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2019 DIGILAW 338 (AP)

Challa Sankara Rao v. State of Andhra Pradesh

2019-11-25

D.V.S.S.SOMAYAJULU

body2019
ORDER : D.V.S.S. Somayajulu, J. 1. This Court has heard Sri V.V.N. Narayana Rao, learned counsel appearing for the petitioner and the Additional Advocate General to the State of Andhra Pradesh, who appeared for respondent Nos. 1 to 4. 2. The petitioner before this Court is a former Chairman of the 5th respondent Cooperative Bank. The term of the Chairman and his team of Directors was five years from December, 2013. Just before the term was expiring, the petitioners made a request to the respondents to extend the term of Office. The said request was accepted and orders were issued on 01.01.2019 extending the term of the existing committee till 29.06.2019 or till elections are held. Later, a further extension was granted from 10.05.2019 up to 09.11.2019. Prior to this, as the term was not being extended, W.P. No. 7539 of 2019 was filed and orders were passed on 19.06.2019 by a learned single Judge of this Court, wherein he directed the respondents to consider and dispose of the representation of the petitioners. 3. Learned counsel states that recommendation was also made for extension of the Managing Committee Members as "non-official" persons-in-charge. Contrary to this, learned counsel submits that the impugned order was issued on 13.07.2019 setting out certain reasons for the exercise of power by the respondents and denying the further extension. 4. Learned counsel for the petitioner submits that the impugned direction also refers to the earlier writ petitions that are filed i.e. W.P. Nos. 7539 and 7331 of 2019 and thereafter, he submits that the impugned order is passed. Learned counsel submits that the issues raised are similar in this case also. Learned counsel also submits that the alleged allegations for which a probe was conducted into the affairs of the Bank relating to misappropriation by one B. Naveen, who is a clerk and an alleged fraud committed by In-charge Manager of the Branch E. Vinod Kumar and R.N.S. Sharkarjee, employee of the Bank. Learned counsel points out that action had already been taken in 2018 itself against E. Vinod Kumar and Shankarjee, that the amounts were recovered and Shankarjee was dismissed from service. Apart from this, learned counsel points out that the financial health of the Bank has improved and the deposits have increased. Nine (9) branches were opened and another four (4) branches are proposed to be opened. Apart from this, learned counsel points out that the financial health of the Bank has improved and the deposits have increased. Nine (9) branches were opened and another four (4) branches are proposed to be opened. Relying on the two Division Bench judgments reported in M. Ranga Reddy v. State of Andhra Pradesh, 1990 (3) ALT 231 (D.B.) : AIR 1989 AP 81 and B. Kota Mallaiah v. Commissioner and Registrar of Co-operative Societies, 1991 (3) ALT 433 , learned counsel argues that unless and until there are allegations of financial irregularities etc., against the petitioners, no action can be taken. In these two Division Bench judgments, learned counsel points out that it was held that the existing Office bearers should be allowed to continue, if there are no allegations or irregularities etc., against them. Relying on the plain language of Section 34, the learned counsel argued that once a person-in-charge is appointed, the respondents can only extend the term, but cannot appoint a special Officer etc. Relying upon Zenit Mataplast Private Limited v. State of Maharashtra, (2009) 10 SCC 388 , learned counsel argues that every action on the State or on instrumentalities should be fair, legitimate and above-board; should not be taken for extraneous reasons. Learned counsel also relies upon the interim order passed in W.P. No. 30238 of 2018 by the combined High Court, wherein the learned single Judge held that if there are any allegations against the former Managing Committee members, it is incumbent on the part of the Registrar to put them on notice and given them an opportunity. In the concluding part, it is held by the learned single Judge that as they were not given notice; the impugned order should be set aside. For all these reasons, learned counsel for the petitioner argues that the interim orders as prayed should be granted. 5. Learned Additional Advocate General argued on the basis of the counter affidavit filed and also relied upon case law. It is his contention that the petitioner do not have a vested right to continue. He points out that there are serious allegations against the Managing Committee and that there is an enquiry which is pending under Section 51 of the A.P. Co-operative Societies Act, 1964 (for short 'the Act'), therefore, it is necessary that official person in-charge should be appointed. He points out that there are serious allegations against the Managing Committee and that there is an enquiry which is pending under Section 51 of the A.P. Co-operative Societies Act, 1964 (for short 'the Act'), therefore, it is necessary that official person in-charge should be appointed. He also relies upon the report dated 06.07.2019, wherein certain serious allegations were found and that there is a prima facie evidence that the embezzlement of funds to a tune of Rs. 72.31 lakhs by the employees of the Bank. Relying upon the following judgments, the learned Additional Advocate General argues that the petitioners have no vested or legal right to continue. The judgments are K. Somasekhar Rao v. District Co-operative Officer/Joint Registrar of Co-operative Societies, 2005 (2) ALT 532 : 2005 (2) ALD 85 (Single Judge), D. Srinivasa Rao v. The Government of A.P., 1993 (1) ALT 86 (DB), Elakolanu Primary Agricultural Co-Operative Credit Society Ltd., v. Government of Andhra Pradesh, 2003 (6) ALT 274 (DB) and Kereti Srinivasulu v. Deputy Registrar, Cooperative Societies, 2006 (1) ALD 198 (Single Judge). 