The High Court · 2025

THE HON'BLE SRI ruSTICE J. SREENIVAS RAO CRTMINAL PETITION No .630 of 2022 ORDER: This Criminal Petition has been filed under Section 482 of the Code of Criminal Procedure,, 1973 (for shotl' 'Cr.P.C.') by the petitioners-accused Nos'15 and2l' seeking to quash the proceedings against them in C'C'No'110 of 2Ol8 pending on the file of the lear-ned XII Additional Chief Metropolitan Magistrate at Hyderabad,, registered for the offences punishable under Sectio ns 42O, 42O and l2O-B r/w 34 of lPC and Section 38(2X3X4) of the A'P'/T'S' Mutually Aided Cooperatives Societies Act,, 1995 (for brevity' hereinafter ref-en-ed to as 'the Act')'

2. Heard Mr. G'U.R.C. Prasad, learned counsel for the petitioners and Mr. M.Vivekananda Reddy, learned Assistant Public Prosecutor appearing fbr respondent Nos'l and 2' Perused the record.

3. When this matter is taken up for hearing on25-08-2025, Mr. G.U.R.C.Prasad, learned counsel for the petitioners 2 l, appearing through video conference submitted that the issue raised in this criminal petition is squarely covered by the order dated 24.12.2024 passed by this Court in Criminal Petition l.{o.7792 of 2O23, wherein, accuSed Nos.lg, lg, 24, 25 and 26 have approached this Court seeking to quash the very same C.C.No. I l0 of 201g. Learned counsel placed the copy of the above said order by duly serving upon Mr. M. Vivekananda Reddy, leamed Assistant public Prosecutor. At the request of learned Assistant pubric Prosecutor, the matter was adjoumed to 01.09.2025 for getting instructions. Once again, this matter came up fbr consideration on 09.09.2O25. On that day also, at the request of learned Assistant public prosecutor, the matter was posted to today i.e., r0.o9.2025. Today, the learned Assistant public Prosecutor fairly submits that the issue raised in this criminar petition is squarely covered with the order dated 24.12.2024 passed by this Court in Criminal petition t-{o.7792 of 2023.

4. In view of the submissions made by the respective parties, this Criminal petition is allowed, rn terms of the \ l ) I \ \ .t 3 order dated 24.12.2024 passed by this Court in Criminal Petition t1o.7792 of 2023 and the proceedings against the petitioners-accused Nos.l5 and 21 in C'C'No'110 of 2018 pending on the file of the learned XII Additional Chief Metropolitan Magistrate at Hyderabad, are hereby quashed' Pending miscellaneous applications, if any, shall stand closed. To, sD/- T S ASSIS RINIVASA REDDY I T REGISTRAR //TRUE COPY// .l \ SECTION OFFIGER '1 . The Xll Additional Chif Metropolitan Magistrate' Hyderabad' 2. The S.H.O., CCS, DD, HYderabad' 3. One CC to SRl. G U R C PRASAD Advocate IOPUCI 4. One CC to THE PUBLIC PROSECUTOR , HIGH COURT' HYD [OUT] 5. Two CD CoPies PSL a { I t ., .:.. .tt t .:..' ., {, 4li .i;;1 a'i';ji , '., j",. HIGH COURT DATED:1010912025 - ;,.i. ^$ " .(r\ \ ORDER "li:l + 1-f'-";.1 CRLP.No.630 of fQff ::::t::" ALLOWING THE CRLP * THE HONOURABLE SMT JUSTICE K. SUJANA CRIMINAL PETTTION No.7792 OF 2O2g ORDER: This Criminal petition is filed under Section 4g2 of the Code of Criminal procedure, l9Z3 (for short Cr.p.C.,) to quash the proceedings initiated against the petitioners/accused Nos. 1g , Ig, 24,25 and 26 in CC.No.110 of 2O 18 pending before the XII Additional Chief Metropolitan Magistrate, at Nampally, Hyderabad, registered for the offences punishable under Sections 4O6, 42O, l2O_B read with Section 34 of the Indian penal Code, 1g60 ffor short 'the IPC) ard Section 38 (2) (3) (4) of Andhra pradesh Mutually Aided Co-Operative Societies Act, 1995 (for short the ActJ.

