Ramachandran Nair, J.

1. This writ appeal is filed by the State challenging the judgment of the learned single Judge vacating surcharge orders issued under Section 68(2) of the Kerala Co-operative Societies Act, 1969, hereinafter referred to as the "Act", against respondents 1 to 4 and the consequent orders issued by the Joint Registrar as violative of Rule 66(5) of the Cooperative Societies Rules, hereinafter referred to as the "Rules".

2. We have heard learned Government Pleader for the appellants and Adv.Sri.George Poonthottam for respondents 1 to 4.

3. An inspection was ordered by the Registrar into the affairs of the sixth respondent society consequent upon the report furnished by the Reserve Bank of India pointing out financial irregularities in the affairs of the society. In the report prepared by the Inspector of Co- operative Societies, respondents 1 to 4 were indicted for causing loss to the society. Based on the findings, the Registrar initiated proceedings under Section 68(1) against respondents 1 to 4 and after giving notice and serving copy of the enquiry report, Ext.P8 order was issued under Section 68(2) of the Act. Subsequent to the surcharge orders, respondents 1 to 4 were served with orders under Rule 44(1) (a) of the Rules disqualifying all of them from being members of the committee. After disqualification of respondents 1 to 4, the managing committee lost required number of members for sustenance and consequently the Joint Registrar issued Ext.P25 order appointing Administrator to take over the charge of the management of the society. Appeal filed by respondents 1 to 4 against surcharge orders issued vide Ext.P8 before the Government were rejected. Writ petition was filed by respondents 1 to 4 challenging all these orders and since the basic order is Ext.P8, the learned single Judge went into the legality of the said order and on finding it untenable by virtue of violation of Rule 66 (5), he vacated the said order and consequently all follow up orders were quashed. It is against this judgment of the learned single Judge; the State has filed this writ appeal.

4. The sole question to be considered is whether there is violation of Rule 66(5) of the Rules in this case. On facts, the conceded position is that enquiry was ordered based on R.B.I. report and after receiving enquiry report, the Registrar proposed to take action against respondents 1 to 4 under Section 68 (2) of the Act. Respondents 1 to 4, apprehending that orders will be issued surcharging them without giving them copy of the report and without hearing them, approached this Court and this Court, by Ext.P5 judgment, directed the Registrar to afford opportunity of hearing to respondents 1 to 4 and to take a decision, in accordance with law. Thereafter, respondents were served with copy of the report and were given opportunity to file reply before surcharge orders were issued under Section 68(2) of the Act. However, after surcharge orders and follow up orders were issued disqualifying respondents, they approached this Court with the writ petition that led to the impugned judgment alleging that there is violation of the principles of natural justice in as much as there was non-compliance of Rule 66(5) of the Rules. The controversy is on the interpretation of Rule 66(5), which prima facie applies only in regard to the apportionment of cost of inspection among the persons referred to in Section 67. However, counsel for the respondents contended that opportunity referred to in Rule 66(5) is for every action to be taken by the Registrar pursuant to the report. We notice that, the latter part of Rule 66(5) providing for an opportunity and an adjudication by the Registrar refers to only sharing of cost under Section 67. In this context, it is worthwhile to refer to Section 67 and Rule 66(5), which are extracted hereunder:

Section 67. "Cost of inquiry or inspection:-Where an inquiry is held under Section 65, or an inspection is held under Sect