminary notice was issued to the appellant and the same was served on him on 27.09.1993 but he did not respond to it and in the circumstances the preliminary inquiry was completed ex parte. As the inquiry revealed prima facie case against the appellant the proceeding was formally initiated charges were framed, and post-charge notice was issued alongwith copy of the charges to the appellant which too was served but despite service the appellant did not care to respond, leaving no option to the authority i.e., the Joint Registrar, Co-operatives Societies, Bikaner to proceed ex parte against him. 8. The submission that even in ex parte proceeding under Rule 74 it is necessary to examine witnesses and adduce evidence does not appear to be in accord with the scheme envisaged in Rule 74. It is true that Sub-rule (5) states about recording of evidence and taking on record documents, but the provision cannot be construed as laying down that in all cases the Society and/or person concerned must necessarily examine witnesses and adduce further evidence. Sub-rule (5) in our opinion is merely an enabling provision which empowers the Registrar or the person authorized by him to record evidence “led by the society or the person/ persons concerned”, that is to say, to examine witnesses and receive evidence adduced by them. It is to be kept in mind that, more often then not, assessment of surcharge under Section 74 read with Rule 74 can effectively be made on the basis of records. As a matter of fact, the report referred to in Section 74 itself is based on the records of the Society. So where the record reveals a prima facie case the Registrar may make further inquiry, if necessary under Sub-rule (1) of Rule 74 and then call upon the person or persons concerned to submit statement in the nature of defence. So where the record reveals a prima facie case the Registrar may make further inquiry, if necessary under Sub-rule (1) of Rule 74 and then call upon the person or persons concerned to submit statement in the nature of defence. Undoubtedly, if the society wants to clarify anything it may examine witnesses or otherwise produce documents, and similarly, if the person concerned wants to explain the accusation/charges by examining witnesses or otherwise, it is open to them to do so and in that situation, under Sub-rule (5) the Registrar or the person authorized by him is required to record the evidence led by the society or the person or persons concerned. 9. In the instant case the appellant chose to ignore both the preliminary notices as well as the post-charge notice and participate in the proceeding. He cannot make any grievance of the final order passed without examining witnesses or adducing further documentary evidence by the society. The proceedings have been initiated on the basis of the records of the society, the society could not be compelled to examine witnesses or adduce further evidence, particularly when the authorities were satisfied to record positive findings on the basis of materials available to them. We thus do not find any violation of the provisions of Rule 74 vitiating the proceedings. The perusal of the order of the Joint Registrar dated 10.12.1993 holding the appellant liable to the sum of Rs. 1,36,331.29 shows that the findings are based on records with which there is little scope for interference in writ jurisdiction. The learned Single Judge, therefore, did not commit any error in dismissing the writ petition. 10. In the result the appeal is dismissed.