2. The brief facts of the case are that the respondent No.2/de facto complainaat lodged a compiaint stating that the Registrar of Mutually Aided Co-Operative Societies, Andhra Pradesh, Hyderabad (heretnafter referred as lRegistrar of Societ5rJ uide proceedings bearing No.tt864/2O1 1/HR_4 dated 22-02.2O12 and 2S.OS.2O\2, ordered inquiry under 2 SKS, J Crl.P.No.7792 OF 2023 Section 2912\ of the Act, of the Andhra Pradesh High Court Employees Mutually Aided' Co-Operative Housing Society Limited, Hyderabad (for short 'society') and appointed the Divisional Cooperative Officer, Secunderabad Division' Hyderabad, as the Inquiry Officer to inquire into the into the gross violation of the functioning arrd to look provisions of the Act.

3. The Inquiry Ofhcer was appointed to look into the issues pertaining to allegations covering the period from the date of registration of Society i'e', from 29 'O7 '2OO3 ; failure of ADHOC Committee to conduct election as per Section 23(i) of the Act ; failure of management to arrange audit of its accounts as per statutory provisions prescribed under Section 27 of ltre Act ; failure of Management Committee to discharge its duties as specified under Section 23 of the Act (bye-lau, No.44) ; failure to file annual returns with the Registrar as per Section 34 of the Act ; violation of terms and conditions stipulated in G'O'Ms'No'633 dated L7.ll.lgg2 Admn (Service) Department ; not furnishing the annual returns for the year 2OO3-2OO7 under Section 34 of the Act, 1995 to the Registrar of Society ; failure in handing 3 SKS, J Crl.P.No.7792 oF 2023 over of expenditure vouchers worth Rs.4,8g,826.00/- for the period of 2005-06 to 2009_10 ; management of accounts without proper vouchers, cash book or other books of accounts arranged for audit of the society for the year 2OO3_ 20 10 and ; failure in producing the plans and estimates measurement book records bills for the civil works under taken by the society, as well as, the contractor, and the approval of managing committee was not shown for verilication.

4. The Inquiry Officer commenced and concluded the inquiry by submitting a detailed report to the Registrar of Society who was informed by the Government pleader that in WP.No.29232 of 2Ol2 an ordgr dated 18.09.2012 was passed directing the respondent No.2 _ District Co-operative Officer, Hyderabad (for short DCOJ to consider initiation of steps for prosecution of delinquents on the basis of findings made in Inquiry Report dated 20.06.20|,2 and in compliance of the said orders, criminal proceedings urZe FIR.No.286 of 2Ot2 dated 18.10.2012 were initiated before the Charminar police Station and later W.A.No.1366 of 2OI2 was fiIed challenging the order passed in the said Wp.. and 4 SKS, J Cr1.P.No.7792 OF 2023 uid.e ord.er dafed, 06.12 2O12 the said WA'' was a'llowed ' dismissing the order passed in WP'' and observing that under the prouisions of the Act itsetf there ore other measures prouided entirelg tuithin the domain of the authoitg under the Act to take steps in the matter and it is their right to decide uhat steps tlrcg r.ttould auail concenting the allegations of commlssions a rud' omissions or anA other uiolations on the part of tl'"e Parties

5. On examination of the irregularities as mentioned above, a complaint against the Members of the Society was lodged stating that as per bye law No'45, the Society has not appointed any council of elders to resolve the disputes or settle the issues that arose with reference to the management and business of the Society lt was alleged that the trx Secretary has issued' a cheque to the contractor for an amount of Rs.9,8O,0OO'OO/- without bringing the same to the notice of the Board, whereas, the amount eligible to the contractor comes to Rs'80,OOO/- only' It was further alleged that though the cheque bearing original amount of Rs.80,00O/- was encashed, the Ex Secretary issued cheque bearing an amount of Rs'9,80,OOO'/- and the same be 5 SKS, J Crl.P.No.77s2 oF 2023 recovered from the Ex Secretar5r itself. It was stated the Managing Committee of the Society convened meeting on 15.04.2011 and resolved to recover the said amount from the trx Secretary and the General Body also resolved for the same. That apart, it was alleged that several other irregularities were found pertaining to pa],,ments of amounts towards consultation, assessment and other miscellaleous expenditure incurred by the Society. Hence, complaint was lodged by respondent No.2.

