ORDER:

Challenging surcharge order in Rc.No.507/2016.C1, dated

16.10.2017 passed under Section 60 (1) of the A.P. Cooperative Societies Act, 1964 by the 3rd respondent ordering recovery of Rs.23,65,287.92ps excess expenditure from the Managing Committee Members of Narasingapuram FSCS along with 18% interest per annum from the date of excess expenditure till the date of recovery of the amount, the present writ petition is filed.

2. Heard Sri N. Jayasurya, learned counsel for the petitioner and the learned Government Pleader for Cooperation.

3. The case of the petitioner is that the 4th respondent-

Narasingapuram Farmers Service Cooperative Society was established in 1976. As the society was financed by the Indian Bank with substantial amounts, an officer of the said bank was deputed to act as Managing Director of the 4th respondent society. The present Managing Committee of the society was elected in the year 2013. The petitioner was elected as President of the Managing Committee and discharged his functions in strict adherence to the provisions of the Andhra Pradesh Cooperative Societies Act, 1964 and rules made thereunder and followed circular instructions of the Government. It is stated that the term of the present Managing Committee expired on 03-02-2018, but the same was extended by six months vide G.O.Ms.No.8 Agriculture and Cooperation Department, dated 29-01-2018 as per the provisions of Section 32 (7) (1) of the A.P. Cooperative Societies Act, 1964. The present Managing Committee continued the practice of making payment of salaries to staff of the society. Every year the Audit Wing of Cooperative Department deputes their officials for auditing the accounts of the society and on completion, the District Cooperative Audit Officer, Chittoor District approves the said audit. The audit of the society was completed up to 2016-17. In the audit, no misuse of funds was made out except for the year 2015-16, wherein it is found that the excess expenditure incurred towards staff salaries over and above prescribed limit. It is further stated that pursuant to a Special Audit Report dated 29-09-2016 submitted by the officers of the Audit Wing regarding Final Audit Report for 2015-16, a surcharge notice dated 07-06-2017 was served on the Managing Committee to show cause as to why action should not be initiated for recovery of Rs.25,64,529.32 along with interest at 18% p.a. The members of the Managing Committee were also directed to attend enquiry on 05.07.2017. Pursuant to the said surcharge notice, the petitioner along with other Directors submitted their explanation on 27-06-2017 setting out various facts with regard to incurring expenditure towards cost of management and staff cost including the reason for incurring expenditure due to availing the services of an officer of the Indian Bank as Managing Director of the society and requested to drop the proposed recovery of expenditure incurred towards salary of Managing Director. The petitioner along with other Directors attended the enquiry on 05.07.2017, during the course of which, the petitioner raised various objections in respect of failure of the auditors in following the norms laid down by the circulars issued in Rc.No.1043/2003/PCI, dated 14.05.2010 and the Circular Memo Rc.No.1372/10/CR2, dated 30.10.2010, besides pointing out various discrepancies. However, the Surcharge Officer, without properly considering the explanation submitted by the Managing Committee in its proper perspective issued the impugned Surcharge Order vide proceedings in Rc.No.507/2016.C1, dated 16-10-2017, ordering recovery of Rs.23,65,287.92ps. excess expenditure incurred towards management and staff salaries from the Managing Committee members of the 4th respondent society with interest at 18% p.a. from the date of excess expenditure till the date of recovery of the amount. Assailing the said surcharge order, the present writ petition came to be filed.

4. Sri N. Jayasurya, learned counsel for the petitioner