1. Mr. T.Purna Chandra Rao, learned counsel for the appellants.
Ms. B.Mohana Reddy, learned Government Pleader for Co-operation Department for respondent Nos.1 to 3.
2. Heard on the question of admission.
3. In this intra court appeal, the appellants have challenged the validity of the order dated 30.01.2024 passed by learned Single Judge in W.P.No.31742 of 2023, by which writ petition preferred by the appellants has been dismissed.
4. Facts giving rise to filing of this appeal briefly stated are that respondent No.4 namely The Software Associates Mutually Aided Cooperative Housing Society Ltd. (hereinafter referred to as ‘the Society’), is a housing society registered under the provisions of Telangana Mutually Aided Co-operative Societies Act, 1995 (hereinafter referred to as ‘the 1995 Act’). According to the appellant, the Society acquired the land measuring Acs.08.07 guntas in Survey Nos.181/Part and 189/Part, situated at Vattinagulapalli Village (hereinafter referred to as ‘the subject land’) with the contributions collected from its members for the purposes of converting the subject land into residential plots and allotting the same to the members. It has been averred in the writ petition that the Society was unable to get a layout approved and as the subject land was affected by provisions of G.O.Ms.No.111 dated 08.3.1996. It has further been averred in the petition that respondent No.7 who was acting as President of the Society colluded with a businessman to alienate the subject land.
5. Thereupon the members of the Society made a complaint to the Commissioner of Co-operation and Registrar of Co-operative Societies, who conducted an inquiry vide order dated 31.12.2022 and directed respondent No.3-District Co-operative Officer, Ranga Reddy District to submit a report within a period of 15 days. The District Co-operative Officer passed an interim order on 18.01.2023 directing the Tahsildar, Gandipet not to register/transfer the subject land belonging to the Society without proper clearance from the District Co-operative Officer.
6. Thereafter the District Co-operative Officer submitted a report on 24.01.2023 to the Registrar. The District Co-operative Officer informed the Society to convene a Special General Body meeting as provided under Section 31 of the 1995 Act within a period of 30 days and to place an inquiry report before the Body. Thereafter, a General Body Meeting was conducted by the Society on 19.03.2023 and the inquiry report was not accepted by the Society.
7. Thereupon, the appellants filed the writ petition, in which following reliefs were claimed:
“For the reasons stated in the accompanying affidavit, the Petitioners prays that this Hon’ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ/Order/Direction declaring that the inaction on the part of Respondents 1 to 3 in not implementing the findings of the 3rd Respondent under Inquiry Report by initiating further actions against the Managing Committee of the Respondent No. 4 Society, including the alleged President 7th Respondent, for the breaches and violation of the byelaws and TSMACS Act, as arbitrary, illegal, bad in law and violative of the Principles of Natural Justice, apart from being violative of the Article 14 of the Indian Constitution and consequently direct the Respondents 1 to 3 to initiate further actions by conducting a General Body Meeting of the 4th Respondent/Society and to appoint an ad-hoc committee under Section 23(3) to take over the management and affairs of the Society and to conduct elections to elect a fresh committee and also to initiate such penal proceedings under Sec. 38 of Telangana State Mutually Aided Co-operative Societies Act, 1995 against Respondent-7 and other managing committee members and to take such other or further actions as may be appropriate under provisions of TSMACS Act, and to pass such other and further orders as to this Hon’ble court may deem fit and proper in the circumstances of the above case.”
8. The learned Single Judge by an order dated 31.01.2024 dismissed the writ petition inter alia on the ground that the appellants have an alternative efficacious remedy under Section 37 of the 1995 Act for dispute resolution and the appellants themselves have availed of the remedy by filing O.P.No.2 of 2023 before the Co-operative Tribunal. It was further held that the findings recorded by the Inquiry Officer are erroneous. Hence, this appeal.
9. Learned counsel for the appellants submitted that the Registrar is under a statutory obligation to act on the inquiry report. It is further submitted that in the absence of challenge to the inquiry report, learned Single Judge ought not to have recorded a finding that the findings recorded by the Inquiry Officer is erroneous. It is therefore submitted that the Registrar be directed to perform the statutory duty by taking action on the inquiry report. In support of aforesaid submission, reliance has been placed on decision of a Division Bench of this Court in Hanumantu Narayana Dora v. Srikakulam Co-op. Urban Bank Ltd., Srikakulam 2016 (4) ALD 505 (DB).
10. We have considered the submission made by learned counsel for the appellants and have perused the record.
11. The Telangana Mutually Aided Co-operative Societies Act, 1995 is an Act to provide for voluntary formation of Co-operative Societies, reliant business enterprises, based on thrift, self-help and mutual aid and owned, managed and controlled by members for their economic and social, betterment and for the matters connected therewith or incidental thereto. Section 29 of the 1995 Act deals with inquiry whereas Section 31 of the 1995 Act deals with the action on special audit or inquiry report. For the facility of reference, Sections 29 and 31 of the 1995 Act are extracted below:
“29. Inquiry:- (1) Every Co-operative Society shall furnish any relevant information required by the Registrar in order to enable him to satisfy whether the Co-operative Society has conducted its affairs in accordance with the Co-operative principles and the provisions of this Act.
