Andhra Pradesh High Court - Amravati

V Kodandaramaiah vs The State Of Ap on 19 October, 2022

           HONOURABLE SMT. JUSTICE V.SUJATHA

                WRIT PETITION No.4899 of 2019

ORDER:

The present Writ Petition came to be filed under Article

226 of the Constitution of India seeking the following relief:-

"to issue any writ or direction more particularly one in the nature of Writ of Certiorari in calling the records by declaring the action, things and deeds of Respondents in dismissing the Petitioner from the post of C.E.O. of 7th Respondent by Termination Proceedings dated 09.01.2019 issued by 7th Respondent, which are illegal, irregular, arbitrary, contra to the provisions of A.P. Co-Operative Societies Act, 1964 and its Rules and against to the Service Regulations of the Employees of District Co- operative Central Bank Ltd., and also in violation of Articles 14, 19, 21 and 311 of Constitution of India, consequently set aside the Termination Proceedings dated 09.01.2019 by reinstating the Petitioner into service with all benefits including back wages and to pass such other orders".

2. The facts of the case are that the petitioner joined as

Attender in the year 1992 in Dandikuppam, Santhipuram,

P.A.C.S. Limited and thereafter, he was promoted as

Salesman/Accountant in the year 2005. After some time, the

Dandikuppam, P.A.C.S. Limited was merged in Santhipuram,

P.A.C.S. Limited and thereafter the petitioner temporarily

worked as Chief Executive Officer from 12.07.2012 to

30.06.2013. On 23.06.2016, he was promoted as C.E.O. and

while discharging his duties as C.E.O., a show-cause notice

dated 06.04.2018 was served on the petitioner by the 7th

respondent asking him to submit his explanation in respect of

the irregularities found in the Audit Report for the year 2016-17

vide letter dated 16.03.2018 of Deputy Divisional Co-operative

Officer. In the said show-cause notice, 15 allegations have been

made against the petitioner contending that there was

misappropriation of funds of Santhipuram P.A.C.S. Limited. In

response to the said show-cause notice, the petitioner submitted

a detailed explanation on 16.04.2018, explaining that the said

differences were carried forward since 10 to 15 years and it was

not done during the petitioner's tenure and the Societies were

computerized in the year 2016-17 and after verifying the Society

records, the said difference has been found in respect of items 1

to 8, for which, the petitioner was not responsible and the truth

would come out if the earlier C.E.Os are enquired.

3. In his explanation, the petitioner further submitted that in

respect of long term loans and Janatha loans, they were granted

only after obtaining permission from the President since last ten

years, and if any discrepancy arises, for which the earlier C.E.Os

would be responsible but not the petitioner. In reply to 10th

allegation, the petitioner submitted that the temporary receipts

have been issued on the oral instructions of the President as the

said practice was being continued since several years and if the

enquiry is conducted through the Co-operative Department, the

total information would come out. In respect of items 11 to 15 of

the show-cause notice, if the Society records are verified for the

last 10 to 15 years, the actual position would be known, since

there was a complaint to the officials of the D.C.C. Bank even

five years back, for which, no action was initiated.

Misappropriation of funds in respect of conduct of business of

Groundnut, Pulses and Fertilizers is that if proper enquiry is

conducted by the Deputy Divisional Co-operative Society Officer,

Madanapalli, the truth would be known. One of the points

raised in the show-cause notice is also about the irregularities in

issuing gold loans, wherein it is found that an amount of

Rs.16,86,952/- was not brought to the cash book and loan

ledger and misappropriated of funds of the 7th respondent.

4. It was further alleged that four ornamental packets in

respect of four loans were missing shortfall collection of interest

to a tune of Rs.27,142/- and therefore, the petitioner was

informed that why action should not be initiated against him for

recovery of Rs.17,14,094/- along with interest @ 18% per

annum from the date of misappropriation till its realization and

he was asked to attend for enquiry before the 5th respondent on

03.07.2018. As per said show-cause notice dated 26.06.2018,

the petitioner was also instructed to attend before the Divisional

Co-operative Officer, Madanapalle on 03.07.2018 at 11-00 A.M.

along with his explanation. Thereafter, the petitioner was placed

under suspension on 05.07.2018. The petitioner submitted his

explanation on 09.07.2018, by which date, he was placed under

suspension. On 20.11.2018, a resolution was passed to appoint

a Domestic Enquiry Officer and after a thorough enquiry, a

show-cause notice for removal was issued on 27.12.2018 which

was received by the petitioner on 29.12.2018. On 03.01.2019,

the petitioner submitted a representation requesting to furnish

the copies of records to give proper reply to the show-cause

notice dated 27.12.2018. Inspite of the said request, the 7th

respondent instead of furnishing the copies of the record to the

petitioner, has straight away removed the petitioner on

09.01.2019 basing on the report of the enquiry committee, even

without giving any opportunity for filing the explanation of the

petitioner, which was served on the petitioner on 09.02.2019 i.e.

after one month.

