Karnataka High Court
Nataraj S L vs State Of Karnataka on 19 September, 2025
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NC: 2025:KHC:37757
WP No. 4997 of 2020
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE R. NATARAJ
WRIT PETITION NO. 4997 OF 2020 (CS-RES)
BETWEEN:
1. NATARAJ S.L.
S/O LATE NARAYANA DEEKSHITH
AGED 49 YEARS,
R/O NO.468, 12TH MAIN ROAD,
11TH 'A' SECTOR,
YALAHANKA NEWTOWN,
BENGALURU NORTH.
2. MANJULA G.S.
W/O SHIVAKUMAR A.B.
AGED 50 YEARS,
R/O NO.83, K.H.B. COLONY,
GANDHINAGAR,
BENGALURU-560064
3. S. NARASIMHAMURTHY RAO
Digitally S/O NARAYANA RAO S
signed by
SUMA AGED 70 YEARS,
Location: R/O NO.52/2, RAMAKRISHNA ROAD,
HIGH 3RD CROSS, M.V. EXTENSION
COURT OF HOSAKOTE, BENGALURU-560078
KARNATAKA
4. VIJAYA SIMHA N.
S/O NARASIMHAMURTHY K.,
AGED 54 YEARS
R/O NO.12, SHIVANAHALLI DIVISION,
SURABHI LAYOUT, 3RD CROSS ROAD,
YALAHANKA, BENGALURU-560064
5. SONNAPPA N.
S/O CHIKKANANJUNDAPPA,
AGED 64 YEARS,
R/O NO.72, ARADEHALLI VILLAGE AND POST,
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WP No. 4997 of 2020
HC-KAR
KUNDANA HOBLI, DEVANAHALLI TALUK,
BENGALURU RURAL DISTRICT.
6. M. NARASIMHA MURTHY
S/O LATE MUNIYAPPA
AGED ABOUT 50 YEARS,
R/O NO.865/17, N.M.I.J-B
5TH STAGE, YALAHANKA NEW TOWN,
BENGALURU-560064.
7. Y.C. PILLAPPA
S/O CHANNARAYAPPA
AGED 55 YEARS
R/O NO.1089, HOSABEEDI,
YALAHANKA,
BENGALURU NORTH-560064
8. MANGALA BHARATHI S.M.
W/O MADAVA SUBBARAO,
AGED ABOUT 60 YEARS,
R/O NO.205, M.I.J. 3RD CROSS ROAD,
4TH STAGE, K.H.B. COLONY,
YALAHANKA,
BENGALURU-560064
9. NAGARAJ RAO
S/O T.R. NARAYANA RAO,
AGED ABOUT 70 YEARS,
NO.497, 1ST A MAIN,
TALAKAVERI LAYOUT,
AMRUTHAHALLI
BENGALURU-560092
10. PUTTASHAMAIAH
S/O VENKATACHALAIAH
AGED ABOUT 80 YEARS,
R/O NO.2002, ANDREA GREEN PARK APARTMENT,
ALLALASANDRA JUDICIAL LAYOUT
BENGALURU-560064
...PETITIONERS
(BY SRI. DEVI PRASAD SHETTY, ADVOCATE)
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WP No. 4997 of 2020
HC-KAR
AND:
1. STATE OF KARNATAKA
DEPARTMENT OF CO-OPERATION
M.S. BUILDING AMBEDKAR VEEDHI,
BANGALORE-560 001
REPRESENTED BY ITS PRINCIPAL SECRETARY
2. REGISTRAR OF CO-OPERATIVE SOCIETIES
DEPARTMENT OF CO-OPERATION
OFFICE OF THE REGISTRAR OF
CO-OPERATIVE SOCIETIES
NO.1, ALI ASKER ROAD,
BANGALORE-560 052
3. JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES
URBAN BANK CELL
OFFICE OF THE JOINT REGISTRAR OF
CO-OPERATIVE SOCIETIES,
NO.1, ALI ASKER ROAD,
BANGALORE-560 052
4. ARUNA CO-OPERATIVE BANK LTD
NO.708, 15TH MAIN ROAD,
MIG, 'A' SECTOR, 3RD STAGE
NEAR LIC OFFICE ROAD
YALAHANKA NEW TOWN
BENGALURU-560064
BY ITS CHIEF EXECUTIVE OFFICER
5. SPECIAL OFFICER
DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETY
1ST CIRCLE, MALLESHWARAM,
BENGALURU
APPOINTED FOR ARUNA CO-OPERATIVE BANK LTD.,
NO.708, 15TH MAIN ROAD,
MIG, 'A' SECTOR, 3RD STAGE
NEAR LIC OFFICE ROAD,
YALAHANKA NEW TOWN
BENGALURU-560064
...RESPONDENTS
(BY SRI. S.R.KHAMROZ KHAN, ADDITIONAL GOVERNMENT
ADVOCATE FOR RESPONDENT NOS.1 TO 5)
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WP No. 4997 of 2020
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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDERS
IN DISPUTE NO.RCS/UBC-7/12/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(G)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(D)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(C)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(B)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(E)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(A)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(H)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(F)/PRAKARANA 29-C/2019-20, DISPUTE