(2) The Registrar may, of his own motion, and shall on the application, of a federation to which the Co-operative Society concerned is affiliated, or of a creditor to whom the Co-operative Society is indebted or of not less than one-third of the Director, or of not less than one-tenth of the members, hold an inquiry or cause an inquiry to be made into the specific matter or matters relating to any gross violation of any of the provisions of this Act by the Co-operative Society.
(3) The inquiry shall be completed within a period of four months from the date of receipt of orders.
Provided that the Registrar may extend the period of inquiry further period of one month while recording the reasons thereof in writing.
(4) XXX
(5) The Registrar shall, within a period of thirty days from the date of the completion of the inquiry communicate the report of the inquiry or the reasons for the non-completion of the inquiry, as the case may be.
(a) To the cooperative society concerned;
(b) To the applicant federation, if any;
(c) To the applicant creditor, if any;
(d) To the person designated by the applicant - directors, if any;
(e) To the person designated by the applicant - members, if any;
(f) To any person, on payment of fee fixed by the Registrar; and
(g) To the Cooperative Tribunal where necessary.
(6) The inquiry officer acting under this section shall, among others, specifically state the amount of deficiency, waste or loss which appears to have been caused by the gross negligence or misconduct of any person in the performance of his duties.
31. Action on Special Audit or Inquiry Report.- On communication of a special audit report under Section 28 or an inquiry report under Section 29, the Registrar should examine the report and if satisfied on the findings of the report without prejudice to any civil or criminal proceedings to which the Board of Directors may be liable:-
(a) direct the Board to convene a General Body Meeting within such reasonable time as he may specify, to enable him to bring to the notice of the General Body, either directly or through his nominee, the findings of the special audit or inquiry report, for necessary action.
If the society fails to convene General Body within one month it is deemed that the General Body has accepted the findings of the Special Audit or Inquiry Report.
(b) Notwithstanding the action taken by the General Body under this section, the Registrar may initiate necessary action on the findings of Special Audit Report / Inquiry Report.”
12. Under Section 31 of the 1995 Act, the Registrar is only directed to take an action on the inquiry report in the manner indicated therein i.e., he is required to direct the Board to convene a General Body Meeting and bring to the notice of the General Body the findings of inquiry report for necessary action. Section 31(a) of the 1995 Act further provides that in case Society fails to convene a General Body Meeting, within one month, it shall be deemed that General Body Meeting has accepted the findings of the inquiry report. Notwithstanding the action taken by the General Body, the Registrar may initiate necessary action on the findings of inquiry report. The provisions of Section 31 of the 1995 Act were interpreted by this Court in M.V.Ramanaiah v. A.P. Secretariat Employees Mutually Aided Co-operative Housing Society Ltd., Hyderabad (2013) 3 ALT 298 and it has been held that the Registrar is required to approach the Co-operative Tribunal by initiating necessary action on the findings of the inquiry report, if so advised.
13. In the instant case, admittedly, the Registrar acting under Section 31(a) of the 1995 Act had directed the Society to convene the General Body Meeting. The Society convened the General Body Meeting, which was attended by a majority of the members and passed a resolution on 19.03.2023 rejecting the report. It is pertinent to note that in the meanwhile, elections of the Society have also been held. Therefore, the relief sought for by the appellants in the writ petition relating to appointment of an administrator and consequently seeking a direction to hold the elections of the Society has been rendered infructuous.
14. Insofar as reliance placed by learned counsel for the appellants on decision of a Division Bench of this Court in Hanumantu Narayana Dora (supra), suffice it to say that the Division Bench dealt with Section 51 of the Andhra Pradesh Co-operative Societies Act, 1964, whereas in the instant case, Section 31 of the 1995 Act arises for consideration.
15. Section 37 of the 1995 Act provides for settlement of disputes touching the constitution, management or business of a Co-operative Society.
16. In the facts and circumstances of the case, it is open for the appellants to take recourse to the remedy provided under Section 37 of the 1995 Act, even otherwise action on the inquiry report in terms of Section 31(a) of the 1995 Act has been taken by the Registrar.
17. Needless to state that in case the appellants resort to the alternative remedy provided to them under the statute, the authority under the statute shall decide the dispute which may be raised by the appellants without being influenced by the observations contained in the order dated 30.01.2024 passed by the learned Single Judge in W.P.No.31742 of 2023.
18. To the aforesaid extent, the order dated 30.01.2024 passed by the learned Single Judge in W.P.No.31742 of 2023 is modified.
19. Accordingly, Writ Appeal is dismissed. There shall be no order as to costs.
As a sequel, miscellaneous petitions, pending if any, stand closed.