5. The main grievance of the petitioner is that the removal of

the petitioner is not in consultation with the District Level

Committee, but only basing on Audit report, even without

conducting an enquiry under Section 51 of the A.P. Co-operative

Societies Act, 1964. The further case of the petitioner is that

before placing him under suspension, the petitioner was not

even paid any salary and no subsistence allowance was also paid

to him during the period of suspension.

6. The 7th respondent has filed a detailed counter stating that

the their society is registered under the Andhra Pradesh

Cooperative Societies Registration Act, 1964, vide Registration

No.CR331, dated 20.12.1977 and the said Society is called as

Santhipuram Primary Agricultural Co-operative Society. The

society's operational area is entire Kuppam Mandal. The

petitioner was elected as President of their society in the year

2013, for a period of 5 years i.e. from 2013 to 2018 and after

completion of the said term also, he continued as President as

per the orders of the State Government. Even prior to 2013, he

worked as President of said Society for more than 13 years.

7. The 7th respondent further submitted that since the date

of the formation of the society, the audits have been taken place

in every cooperative area. In the said process for the year 2016-

17 also, final audit was conducted by the Assistant Registrar of

the Co-operative Societies by name Sri S.Arifulla, who found the

irregularities and misappropriation of loan amounts and other

irregularities committed by the Chief Executive Officer of the

said society. The said Assistant Registrar informed the same to

the District Co-operative Officer and requested to initiate

necessary action. On 16.03.2018, the office of the Sub-

Divisional Co-operative Officer, Kuppam issued a memo whereby

calling for explanation from the petitioner within a period of

three (03) days. In the said memo, it was categorically stated

that huge funds were misappropriated such as fertilizers

business, gold loans, Janatha loans etc., and further held that

the loans were disbursed under Janatha loans without proper

scrutiny. Even before issuance of the said memo by the

statutory authorities, the 7th respondent society addressed a

letter to the petitioner on 19.01.2017 requesting him to submit a

detailed report on re-schedulement ST loans along with relevant

records, otherwise, the disciplinary action shall be initiated

against him, which was endorsed by the petitioner on

22.01.2017 as received. The said misappropriation of funds and

other irregularities were also found even in the final audit report.

The petitioner failed to give any reply to the said notice issued by

the 7th respondent.

8. The 7th respondent further submitted that the statutory

authorities after receiving the information regarding the

misappropriation of funds and other irregularities committed by

the petitioner, issued a show-cause notice dated 06.04.2018 by

relying upon the final audit report and proceedings of the

District Co-operation Officer, Kuppam dated 16.03.2018,

requesting the petitioner to explain the issues 1 to 15, as stated

in the said show-cause notice in accordance with the bye-laws of

the society. Though the petitioner received the said notice on

06.04.2018, has failed to give any explanation to the same. As

such, the petitioner was suspended by an order dated

05.07.2018 duly placing the issue before the Board Meeting held

on 05.07.2018. The 7th respondent's society suspended the

petitioner keeping in view the interest of the society for the

reason of misappropriation of the society funds to a tune of

Rs.17,14,094/-.

9. The 7th respondent further submitted that on 23.08.2018,

articles of charges were framed against the petitioner and in

pursuance of the said Articles of charges, domestic enquiry was

ordered by passing a resolution in the Committee on

20.11.2018. Thereafter, the domestic enquiry Committee also

issued a notice to the petitioner on 27.12.2018 which was

endorsed by the petitioner vide acknowledgment receipt dated

29.12.2018. The Domestic Enquiry Committee after duly giving

sufficient opportunity to the petitioner, submitted a report dated

07.01.2019, thereby found that the petitioner being a paid

employee of the Society, collected gold loans, share capitals and

doing banking business on behalf of the society and accordingly,

has committed financial irregularities, misappropriated the

society funds for his personal use and requested to take further

action against the petitioner in accordance with the bye-laws of

the society.

