J.L. Muralidhar vs. The State Of Andhra Pradesh

Held

The Court did not decide the allegation of predetermination. Instead, it disposed of the writ petition with a direction to the petitioner to submit their explanation to the impugned notice within four weeks, raising all necessary pleas and submitting relevant material. The Court reasoned that mentioning prima facie irregularities in a show cause notice does not necessarily amount to the authority having made up its mind. The authority, upon receiving the explanation and material, would objectively consider the objections along with the enquiry report and the submitted material before passing appropriate orders. The Court also directed that no coercive steps would be taken against the petitioner and others until a final order is passed by the authority.

Facts

The petitioner, J.L. Muralidhar, was the Ex-Chairman of The Anantapuramu Cooperative Urban Bank Ltd. (respondent No. 4) from July 27, 2015, to July 26, 2020. Following the completion of his term, a statutory enquiry was ordered under Section 51 of the A.P. Cooperative Societies Act, 1964, into the bank's affairs from 2015-16 to 2019-20. An enquiry report dated June 25, 2021, was submitted, which fixed a liability of Rs. 1,76,85,643/- jointly and severally against the Ex-Managing Committee. Consequently, a notice dated February 2, 2022, was issued to the petitioner under Section 60(1) of the Act, proposing recovery of this amount. The notice cited two irregularities: excess staff and management costs (Rs. 1,61,04,247/-) and non-recovery of GST at 12% from contract bills (Rs. 15,81,396/-). The petitioner filed a writ petition challenging this notice.

Key Issues

1. Whether the show cause notice impugned in the writ petition is liable to be set aside on the ground of alleged predetermination by the authority? Petitioner's arguments: The petitioner contended that the show cause notice was issued with a predetermined mind, rendering the explanation process futile. They argued that Section 60 of the Act contemplates a separate enquiry before fixing liability, but the notice indicated the issue was already decided. The petitioner also pointed out that the bank had not received the enquiry report as of September 30, 2021, suggesting the enquiry was politically motivated. Furthermore, they argued that the alleged offences under Section 116(C) of the Act were not applicable to the facts. Respondents' arguments: The Government Pleader argued that the show cause notice was issued after considering the enquiry report and that the petitioner had not yet submitted their explanation. They stated that the notice detailed the irregularities, and the authority would objectively consider any objections submitted. The respondents contended that the petitioner approached the court without exhausting the available remedy of submitting an explanation.