APHC010278552022 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3327] WEDNESDAY, THE TWENTY FOURTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY WRIT PETITION NO: 16407/2022 Between: 1. AVULA BASAVAIAH, S/O. RAGHAVAIAH, HINDU, AGED ABOUT 60 YEARS, RIO. ISMAILBEGPET, KODURU MANDAL, KRISHNA DISTRICT. ...PETITIONER A N D 1. THE STATE OF ANDHRA PRADESH, THROUGH THE PRINCIPAL SECRETARY, DEPARTMENT OF CO OPERATIVE SOCIETIES, SECRETARIAT, VELAGAPUDI, AMARAVATHI, GUNTUR DISTRICT. 2. DISTRICT CO OPERATIVE OFFICER, KRISHNA, MACHILIPATNAM. 3. DIVISIONAL COOPERATIVE OFFICER, MACHILIPATNAM, KRISHNA DISTRICT. 4. ASSISTANT REGISTRAR II, INQUIRY OFFICER, 0/O. SUB- DIVISIONAL CO-OPERATIVE OFFICER, AVANIGADDA, KRISHNA DISTRICT. 5. KODURU PACS, REP. BY ITS CEO, KODURU, KODURU MANDAL, KRISHNA DISTRICT. ...RESPONDENT(S): Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue Writ, or Writs, Order or Orders more particularly one in the nature of writ of MANDAMUS declaring the in action of the Respondents to take appropriate legal action as against the report of the 4th respondent Under section 51 of A.P. Co Operative Societies Act is wholly illegal, arbitrary, violative of the Co Operative Societies Act and SRK, J W.P.No.16407 of 2022 2 consequently direct the respondents to take appropriate legal action as against the Report of the 4th respondent conducted U/S 51 Of A.P Cooperative Societies Act and pass IA NO: 1 OF 2022 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the respondents to take appropriate legal action as against the Report of the 4th respondent, pending disposal of the writ petition, and pass Counsel for the Petitioner: 1. GHANTASALA UDAYA BHASKAR Counsel for the Respondent(S): 1. THOTA SUNEETHA 2. GP FOR COOPERATION The Court made the following: SRK, J W.P.No.16407 of 2022 3 O R D E R This Writ Petition is filed seeking to declare the inaction of respondents in taking appropriate legal action pursuant to the report of 4th respondent under Section 51 of the Andhra Pradesh Cooperative Societies Act, 1964 (for brevity ‘the Act, 1964’), as illegal and arbitrary and consequently, direct the respondents to take appropriate legal action pursuant to the report of 4th respondent. 2. 2. Contents of the affidavit, filed by the Writ Petitioner, are that, the petitioner is one of the Members in 5th respondent- Society; that 2nd respondent ordered for inquiry, under Section 51 of the Act, 1964, into the constitution, working and financial condition of 5th respondent-Society; that 4th respondent was appointed as an Inquiry Officer by virtue of Proceedings in RC No.248/2019/C3 and commenced the inquiry from 09.12.2019 and completed on 13.12.2020; that during the inquiry, 4th respondent recorded the statement of petitioner as a witness, as he being the Member of 5th respondent-Society. (b) Though the Inquiry Report reveals that an amount of Rs.6,11,776/- was misappropriated and civil and criminal action were recommended, respondents had not proceeded with further on the Inquiry Report; that on 07.02.2022, petitioner made a SRK, J W.P.No.16407 of 2022 4 representation to the District Collector, Krishna at Machilipatnam, in turn, 3rd respondent informed the petitioner vide RC No.1124/ 2019/D/dated 17.03.2022 stating that in respect of civil action, the amount of Rs.6,11,776/- was fully recovered along with interest from the persons who misappropriated the funds of 5th respondent-Society, and regarding criminal action, the District Cooperative Officer, Krishna at Machilipatnam vide findings on the Inquiry Report, instructed the Divisional Cooperative Officer, Machilipatnam to take legal opinion before sending the sanction of the prosecution; that from the information under the Right to Information Act, 2005, vide RC No.1124/2019/D, dated 21.04.2022, petitioner learnt that the Assistant Public Prosecutor opined that the criminal action is not necessary and it was recommended to drop the proceedings; that the respondents, under the influence of opinion furnished by the Assistant Public Prosecutor and also under political influence, kept quiet. (c) That even without fixing the liability on a person under Section 60 of the Act, 1964, criminal prosecution shall continue and the person shall be prosecuted under the provisions of the Indian Penal Code, 1860 (for brevity ‘IPC’) by filing report under Section 173 of the Code of Criminal Procedure, 1973 (for brevity SRK, J W.P.No.16407 of 2022 5 ‘CrPC’). The inaction of respondents in taking appropriate action as against the report of 4th respondent under Section 51 of the Act, 1964, is nothing but gross misuse of powers vested by the law. Hence, the Writ Petition. 3. Heard the learned counsel for the petitioner. Perused the entire material available on record. 4. Learned counsel for the petitioner would contend that even though the misappropriated amount of Rs.6,11,776/-, belonged to 5th respondent-Society, as per the Inquiry Report of 4th respondent, was fully recovered along with interest, from the persons who misappropriated those funds, still they are liable to be punished as per the provisions of the Indian Penal Code, 1860, but the respondents were influenced by the opinion furnished by the Assistant Public Prosecutor opining that the proceedings may be dropped as the recommended the criminal action was not necessary. Learned counsel placed reliance on the proposition of law laid down in Garimella Subba Rao and others v. State of A.P. rep. by Public Prosecutor1 wherein this Court held as thus: (Paragraph Nos.9, 11 and 13) “9. There cannot be any dispute that police have got statutory power to conduct investigation relating to a cognizable 1 2014 (1) ALT (Crl.) 53. SRK, J W.P.No.16407 of 2022 6 offence. The conditions relating to