6. Learned Additional Advocate General points out that Section 32(7) of the Act gives an absolute right to the Government to appoint a person as a person in-charge and that the petitioners have no vested right. Relying on D. Srinivasa Rao's case (4 supra), learned Additional Advocate General submits that decisions referred to by the counsel for the petitioner were considered and thereafter the Division Bench held that the out going Managing Committee does not have a vested right to continue. The decision reported in Elakolanu Primary Agricultural Co-operative Credit Society Ltd., (6 supra) was also followed in Kereti Srinivasulu (7 supra). Relying on these judgments, learned Additional Advocate General submits that the petitioners are not entitled to an order as prayed for. 7. Although the matter was argued at great length with great passion by both the counsel for the petitioner and the learned Additional Advocate General, the fact remains that the issue involved is in a narrow compass. 8. As pointed out by the learned counsel for the petitioner, the allegations in this case are essentially against some employees of the Bank. He points out that the documents filed do not show an allegation being specifically made against the erstwhile Committee Members. Apart from this, no notice was also given to the Committee Members of the alleged allegations against them. He points out that the documents filed do not show an allegation being specifically made against the erstwhile Committee Members. Apart from this, no notice was also given to the Committee Members of the alleged allegations against them. Even in the impugned order dated 13.07.2019, it is said in page 2 that an amount of Rs. 20.99 lakhs was misappropriated by one B. Naveen and that another fraud was committed by one E. Vinod Kumar and Shankarjee. All the three are employees of the Bank. 9. The case law cited by both the parties still continues to hold the field. While it is a fact that the petitioners do not have a vested right to be continued, the earlier Division Bench judgments were not expressly overruled. Hence, the existence of a vested right is one thing and the non-continuance of the petitioners because of allegations of irregularities against them is another issue. Each case will have to be decided on its own. 10. In the present case, the document filed by respondents show that on 24.03.2018 the District Co-operative Officer pointed out that there were certain issues which need to be looked into as far as the violation of procedures by the Bank in respect of promotions and employment are concerned. Similarly, the defect sheet issued by the Divisional Co-operative Officer, which is filed along with counter affidavit shows that the contention of the Bank with regard to the loans advanced or the misuse of funds by the employees is also not fully resolved. As far as the case of B. Naveen Kumar is concerned, the defect sheet points out that two loans were given to him to cover up the misappropriated amounts and this was shown as recovery. In the case of E. Vinod Kumar, he was allowed to resign. The District Co-operative Officer said that in the above instances, there is a need to verify the staff accounts, customer accounts and the accounts of Board of Directors. Similarly, in the letter from the District Cooperative Officer to the Commissioner for Co-operation, dated 06.07.2019 also a long history of the allegations is again reproduced. Allegations of further fraud or irregularities are also mentioned in this matter. A number of allegations were also received from the said unit with regard to certain allegations on the procedures followed. Similarly, in the letter from the District Cooperative Officer to the Commissioner for Co-operation, dated 06.07.2019 also a long history of the allegations is again reproduced. Allegations of further fraud or irregularities are also mentioned in this matter. A number of allegations were also received from the said unit with regard to certain allegations on the procedures followed. In case of certain employees who along with B. Naveen Kumar have stated to have committed some irregularities, there is only a deduction of increment in the salary. Therefore, he recommended a statutory probe into all these matters. 11. In that view of the matter, while it is clear that as per the Division Bench judgment, the case of the petitioner should be considered still the fact remains that there are certain allegations which need to be resolved once and for all. The cases of the employees whose names are mentioned above, are relied on by the petitioner to show that their issue is resolved. There does not appears to be a firm conclusion on these matters. Other allegations regarding promotions etc., are also there. These issues need to be resolved and for that purpose an enquiry is necessary. As mentioned earlier, even as per the decisions of the Division Bench of this Court in 1 and 2 supra, continuation of the existing Office Bearers is preferred, if there are no allegations against them. In the case on hand, allegations are there and they are not yet resolved. So the petitioners do not have a right let alone a vested right to continue. 12. In that view of the matter, this Court is of the opinion that the petitioners cannot be considered for continuation and there is a need for an enquiry into all the episodes/issues which are mentioned earlier. Hence, this Court is of the opinion that the petitioners are not entitled to the reliefs that they are prayed for, mainly a direction to the respondent Nos. 1 and 2 to extend the term of the managing committee. Although earlier extensions were granted, the fact remains that they does not appear to be a quietus to the outstanding issues. 13. Hence, this Court is of the opinion that there is a need to conduct an enquiry as mandated by the provisions of the Act. 1 and 2 to extend the term of the managing committee. Although earlier extensions were granted, the fact remains that they does not appear to be a quietus to the outstanding issues. 13. Hence, this Court is of the opinion that there is a need to conduct an enquiry as mandated by the provisions of the Act. Many of these issues which are pending have also been reproduced in the counter affidavit and nothing contrary is pointed out. 14. Hence, this Court is of the opinion that there are no merits in the wit petition and the same is dismissed. 15. Consequently, the writ petition is also dismissed. No order as to costs. 16. As a sequel, miscellaneous petitions, if any, shall stand closed.