The Andhra Pradesh High Court affirmed that surcharge proceedings under Section 60 of the Andhra Pradesh Cooperative Societies Act, 1964, can legally proceed even during the liquidation of a cooperative society. This decision came as the Court dismissed a writ petition filed by two individuals who had challenged a notice issued under Section 60(1) of the Act.
The case arose when the Deputy Registrar of Cooperative Societies, Vizianagaram, initiated surcharge proceedings against the petitioners through a notice dated 16.10.2006. The notice followed an earlier directive by the A.P. Cooperative Tribunal in 2006, which had ordered a fresh inquiry, ensuring fair opportunity for the petitioners, including the right to receive copies of enquiry reports and cross-examine witnesses.\
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“The above provision clearly indicates that the Surcharge Proceeding can be initiated even by the Liquidator... The said provision would also clearly indicate that the Surcharge Proceeding would go on even during the process of winding up of the Society,” — Justice Gannamaneni Ramakrishna Prasad
Despite this, the petitioners argued that the appointment of a Liquidator under Section 65 should stop any such proceedings. They also claimed they had not been served proper documentation related to the notice. The Court, however, dismissed these claims as unfounded.
“The submission of the learned Counsel for the Writ Petitioners pales-away, inasmuch as the said submission is directly in conflict with the Section 60 of the Act,” — Justice Gannamaneni Ramakrishna Prasad
The Court emphasized the clarity of Section 60, which explicitly allows the competent authority—including a Liquidator—to initiate surcharge proceedings during a society's liquidation. It further noted that the Liquidator has powers to defend or initiate legal proceedings on behalf of the society under Section 66 of the Act.
Importantly, the Court also pointed out that the petitioners did not take any steps to request relevant documents from the authorities, weakening their argument about not receiving material evidence.
“The contention of the Writ Petitioners is that the material has not been supplied... The same is also frivolous in nature, inasmuch as the Writ Petitioners have never made any application... seeking any material documents,” — AP High Court Order
The case had been stalled for nearly 19 years due to an interim suspension granted in December 2006. However, the Court determined that the original proceedings were initiated in compliance with the Tribunal’s directive and were well within the legal framework.
In conclusion, the Court dismissed the writ petition as meritless and labeled it an abuse of legal process. Additionally, it ordered each petitioner to pay ₹10,000 towards the Andhra Pradesh High Court Advocates’ Association.
Case Number: WRIT PETITION NO: 25007/2006
Case Title: S.S. KARRI & ANOTHER v. DEPUTY REGISTRAR
Date: 05.05.2025