10. The 7th respondent further submitted that, on 09.01.2019,

the 7th respondent society after considering the entire material

available on record, passed an order terminating the petitioner

from the services with immediate effect which was

communicated to the petitioner. The 7th respondent further

stated that the writ petitioner himself admitted his guilt to the

effect that he voluntarily executed acceptance letter dated

16.03.2018, thereby accepted that if any misappropriation of

funds happened during his tenure, he will be liable to pay back

the amount to the society. The 7th respondent further contended

that, as per the bye-laws, if the employee commits any financial

mistake relating to management of the Society, such employee is

liable to be dismissed from the society. Further contended that

as the issues involved herein are pure question of facts, the

petitioner has to avail alternative remedy by filing an appeal

before the appropriate authority and without availing the said

alternative remedy, the petitioner approached this Court,

because of which, the writ petition is not maintainable and

requested to dismiss the writ petition with costs.

11. Heard Sri Narasimha Rao Gudiseva, learned counsel for

the petitioner and the learned Government Pleader for Co-

operation for respondents 1, 2, 4 and 5 and Sri Naga Praveen

Venkayalapati, learned Standing Counsel for the 7th respondent.

12. Learned counsel for the petitioner reiterated the facts as

stated in the writ petition.

13. Learned counsel for the petitioner relied upon a Judgment

in Banta Singh Khushal Singh v. Anjuman Imdad Bahmi

and Thrift Society, Tanoli1, wherein it was held at Para No.8

as follows:-

"......According to Section 59 of the Evidence Act, all facts, except the contents of documents, might be proved by oral evidence and documents under Section 64 of the same Act must be proved by primary evidence, except in the cases

AIR 1970 Punjab and Haryana 203

thereinafter mentioned. It was not the position of the respondent that in the present case, the audit notes could be proved otherwise than by primary evidence. Learned counsel, however, submitted that the objection regarding the mode of proof should have been taken at the time when D.W. 1 was giving evidence.

Counsel for the appellant, on the other hand, contended that if the audit notes had been exhibited without any objection from their side, perhaps the submission of the learned counsel for the respondent in that case might have some force. But in the instant case, those audit notes were not produced and made a part of the record of the case by the defendant-Society.

This apart, assuming for the sake of argument, even if the audit notes had been brought on the record, could it be said that a presumption of correctness with regard to their contents also arise? All that Section 17(1) of the Co- operative Societies Act, 1912, says is that the Registrar shall audit or cause to be audited by some person authorised by him the accounts of every registered Society once at least in every year. According to sub-Clause (2) of that section, the audit under sub-section (1) shall include an examination of overdue debts if any and evaluation of assets and liabilities of the Society. If the auditor, who had prepared those audit notes had appeared in the witness- box, he could be asked on what basis the entry regarding the appellant's membership of the Society was made therein. No law had been cited under which the contents of those audit notes could be presumed to be correct.

14. The case of the petitioner is that as per Bye-law 7, which

deals with the procedure for disciplinary action, the competent

authority to impose the punishment of removal or dismissal,

would be the managing Committee in consultation with the

District Level Committee and as per Bye-law 8, the Appellate

authority would be the District Level Committee as the petitioner

is a C.E.O.

15. Learned counsel for the petitioner further relied upon a

judgment in Rakesh Kumar Vs. State of U.P.2, wherein, it was

held that:

"....this court under its power conferred by Article 226 of Constitution of India, can interfere in the matter of disciplinary proceedings if the disciplinary/enquiry proceedings were conducted in violation of manner prescribed and against the principles of Natural Justice and if the order of concerned authority is non-speaking and unreasoned. This Court can interfere in the matter of disciplinary proceedings if the decision making process is in violation of Rules and against Principles of Natural Justice. The judicial review in the matter of departmental proceedings is permissible with respect to decision making process and not against the decision itself unless it is shown that the decision is without any evidence or suffers from malafide and malice or harsh or without jurisdiction'.