recording of the First Information Report under Section 154 of the Code of Criminal Procedure, 1973 are: (1) there must be information relating to commission of a cognizable offence; (2) it must be given to the officer in-charge of the police station; (3) in case of oral complaint, it shall be reduced into writing by the officer in-charge of the police station and it must be signed by the informant; (4) finally, substance of the information must be entered in the prescribed book. In other words, first information of commission of a cognizable offence is enough to constitute the First Information Report. First information should not be vague or indefinite, but it must be the information of facts showing commission of an offence enabling the police or giving scent to take up investigation. Even if a police officer suspects about taking place of a cognizable offence, he has got the statutory right to conduct investigation after registering the case, Magistrate can take cognizance under Section 190 (1) (b) of the Code of Criminal Procedure, 1973 on submission of report by police. It is open to the Magistrate, after exercise of judicial discretion, to take the view that the facts disclosed in the report makes out an offence for taking cognizance to put the accused on trial. At this stage, Magistrate can look into the statements of witnesses recorded during the course of investigation and documents filed along with the report to ascertain whether prima facie cognizable offence is made out or not. All that the Magistrate has to see is whether or not there is ‘sufficient ground for proceeding against the accused’. 10. …… 11. It is the statutory duty of police to conduct investigation and bring the offender to book, if a cognizable offence is reported. Once it investigates and finds an offence having been committed, it is the duty of the investigating officer to collect evidence for proving the offence. The proceedings initiated after registration of the case, cannot be interdicted except as provided under the Code of Criminal Procedure, 1973. In view of the above discussion, it is clear that there is no bar for proceeding further for investigation, enquiry and trial of a case when a prima facie cognizable offence is made out. There is no need to wait till completion of enquiry as contemplated under Section 60 of the Societies Act. The object and purpose of Section 60 of SRK, J W.P.No.16407 of 2022 7 the Societies Act is entirely different. Its primary object is to recover the amount from the person or officer of the co-operative society, who dishonestly misappropriated the property or valuable security of the society. Even if the criminal prosecution is launched under Section 79 of the Societies Act, still that is not a bar for proceeding against a person accused of an offence under General Law viz., the Indian Penal Code, 1860. If the offence made punishable and its ingredients are one and the same in General Law and the Special Law, then only the protection under Article 20 (2) of the Constitution of India comes into effect. Even Article 20 (2) of the Constitution of India has no application when the offence under General Law is distinct and separate with that of the offence under the Special Law. 12. The three judgments of learned single Judges of this Court in D. Prabhakar Reddy v. District Collector, Kurnool2; in V. Nageswara Rao v. State of A.P.3 and in P.Narsaiah v. P.Raj Reddy4 cases, have not been brought to the notice of the learned single Judge while disposing of Writ Petition No.4563 of 2003. Therefore, it was held that after fixing the liability of a person or officer of the society under Section 60 of the Societies Act, the question of prosecution does not arise. So, from the aforesaid reasons, we are of the opinion that even without fixing the liability on a person under Section 60 of the Societies Act, criminal prosecution can go on for the offence punishable under Section 409 of the Indian Penal Code, 1860, provided, on filing of report by police under Section 173 of the Code of Criminal Procedure, 1973. The Magistrate can take cognizance of any offence if the report sets out facts constituting an offence. Even if no liability is fixed on a person or an officer of a society, still criminal prosecution shall be proceeded with, subject to the facts constituting an offence. 13. In view of the reasons as mentioned hereinbefore, we hold as follows: (a) Prosecution of the person accused of an offence can be proceeded with both under General Law and Special Law; 2 1997 (1) ALD 500. 3 2001 (2) ALD (Crl.) 564 (AP). 4 1988 (2) ALT 248. SRK, J W.P.No.16407 of 2022 8 (b) Fixing the liability under Section 60 of the Andhra Pradesh Co-operative Societies Act, 1964 is not a condition precedent to set the criminal law into motion; (c) Even after fixing no liability under Section 60 of the Andhra Pradesh Co-operative Societies Act, 1964, still, the prosecution under General Law viz. the Indian Penal Code, 1860, can be proceeded with subject to the facts constituting an offence; (d) It must be shown that the ingredients for the offence under General Law and Special Law are one and the same, and the accused shall not be liable to be punished twice for the same offence; (e) If the ingredients for the offences punishable under General Law and Special Law are distinct and different, then there is a no impediment to proceed with the case under two enactments; 5. A perusal of the material on record goes to show that 4th respondent conducted inquiry under Section 51 of the Act, 1964, into the affairs of 5th respondent-Society and submitted Inquiry Report to 2nd respondent. The Inquiry revealed that there was misappropriation of an amount of Rs.6,11,776/- and embezzlement of funds in 5th