ORDER Large number of irregularities were noticed in the functioning of Sri Mallidi Tirupayyagari Vankata Reddy Co-operative Rural Bank Limited, East-Godavari District (for short 'the Society'). Inquiry under Section 51 of the Andhra Pradesh Cooperative Societies Act, 1964 (for short 'the Act') was ordered by the Deputy Registrar of Co-operative Societies, Amalapuram, East-Godavari District. A report was submitted by the Inquiry Officer on 6-10-2003. It was pointed out that the Ex President, Secretary and Members of the Society are responsible for large-scale defalcation of its funds, in one form or the other. 2. The Society as well as the concerned authorities of the department have decided to initiate proceedings under Section 60 of the Act. However, by that time, the Secretary of the Society died. A doubt was entertained as to whether it is permissible to initiate surcharge proceedings against the legal representatives of the deceased-employee. In view of this uncertainty, the Society thought it fit to initiate proceedings against the Ex-President, Members of the Managing Committee, as well as the legal representatives of the deceased-Secretary, under Section 61 of the Act, before the Deputy Registrar of Co-operative Societies. The same was taken up as A.R.C.No. 87 of 2003-04. During the pendency of the A.R.C., the Deputy Registrar ordered attachment of the properties of the Ex-President, in exercise of powers under Section 73 of the Act. Through his order dated 28-5-2005, the Deputy Registrar of Co-operative Societies determined the liability against the various individuals mentioned therein. 3. Three separate appeals under Section 76 of the Act were preferred before the A.P. Co-operative Tribunal, Visakhapatnam (for short 'the Tribunal), being O.A.Nos.46,77 and 78 of 2006, by the Ex-President, Members, and the legal representatives of the Secretary, respectively. In addition to that, Ex-President filed O.A.No.136 of 2004 against the order of attachment, dated 17 -12-2006. Through separate orders dated 27-4-2007, the Tribunal had allowed the O.As. W.P.Nos.22255, 22269 and 22445 of 2007 are filed against the orders in O.A.Nos.46, 77 and 78 of 2006, respectively, by the Society. The Ex-President filed W.P.No.21741 of 2007, complaining that, despite the orders of the Tribunal in O.A.No.136 of 2004, the attachment was not raised. 4. For the sake of convenience, the parties are referred to, as arrayed in W.P.No.22255 of 2007. 5. The Ex-President filed W.P.No.21741 of 2007, complaining that, despite the orders of the Tribunal in O.A.No.136 of 2004, the attachment was not raised. 4. For the sake of convenience, the parties are referred to, as arrayed in W.P.No.22255 of 2007. 5. Sri V.L.N.G.K. Murthy, learned counsel for the petitioner-Society submits that though the report of the inquiry under Section 51 of the Act was to give rise to the surcharge proceedings under Section 60, the necessity for the Society, or for that matter, the Deputy Registrar of Co-operative Societies, to initiate proceedings under Section 61 arose, on account of the fact that a person named in the report died, and a doubt was entertained, as to whether surcharge proceeding can be initiated against the legal representatives of the deceased-employee. He contends that the Tribunal, on the one hand, held that the proceedings under Section 61 of the Act are impermissible, and on the other hand, it went into the merits and gave clean chit to the Ex-President, and three others. He submits that, in case the proceedings under Section 61 are impermissible, the matters ought to have been remanded to the concerned Authority, under Section 60 of the Act. 6. Learned Government Pleader for Cooperation, submits that the Tribunal had terminated the entire proceedings on a wrong assumption of facts and law. It is urged that specific findings were recorded in the inquiry, as to misappropriation of funds against various individuals, and surcharge proceedings ought to have been permitted against the persons, who are named in the report, under Section 51, even if there was any impediment to take such steps against the legal representatives of the deceased Secretary. 7. Sri S.R. Sanku, learned counsel for the 3rd respondent-Ex-President, submits that the proceedings initiated against his client, under Section 61 of the Act, were without any basis, and as such the Tribunal had correctly set aside the same. He further contends that it was competent for the Tribunal to go into the merits and record a finding on the basis of the material available on record. Learned counsel submits that there is absolutely no basis for the petitioner Society in refusing to raise the attachment, even after the entire proceedings were terminated against the 3rd respondent. 8. The Act contains several provisions that enable the concerned authorities to ensure transparency in the functioning of the Societies. Learned counsel submits that there is absolutely no basis for the petitioner Society in refusing to raise the attachment, even after the entire proceedings were terminated against the 3rd respondent. 8. The Act contains several provisions that enable the concerned authorities to ensure transparency in the functioning of the Societies. Apart from the routine and supervisory steps, audit under Section 50, inquiry under Section 51, and inspection under Section 52 can be caused in accordance with the procedure prescribed under the relevant provisions. Consequential actions are provided, depending on the outcome of these steps. The Act enables initiation of surcharge proceedings under Section 60, against those, that are found responsible for financial irregularities. Though the reports under the respective provisions may constitute the basis for initiation of surcharge proceedings, the liability of the person, surcharged, has to be established, through independent evidence. 9. In the inquiry held under Section 51 of the Act, into the affairs of the petitioner Society, it emerged that lakhs of rupees were unaccounted for, or misappropriated. The needle of suspicion was pointed out to the involvement of the Ex-President, Members of the Managing Committee, and Secretary. There was adequate basis for initiation of surcharge proceedings against them, and it was for the Society to prove the independent liability against all of them. While there was no difficulty in proceeding against the President and Members of the Managing Committee, problem had arisen, in the context of proceeding against the legal representatives of the deceased-Secretary, who died by the time the report was submitted. 