6. On receipt of the said complaint, the police investigated the matter and on completion of due invesligation, a charge sheet was filed arraying the petitioners as accrrsed Nos.lg, lg, 24, 25 and 26 for the offences punishable under Sections 406, 42O, l2O_B read with Section 34 of IpC and Section 38 (2) (3) (4) of the Act. Aggrieved thereby, the petitioners hled this criminal petition.

7. Heard Sri Dida Vijaya Kumar, learned counsel for petitioners, and Sri S.Ganesh, leamed Assistant ftrblic Prosecutor, appearing for respondent No.1 _ State. 6 SKS, J Crl.P.No 7792 OF 2023 Learned counsel for petitioners submitted that the 8. contemplation of Section 83 in Andhra Pradesh Co-Operative Societies Act, 1964 (for short Act 1964') enables the Magistrate of First Class to take cognizance of the offences under the Act but no such provision is contempiated under the Act which would enable the Magistrate to take cognizance of the offences' He contended that the DCO has no locus standi, jurisdiction or is the competent authority, either to give the complaint or to register the same as FIR and charge sheet in FIR No'68 of 2O13 which subsequently was renumbered as Crime No'232 of 2OI4 under Sections 406 and 42O of IPC and Section 38 of the Act g. Further, he asserted that the Registrar of Co-Operative Societies aione is vested with powers to act upon the Inquiry Report under Section 29 (5) read with Sections 31 and 38 of the Act, whereas, in this case' the respondent No.2 - District Co-Operative Officer' without any locus standi and authority has filed FIR No'68 of 2O13 and the same arnounts to abuse of process of law' He lamented that under Sections 29(3\ and' (4) of the AP MACS Act' the 7 SKS, J CrLPNo.7792 OF 2023 rnquiry shall be concluded within a period of 120 days and report shall also be submitted to the Registrar within the said period, whereas, the report d,ated 20.06.2O12 was not submitted within the time prescribed and the same amounts to violation of provisions of Section 29 of the Act.

10. Learned counsel for the petitioners incessantiy contended that as per Section 31 of the Act, al action on special audit or inquiry report shall be initiated with the assent of General Body of the Society and since no General Body assent is passed, the Additional Registrar would clearly be incompetent to lodge complaint against the petitioners. Further, he apprised that the other accused persons in this matter had Iiled Cr1.p.No.7l57 of 2023 on similar footing, whereunder, uid,e ord,er d,ated O2.Og.2O23 the relief of dispensing with appearance was granted for limited period. Therefore, he prayed this Court to allow the criminal petition, quashing the proceedings initiated against the petitioners in CC.No.11O of 201g. 1 1 . On the other hald, the learned Assistant public Prosecutor, appearing for respondent No.l State, 8 SKS, J Crt.P.l'Io.7792 OF 2023 vehemently opposed the submissions made by learned counsel for petitioner submitting that the CC ' ' pertains to the year 2018 which revolves around the set of serious allegations pertaining to several discrepancies involving payments made from the end of Society He asserted that the matter requires full-fledged trial' Therefore' he prayed this Court to dismiss the criminal petition'

12. Having regard to the rival submissions made and on going through h the materia-l placed on record' it is to be noted that the elections to the Societ5r werc conducted and the petitioners assumed the charge of Director at respective periods. The record would reveal that the petitioner Nos'1 and 2 assumed the charge of Director frorn 29 'O3'2O 1O and the petitioner Nos.3 and 4 assumed r:harge from 26.03.2012. The Society selected an unregistered firm headed by the Contractor named P Veeraiah for the purpose of development of roads and other developmentd works' The said firm was registered on 03 08'2011 but while entering into the agreement with the Society the contractor had no registration. It is noted that the Society withdrew an amount of Rs.5O,0OO/- by cheque bearing No'077951 dated 9 SKS, J C(|.P.No.7792 OF 2023

17.03.201I which had no entry in the cash book. Further, the SocietSr also withdrew Rs.12,OO0/_ on O1.09.2O10 which had no entry in the cashbook and no details of such expenditure were provided. Furthermore, the Societ5r even withdrew an amount of Rs.19,3OO/_ uide cheque No.0Z795g on 19.02.2O11 but the same had no details of expenditure on vouchers.