NO.RCS/UBC-7/12(I)/PRAKARANA 29-C/2019-20 PASSED BY
RESPONDENT NO.3 VIDE ANNEXURES-N, N1, N2, N3, N4, N5, N6,
N7, N8, N9 DATED 26.02.2020 AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN
'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE R. NATARAJ
ORAL ORDER
The petitioners have challenged the orders bearing Nos.Dgï¹J¸ï/AiÀÄÄ©¹-7/12/¥ÀæPÀgÀt 29-¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹- 7/12(f)/¥ÀæPÀgÀt 29-¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹-7/12(r)/¥ÀæPÀgÀt 29- ¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹-7/12(¹)/¥ÀæPÀgÀt 29-¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹-7/12(©)/¥ÀæPÀgÀt 29-¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹- 7/12(E)/¥ÀæPÀgÀt 29-¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹-7/12(J)/¥ÀæPÀgÀt 29- -5- NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR ¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹-7/12(ºÉZï)/¥ÀæPÀgÀt 29-¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹-7/12(J¥sï)/¥ÀæPÀgÀt 29-¹/2019-20, Dgï¹J¸ï/AiÀÄÄ©¹- 7/12(L)/¥ÀæPÀgÀt 29-¹/2019-20, even dated 26.02.2020 passed by respondent No.3 under Section 29C of the Karnataka Co- operative societies Act, 1959 (henceforth referred to as 'Act, 1959'). They have also challenged an order bearing No.AiÀÄÄ©¹- 6/222/«±ÉõÁ¢üPÁj/2019-20 dated 27.02.2020 passed by respondent No.3 appointing Special Officer to respondent No.4.
2. (i) The petitioners were Directors of the Board of respondent No.4, which is an urban co-operative bank subject to the supervision of Reserve Bank of India (henceforth referred to as 'RBI'). The RBI had conducted inspection between 19.06.2019 to 10.07.2019 and submitted a detailed report in which it was found that there was a cash shortage of Rs.12,29,25,000/-. The RBI had observed that the President and some of the Directors of respondent No.4 had paid the cash. The RBI directed respondent No.4 - Bank to report compliance of the defects pointed out and submit compliance report. The respondent No.4 submitted compliance report on -6- NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR 24.09.2019 and agreed to take further action to recover other dues to the bank. Later, respondent No.4 submitted further compliance of the defects pointed out by the RBI. The petitioners contend that RBI has not taken any action subsequent thereto and therefore, it is deemed that defects pointed out by the RBI is complied.
(ii) In the meanwhile, an enquiry under Section 65 of the Act, 1959 was conducted by the Assistant Registrar of Co- operative Societies. A report was submitted indicting the petitioners of misappropriation and misfeasance to the tune of Rs.12,29,00,000/-. The Assistant Registrar of Co-operative Societies reported that it was the petitioners who were responsible for the financial fraud. Based on the said report, respondent No.3 passed an order under Section 68 of the Act, 1959 on 03.12.2019, which was received by the respondent No.4 on 18.12.2019. The respondent No.4 claimed that it had submitted a compliance report even before the order under Section 68 of the Act, 1959 was communicated to it. The respondent No.4 after receipt of the order under Section 68 of the Act, 1959, submitted another compliance report on 03.01.2020 stating that it had rectified all the defects pointed -7- NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR out in the order passed under Section 68 of the Act, 1959 and that a sum of Rs.12.29 crores was recovered.