10. The Deputy Registrar of Co-operative Societies, the 2nd respondent, felt that the surcharge proceedings cannot be initiated against the legal representatives of the deceased-member, or employee, and that the only course is, to proceed under Section 61 of the Act, against them. He also felt that separate proceedings against the President, and Members of the Managing Committee, under Section 60, on the one hand, and those, against the legal representatives of the Secretary, under Section 61, on the other, may lead to complications, and accordingly brought the proceedings against all of them under the purview of Section 61. Through common order dated 28-5-2005, he determined the liability of the respective individuals. 11. Through common order dated 28-5-2005, he determined the liability of the respective individuals. 11. In the appeals preferred against the orders passed by the 2nd respondent, the Tribunal held that it was impermissible to institute proceedings under Section 61, on the strength of inquiry report, under Section 51 of the Act. It was observed that the proceedings under Sections 60 and 61 of the Act are different in nature, and one cannot be taken for the other. It needs to be noted that, the circumstances under which surcharge proceedings, under Section 60 can be initiated, are totally different from those, under which, a dispute can be raised under Section 61 of the Act. Former are inquisitorial, wherein the thrust will be, to inquire into the complicity of the person involved. On the other hand, the proceedings under Section 61 are adversarial, and they lead to adjudication of disputes, between two parties. Therefore, no exception can be taken to the view expressed by the Tribunal. Once it was held that the adjudication by the 2nd respondent, under Section 61 of the Act was not tenable, the Tribunal ought to have left the matters, to be dealt with under the respective provisions. However, it went into the merits and recorded the finding as under: "Para-6: As seen from the records placed before the Tribunal, the Section 51 Enquiry Officer reported that the Ex-Secretary of the CRB has committed the alleged misappropriation of the funds of the Society and Enquiry Officer has not established the role of the Ex-President/Appellant herein in the alleged misappropriation of the funds of the Society. There may be negligence on the part of the Ex President of the Society in the conduct of the affairs of the Society, but there is no evidence of wilful negligence on the part of the Ex-President/appellant in this case. "Wilful negligence" (60) is for the purpose of holding a person in management liable, if he has caused loss to the Society by his intentional and purposeful omission. Mere negligence may not be sufficient to attract the surcharge proceedings. As no wilful negligence has been established on the part of the appellant, he could not be made liable." 12. It was totally impermissible for the Tribunal to have gone into the merits of the matter, once it is held that the proceedings before the 2nd respondent are untenable. Mere negligence may not be sufficient to attract the surcharge proceedings. As no wilful negligence has been established on the part of the appellant, he could not be made liable." 12. It was totally impermissible for the Tribunal to have gone into the merits of the matter, once it is held that the proceedings before the 2nd respondent are untenable. Even where there existed any valid basis for the Tribunal to go into the merits of the matter, it ought to have examined each and every accusation, supporting material, and the findings recorded by the 2nd respondent. No such exercise was undertaken. On the strength of superficial observations, the Tribunal had exonerated the persons named in the inquiry, under Section 51, of their liability. The order of the Tribunal to that extent cannot be sustained in law. 13. This Court is of the view that the surcharge proceedings under Section 60 of the Act are to be initiated against such of the persons, who are named in the report, under Section 51 of the Act, and are alive. So far as the deceased-Secretary is concerned, a dispute under Section 61 of the Act needs to be initiated against his legal representatives, placing the burden squarely upon the Society to prove the factum of misappropriation of amounts. Having regard to the extent of the amount involved, it is desirable to continue the attachment ordered against the properties of former President of the Society. Inasmuch as the Authority, which can deal with both the matters happens to be the 2nd respondent, it is appropriate that the proceedings, though initiated under different provisions, be clubbed and a more elaborate procedure, viz., the one, intended for proceedings under Section 61 of the Act, be followed, in all of them. 14. For the foregoing reasons; (a) the writ Petition Nos.22255, 22445 and 22269 of 2007 are allowed. The orders challenged therein are set aside. The matter is remanded to the Deputy Registrar of Co-operative Societies, directing that surcharge proceedings under Section 60 of the Act shall be initiated against the Ex-President, the Former President, and the Members of the Managing Committee of the Society, who, in turn, shall be named specifically. Writ Petition No. 21741 of 2007 is dismissed. (b) Proceedings under Section 61 of the Act shall be initiated against the legal representatives of the Ex-Secretary of the society. Writ Petition No. 21741 of 2007 is dismissed. (b) Proceedings under Section 61 of the Act shall be initiated against the legal representatives of the Ex-Secretary of the society. (c) The attachment of the properties of the Ex-President shall be remain in force, till the disposal of the proceedings. (d) Since the Authority to adjudicate the matter, and the allegations in both the matters are one and the same, it is directed that the procedure prescribed under Section 61 of the Act shall be followed, in respect of both the sets of proceedings. There shall be no order as to costs.