13. In addition, it is seen that the complaint averments would reveal that the Society took up the development of layout by calling for tenders without obtaining any approval from the Greater Hyderabad Municipal Corporation (for short GHMCJ and incurred huge amount of Rs.2,15,16,136.OO/- towards layout development. It is averred that the Societ5r submitted a layout to GHMC uide application No.69513/ t4/ 11/2otl ard the GHMC in turn has requested the Societ5r to remit an amount of Rs.3,21,31,555/- towards fees and charges for layout approval uide letter bearing No.69513/ 14 / 11/241.

74. In nutshell, it is to be noted that crime was recorded and registered against the petitioners basing on the order of 10 SKS, J C11.P.No 7792 OF 2023 the learned single Judge, whereas, the said order was set aside by the Division Bench and subsequently' the complainant - Additional Registrar and Tribunal Member' lodged fresh report before the Police in the year 2014 stating that irregularities were being committed by present members of the Society, and also pointed out averments of inquiry report, whereas, the petitioners herein are challenging the lnquiry report itself, on the ground that the Registrar of Cooperative Societies, alone is vested powers to act on the inqurry report under Section 29 clause 5 read with Section 31 of the Act, whereas, in the present case' the respondent No.2 is the DCO, without aty locus standi and authoritY had filed the case

15. Section 29 clause 5 reads as under "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 ttre inquiry, as the case maY be,- (a) to the co-operative society concerned; (b) to the applicaat federation, if arry; (c) to the apPlicartt creditor, if any; 11 SKS, J Ct[.P.No.7792 OF 2023 (dI to the person designated by the applicant _ directors, if aly; (e) to the person designated by the applicant _ members, if any; (f) to any person, on payment of fee fixed by the Registrar; and (d to necessarlr.l" the Co-operative Tribunai where

16. Section 3l of the Act deals with Action on Special Audit or Inquiry Report, which says that on communrcation of a special audit report under Section 2g 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 liabte:- (a) direct the Board to convene a General Body Meeting within such reasonable time as he may specii/, 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 inqutry report, for necessarJr 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 72 SKS, J CILP.No.7792 OF 2023 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'

17. Section 38 of the Act reads as under

38. (1) lt shall be an offence under this Act, if a Cooperative Society,- (a) fails to give a notice, send a return or document, or fails to do or allows to be done an1' act which a Cooperative Society is by this Act or under its bye-laws required to give, send, do or aLlow to be done; (b) wilfully neglects or refuses to do art act or to furnish inlormation required for the purposes of this Act or does aI act forbidden by this Act, or the byeJaws; or (c) makes a return, or rvilfully furnishes information, in any respect false or insumcient. (2) It shal1 be an offence under this Act, if any person or Co-operatise Sociery contravenes the provisions of a Cooperative Societ5r' (3) An offence by a Co-operative Society shall be 13 SKS, J C.l.P-No.7792 OF 2OZ3 deemed to have been also committed by each oflice-bearer of the Co-operative Societlr bound by the bye-laws thereof to fulfil the duties whereof the offence is a breach, or if there is no such office-bearer then by each of the Director, unless the office-bearer or Director proves to have attempted to prevent the commission of the offence- (4) An offence under this section shall be punishable with imprisonment for a term which may extend to one year or with tine which may extend to ten thousand rupees or with both: Provided that where a person is guilty of misappropriation, fraud, breach of trust, cheating or ary other act invoh,.ing moral turpitude, resulting in a loss to the Co-operative Society, he shall be punishable under the relevant provisions ofthe India:n Penal Code, lg6O.,,