(iii) The petitioners contend that thereafter, respondent No.3 caused a notice under Section 29C of the Act, 1959 to disqualify them. The petitioners claim that they entered appearance on 13.12.2019 and sought time to file individual vakalaths as separate proceedings were initiated against them. Thereafter, time was sought to file objections and the case stood adjourned to 17.01.2020. The petitioners' counsel sought time to file objections and respondent No.3 issued notice to the Chief Executive Officer of respondent No.4 to find out whether the order under Section 68 of the Act, 1959 was complied or not and adjourned the case to 27.01.2020. On 27.01.2020, the respondent No.3 did not record any reasons regarding the notice issued to the Chief Executive Officer of respondent No.4 and adjourned the case to 10.02.2020 for filing objections by the petitioners. On 10.02.2020, the petitioners filed a memo stating that the election to the Managing Committee of respondent No.4 was declared and in the said election, a new body was constituted on 03.02.2020 and therefore, requested the respondent No.3 to drop the -8- NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR proceedings as it had become infructuous. The case was thereafter adjourned to 17.02.2020 on which day, respondent No.3 rejected the memo filed by the petitioners on the ground that mere re-election of the petitioners did not obliterate the proceedings under Section 29C of the Act, 1959. The petitioners then again sought time to file objections to the proceedings under Section 29C of the Act, 1959. However, the respondent No.3 posted the case on 25.02.2020 and thereafter on 26.02.2020 for passing final orders. The respondent No.3 passed an order disqualifying the petitioners for a period of five years from contesting elections to any other societies in the State.
(iv) The petitioners are therefore, before this Court challenging the order passed by respondent No.3 under Section 29C of the Act, 1959 as well as the order appointing the Special Officer to respondent No.4.
3. The learned counsel for the petitioners submits that the petitioners have complied the defects pointed out in the order passed under Section 68 of the Act, 1959. Therefore, there was no need for the respondent No.3 to take out -9- NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR proceedings under Section 29C of the Act, 1959. He contends that elections to the Board of respondent No.4 was held and a new body was elected and therefore, proceedings against the petitioners was not warranted. He also submits that before the respondent No.3 adequate opportunity was not given to the petitioners to file their objections against disqualification under Section 29C of the Act, 1959. Therefore, he contends that the impugned order under Section 29C of the Act, 1959 against the petitioners be set at naught.
4. Per contra, the learned Additional Government Advocate orally opposed the writ petition and contended that the petitioners have acknowledged the fact that there was a financial misappropriation of Rs.12.29 crores in proceedings under Section 65 of the Act, 1959. He also contends that the petitioners have claimed that they have complied with the defects pointed out in order under Section 68 of the Act, 1959. He therefore, contends that the petitioners cannot now have any defence against the proceedings under Section 29C of the Act, 1959. Nonetheless, the respondent No.3 had given adequate opportunity to the petitioners to appear and file objections and contest the proceedings, which the petitioners
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NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR did not utilize. He therefore, contends that the petitioners cannot now come before this Court accusing the respondent No.3 of not providing opportunity. Besides this, he contends that the petitioners could not have rushed to this Court short- circuiting the remedy of an appeal before the appellate authority under Section 106 of the Act, 1959. He therefore, contends that the writ petition does not merit consideration and prays that the same may be dismissed.
5. I have considered the submissions of the learned counsel for the petitioners as well as the learned Additional Government Advocate for the respondent Nos.1 to 5.
6. In so far as threshold contention that this writ petition is not maintainable before this Court in view of remedy of an appeal available under Section 106 of the Act, 1959, it is no doubt true that the petitioners have remedy of an appeal under Section 106(1)(h) of the Act, 1959. However, it is to be noted that this writ petition is pending since last five years before this Court. One of the grounds urged by the petitioners in this writ petition is that respondent No.3 without granting adequate opportunity had taken out proceedings under Section
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NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR 29C of the Act, 1959. Therefore, though ex-facie this writ petition is not maintainable, since it is the claim of the petitioners that the principles of natural justice were not followed, this Court is of the opinion that a writ petition under Article 226 of the Constitution of India is maintainable in view of judgment of the Hon'ble Apex Court in Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and others [1998 (8) SCC 1].
