Point of Law : Materials disclosed in an inquiry report of the Vigilance Officer can certainly be used for the purpose of surcharging a person after due inquiry as provided for under Section 68(1).

JUDGMENT :

P.B. SURESH KUMAR, J.

1. This writ appeal is directed against the judgment dated 27.01.2020 in W.P. (C) No. 21646 of 2019. The appellants were respondents 1 and 2 in the writ petition. Parties and documents are referred to in this judgment for convenience, as they appear in the writ petition.

2. The petitioner is a member of the third respondent, a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 (the Act). He was also the President of the Society for some time. The petitioner and others were surcharged by the first respondent, the Joint Registrar of Co-operative societies, under Section 68(2) of the Act in terms of Ext.P1 order, on the ground that they have caused loss to the Society to the tune of Rs. 3,15,269/- by taking out a building on lease unnecessarily and without the permission of the competent authority under the Act. Earlier, based on an inquiry report of the Vigilance Officer appointed under Section 68A, an inquiry has been ordered by the Joint Registrar under Section 68(1) through the second respondent, the concerned Assistant Registrar of Co-operative Societies, and it is based on the report in the said inquiry that Ext.P1 order was passed. The petitioner challenged Ext.P1 order in the writ petition from which this writ appeal arises, mainly on the ground that there cannot be an inquiry under Section 68(1) based on the report of the Vigilance Officer appointed under Section 68A. The learned Single Judge accepted the said ground and quashed Ext.P1 order. Respondents 1 and 2 are aggrieved by the said decision of the learned Single Judge.

3. Heard the learned Senior Government Pleader on behalf of respondents 1 and 2, the learned Senior Counsel for petitioner as also the learned counsel for respondents 4 and 5.

4. The learned Senior Government Pleader argued that the plain meaning of the words used in Section 68(1) of the Act would show that an inquiry thereunder could be ordered if it is found in the course of an inquiry that any of the persons referred to therein has caused loss to the society by any one of the conducts mentioned therein, and there is absolutely no justification to hold that such an inquiry cannot be ordered based on the report of an inquiry by the Vigilance Officer appointed under Section 68A.

5. Per contra, the learned Senior Counsel for the petitioner contended that the term “inquiry” in Section 68(1) refers only to the inquiry provided for under Section 65 and the scope of the said term cannot be expanded to include the inquiry of the Vigilance Officer appointed under Section 68A. It was pointed out by the learned counsel that based on an inquiry report of the Vigilance Officer appointed under Section 68A, the Registrar is empowered only to order an inquiry under Section 65 and as such, if it is held that there can be an inquiry straight away under Section 68(1) based on the inquiry report of the Vigilance Officer, the competent authority under Section 68 would be bypassing the requirement of inquiry under Section 65 before initiating proceedings for surcharge. It was also argued by the learned counsel that Section 68A was introduced only with effect from 5.6.2007 and the provision in Section 68(1) even before 5.6.2007 was substantially the same and as such, it cannot be said that the term “inquiry” under Section 68(1) takes within its scope the inquiry of the Vigilance Officer also. The learned Senior Counsel conceded that while Section 65 empowers the Registrar to order an inquiry under that provision based on the report of the Director of Co-operative Audit appointed under Section 63, it is permissible for the Registrar to initiate proceedings for surcharge under Section 68(1) also based on the materials disclosed in the audit straight away, without waiting for an inquiry under Section 65 based on the report of the audit. It was, however, argued by the learned counsel that an inquiry report of the Vigilance Officer appointed under Section 68A cannot be