18. The case of learned counsel for petitioners revolves on the ground that complaint is not made by the Registrar ald that there are no averments in the complaint stating that the Deputy Commissioner is authorized to file report before the Police. Further, that under Section 29 clause 3 and 4 of L4 SKS, J Ctl.P.No.7792 OF 2023 the Act, the inquiry shall be completed within period of 120 days and shall be submitted to the Registrar' whereas' in the case on hand, the inquiry report dated 26 06 2012 was not submitted either by the Inquiry Ofhcer' or by the DCO' to the Registrar of the Cooperative Societies' rvithin the time limit prescribed, and thereby, the same amounts to violation of provisions of Section 29 of the Aet and that the Inquiry report dated 20.06.2012 has lapsed and as per Section 29(4\, no action can be taken on lapsed report'

19. That apart, in the present case therc is no counter filed by respondent. As seen from the compLaint averments' the inquiry was ordered oi 20'O2'2O12 arrd 25'05 2012 atd in the complaint it is stated that inquiry report was submitted uid.e cited' reference number trvo ' whereas ' on going through the orders passed in writ petition' it is seen that the inquiry was completed rvithin time and that the report was submitted to Registrar' Therefore' there is no force in the said contention of learned counsel for petitioners 15 SKS, J Ctl.P.No.i792 oF 2023

20. That apart, the other contention is that no ascent of general body was passed, as required by Section 31 of the Act, and that the Additiona_l Registrar is incompetent to lodge complaint. on going through the said contention it is seen that in the complaint, nowhere it is mentioned that they have taken ascent of the general body ald nowhere it is stated that inquiry report was placed before the general Lrody and the general body gave ascent for inquiry report.

27. Section 3 I of the Act outlines the procedure for the Registrar to follow upon receiving a special audit report or al inquiry report. The Registrar is required to examine the report and, if satisfied with its findings, take necessary action. The filst step in this.process is for the Registrar to direct the Board of Directors of the societ5r to convene a General Body Meeting within a reasonable time. The purpose of this meeting is to bring the findings of the special audit or inquiry report to the attention of the Genera_l Body, enabling them to take necessary action. If the society fails to convene the General Body Meeting within one month of the Registrar's direction, it is deemed that the General Body has accepted the findings of the special audit or inquiry report. 15 SKS, J Crt P.No7792 OF 2023 Thisprovisionensuresthatthesocietycannotsimplyignore the report's hndings and avoid taking action' NotwithstandingtheactiontakenbytheGeneralBody'the Registrar is emporvered to inltiate necessary action based on audit or inquiry rePort This the hndings of the sPecial provision ensures that the address any irregularities or issues highlighted in the report' even if the General Body fails to take action' Registrar can take stePs to

22. In relation to the above, it is noted that in the present case there is absolutely no such averment to show that the Registrar directed the general body to convene meeting and has taken any step in this regard, and without adhering to the decision of the general body, they can initiate any proceedings against the society, but there is no su'ch averment in the report filed by the DCO' A bare reading of the report filed before the Poiice would reveal that the same was not fi1ed by the Registrar, as required by the iaw' and instead, it is filed by the DCO' Further, there is no ascent of the general body or there is any avefinent in the report filed by the DCO, so as to show that the inquiry report was 77 SKS, J Crl.P.No.7?92 OF 2023 directed to be placed before the general body and that no mandatory procedures were followed.

23. In view of the above detailed discussion, it rs needless to mention that the procedure as contemplated above is a mandatory procedure and that the same was not fblowed, as such, the trial Court cannot take cognizance of the same. That being so, this Court is of the opinion that the proceedings initiated against the petitioners are liable to be quashed

24. In the light of the above, this Criminal petition is allowed ald the proceedings against the petitioners in in CC.No. i 1O of 2Ot8 pending before the XII Additional Chief Metropolitan Magistrate, at Nampaliy. Hyderabad, are hereby quashed. Miscellaneous applications, if any pending, sha1l also stand closed Date:24.12.2024 PT K. SUJANA, J 18 SKS, J CrI.P.No.7792 OF 2023 THE HONOURABLE SMT JI'STICE K. SUJANA P.D ORDER IN CRIMINAL PETITION No'7792 OF 2023 Dale:24.12.2024 PT