respondent-society and responsibility was fixed against the Staff, Committee Members and Financing Bank Officials concerned for fixing civil, criminal and disciplinary actions and initiating appropriate further proceedings as per the Societies Act, 1964. A perusal of material on record further goes to show that petitioner made an application SRK, J W.P.No.16407 of 2022 9 to the Collector, Krishna at Machilipatnam on 07.02.2022 in Spandana programme, with a request to take appropriate action against the persons as per the Inquiry Report submitted by 4th respondent. In turn, 3rd respondent, in his letter vide Rc.No.1124/2019/D, dated 21.04.2022 informed the petitioner that in respect of civil action, an amount of Rs.6,11,776/- along with interest was fully recovered from the persons involved in misappropriation of funds of 5th respondent-Society and in regard to criminal action, they obtained legal opinion of an Assistant Public Prosecutor, who opined that the criminal action is not necessary and it may be dropped. 6. Section 60 of the Act, 1964 deals with Surcharge, which reads as under: Section 60 (1) of the Act, 1964 – Notwithstanding anything contained in any other law for the time being in force where in the course of an audit under Section 50 or an inquiry under Section 51 or an inspection under Section 52 or Section 53, to the winding up of a society, it appears that any person who is or was entrusted with the organisation, affairs or management of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or has been guilty of breach of trust in relation of the society or has caused any deficiency in the assets of the society by breach of trust or willful negligence or has made any payment contrary to the provisions of this Act, the rules or the bye- SRK, J W.P.No.16407 of 2022 10 laws, the Registrar himself, or any person specially authorised by him in this behalf, of his own motion or on the application of the committee, liquidator or any creditor or contributor, may inquire into the conduct of such person or officer or servant and make an order requiring him to repay or restore the money or property or any part thereof with interest at such rate as the Registrar or the person authorised as aforesaid thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, misapplication of funds, fraudulent retention, breach of trust, or willful negligence as the Registrar or the person authorised as aforesaid thinks just: Provided that no order shall be passed against any person referred to in this sub-section unless the person concerned has been given an opportunity of making his representation. (2) Any sum ordered under this section to be repaid to a society or recovered as a contribution to its assets may be recovered on a requisition being made in this behalf by the Registrar to the Collector in the same manner as arrears of land revenue. (3) This section shall apply notwithstanding that such person or officer or servant may have incurred criminal liability by his act. 7. From a plain reading of the above provision, it is clear that any person who is or was entrusted with the organisation, affairs or management of the society misappropriates or fraudulently retains any money or other property, the Registrar may inquire into the conduct of such person or officer or servant SRK, J W.P.No.16407 of 2022 11 and make an order requiring him to repay or restore such money with interest at such rate as the Registrar thinks just or to contribute such sum to the assets of the society by way of compensation. However, it is also made clear that no order shall be passed against any person referred to, in this sub-section unless the person concerned has been given an opportunity of making his representation. Proviso 2 of Section 60 of the Act, 1964 enacts that any sum ordered under this Section to be repaid to a society or recovered as a contribution to its assets, may be recovered. 8. Apparently, vide Letters in Rc.No.1124/2019/D, dated 17.03.2022 and Rc.No.1124/2019/D, dated 21.04.2022 addressed by the Divisional Cooperative Officer, Machilipatnam and the Assistant Registrar/Public Information Officer, Office of the Divisional Cooperative Officer, Machilipatnam, the amount i.e. Rs.6,11,776/-, which was misappropriated from 5th respondent- Society, was fully recovered along with the interest. Therefore, no penal prosecution was launched against them for the offence punishable under Section 79 of the Act, 1964. Indeed, criminal prosecution, which is otherwise maintainable, would lie both under the Special Act and the General Act subject, however, to the SRK, J W.P.No.16407 of 2022 12 overriding consideration that they shall not be liable to be punished twice for the same offence. Even after fixing no liability under Section 60 of the Act, 1964, still the prosecution under General Law viz. the Indian Penal Code, 1860 can be proceeded with, subject to the facts constituting the offence and there is no impediment to proceed with the case as against the persons, who misappropriated the amounts belonged to 5th respondent-society, as per the ingredients of the offences punishable under General Law and mere fact that civil liability is complied with, it would not bar for criminal prosecution. 9. In view of the foregoing discussion, the Writ Petition is allowed directing the respondents to take appropriate legal action pursuant to the Inquiry Report filed by 4th respondent in the inquiry conducted under Section 51 of the Andhra Pradesh Co-operative Societies Act, 1964, in accordance with law. There shall be no order as to costs. As a sequel thereto, the miscellaneous applications, if any, pending in this Writ Petition shall stand closed. ________________________ JUSTICE K. SREENIVASA REDDY 24th September, 2025. DNB