It was also observed in Allahabad Bank V. Krishna

Narayana Tewari3, by the Apex Court that:

"7. We have given our anxious consideration to the submissions at the Bar. It is true that a writ court is very slow in interfering with the findings of facts recorded by a departmental authority on the basis of evidence available on record. But it is equally true that in a case where the disciplinary authority records a finding that is unsupported by any evidence whatsoever or a finding which no reasonable person could have arrived at, the writ court would be justified if not duty- bound to examine the matter and grant relief in appropriate cases. The writ court will certainly interfere with disciplinary enquiry or the resultant orders passed by the competent authority on that basis if the enquiry itself was vitiated on account of violation of principles of natural justice, as is alleged to be the position in the present case. Non-application of mind by the enquiry officer or the disciplinary authority, non-recording of

. 2019 SCC Online All 4004

(2017) 2 SCC 308

reasons in support of the conclusion arrived at by them are also grounds on which the writ courts are justified in interfering with the orders of punishment. The High Court has, in the case at hand, found all these infirmities in the order passed by the disciplinary authority and the appellate authority. The respondent's case that the enquiry was conducted without giving a fair and reasonable opportunity for leading evidence in defence has not been effectively rebutted by the appellant. More importantly the disciplinary authority does not appear to have properly appreciated the evidence nor recorded reasons in support of his conclusion. To add insult to injury the appellate authority instead of recording its own reasons and independently appreciating the material on record, simply reproduced the findings of the disciplinary authority. All told, the enquiry officer, the disciplinary authority and the appellate authority have faltered in the discharge of their duties resulting in miscarriage of justice. The High Court was in that view right in interfering with the orders passed by the disciplinary authority and the appellate authority."

It was also observed in State of U.P. Vs. Deepak

Kumar4 by the Division Bench of this High Court that:

"It is settled by the catena of judgments that it is the duty of Enquiry Officer to hold ''Regular Enquiry'. Regular enquiry means that after reply to the charge-sheet the Enquiry Officer must record oral evidence with an opportunity to the delinquent employee to cross-examine the witnesses and thereafter opportunity should be given to the delinquent employee to adduce his evidence in defence. The opportunity of personal hearing should also be given/awarded to the delinquent employee. Even if the charged employee does not participate/co-operate in the enquiry, it shall be incumbent upon the Enquiry Officer to proceed ex-parte by recording oral evidence. For regular enquiry, it is incumbent upon the Enquiry Officer to fix date, time and place for examination and cross- examination of witnesses for the purposes of proving of charges and documents, relied upon and opportunity to delinquent employee should also be given to produce his witness by fixing date, time and place. After completion of

W.P.No.34093 of 2018(S/B), dated 28.11.2016

enquiry the Enquiry Officer is required to submit its report, stating therein all the relevant facts, evidence and statement of findings on each charge and reasons thereof, and thereafter, prior to imposing any punishment, the copy of the report should be provided to charged officer for the purposes of submission of his reply on the same. The punishment order should be reasoned and speaking and must be passed after considering entire material on record."

16. Learned counsel for the petitioner also relied upon a

Judgment in W.P.No.520 of 2020 on the question of

compentency for inflicting punishments, wherein it was held at

para Nos.5 and 6 as follows:-

"5....insofar as the procedure followed by the 5th respondent while issuing the above said impugned proceedings dated 16.08.2019 and 16.09.2019 respectively are concerned there is no answer for the counsel for the 4th and 5th respondents that they have followed the prescribed procedure contemplated under the Bye-laws of the society as mentioned above with regard to the reversion and suspension of an employee of the society much less in the case of the petitioner herein. The record on hand does not disclose any valid procedure that has been followed as contemplated under Bye-laws Nos.5, 7 and 6 of the said Bye-laws of the Primary Agricultural Cooperative Societies before passing the impugned proceedings.

6. In the result, the impugned proceedings are set aside and the 4th and 5th respondents are directed to reinstate the petitioner as CEO/Secretary of the 4th respondent society within two (02) weeks from the date of receipt of copy of this order. However the liberty is given to proceed with any "disciplinary enquiry" that may be warranted against the petitioner strictly in accordance with law. In such view of the matter it is open for the 4th and 5th respondents either to assign or not to assign any financial powers and other powers that may be regulated time to time after such reinstatement pending such disciplinary enquiry if any till it's disposal as per law."

17. In view of the observations made in the above judgments

and on perusal of the impugned proceedings dated 09.01.2019,

it is very clear that the respondents have violated the procedure

as contemplated under Bye-laws Nos.5, 7 and 6 of the said

Primary Agricultural Cooperative Societies before passing the

impugned proceedings.

18. In view of the above stated facts, this Court is inclined to

allow the writ petition by setting aside the impugned proceedings

dated 09.01.2019 issued by the 7th respondent by duly directing

the respondents to reinstate the petitioner as C.E.O. of the 7th

respondent within four (04) weeks from the date of receipt of a

copy of this order, leaving it open to the respondents to proceed