7. In so far as the other contentions urged in the writ petition are concerned, the order under Section 68 of the Act, 1959 indicted the petitioners of the following:
¥Àj«ÃPÀëuÁ CA±À ¥Àj«ÃPÀëuÁ¢üPÁj ¸Àj¥Àr¹PÉƼÀî®Ä C©ü¥ÁæAiÀÄ ¤ÃrgÀĪÀ ¤zÉÃð±À£À
1. ¢£ÁAPÀ 11-06-2019 PÉÌ gÀÆ.12,29,25,612/- ¨ÁåAQ£À DqÀ½vÀ ¨ÁåAQ£À £ÀUÀzÀÄ DSÉÊgÀÄ £ÀUÀzÄÀ ºÀt ºÀt ªÀÄAqÀ½ ¸ÀzÀ¸ÀågÀÄ, ²®ÄÌ ªÀÄvÀÄÛ ¢£ÁAPÀ zÀÄgÀÄ¥ÀAiÉÆÃUÀªÁVgÀĪÀÅzÀÄ CzsåÀ PÀëgÀ «gÀÄzÀÞ 12-06-2019PÉÌ ¨ÁåAPï ¸Á©ÃvÁVzÉ. PÀ£ÁðlPÀ ¸ÀºÀPÁgÀ ªÀgÀ¢ ªÀiÁrgÀĪÀAvÉ ¸ÀAWÀUÀ¼À C¢ü¤AiÀĪÀÄ gÀÆ.12,78,85,518/- 1959 ¥ÀæPÀgÀt 29-¹ EzÉ. DzÀgÉ ¨sÁgÀwÃAiÀÄ gÀrAiÀÄ°è PÀæªÄÀ j¸Àªïð ¨ÁåAPï£À dgÀÄV¸À®Ä ¥Àæ¸ÁÛÀªÉ C¢üPÁjUÀ¼ÀÄ ¨sËwPÀ ¸À°è¸ÄÀ ªÀÅzÀÄ ºÁUÀÆ ¥Àj²Ã®£É ªÀiÁrzÁUÀ CzsåÀ PÀëgÄÀ , DqÀ½vÀ
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WP No. 4997 of 2020
HC-KAR
1959 ¥ÀæPÀgÀt 29-¹
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NC: 2025:KHC:37757
WP No. 4997 of 2020
HC-KAR
8. The petitioners claim that they have complied the defects pointed out in the proceedings under Sections 65 and 68 of the Act, 1959. Therefore, it goes without saying that the petitioners have acknowledged the observation made by the respondent No.3 in proceedings under Section 68 of the Act, 1959. Though the learned Additional Government Advocate contended that the petitioners have admitted their lapses or misappropriation, which was found by respondent No.3 in proceedings under Section 68 of the Act, 1959 and that the same justified action under Section 29C of the Act, 1959, it is relevant to note that an action under Section 29C of the Act, 1959 has drastic civil consequence in as much as petitioners would be disqualified for a period of five years from contesting elections to the Managing Committee of any society and therefore, it was incumbent upon the respondent No.3 to hear the petitioners out and give them adequate opportunity. In the case on hand, though the petitioners were given opportunity, they failed to take advantage of it and procrastinated the matter before respondent No.3 on one or the other grounds. Nonetheless, since the petitioners are visited with a drastic order such as disqualification under Section 29C of the Act,
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NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR 1959, it is appropriate that an opportunity is granted to the petitioners to establish their bonafides in accordance with law by appearing before the respondent No.3 and filing their objections on the next date of hearing that would be fixed by this Court. This is however, subject to payment of cost of Rs.10,000/- payable by each of the petitioners to Sri. Jayadeva Institute of Cardiovascular Sciences and Research, Bengaluru, before the next date of hearing before respondent No.3.
9. In view of the above, following order is passed.
ORDER
(i) The petition is allowed in part.
(ii) The impugned orders bearing Nos.
Dgï¹J¸ï/AiÀÄÄ©¹-7/12/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(f)/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(r)/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(¹)/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(©)/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(E)/¥ÀæPÀgÀt 29-¹/2019-20,
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NC: 2025:KHC:37757
WP No. 4997 of 2020
HC-KAR
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(J)/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(ºÉZï)/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(J¥sï)/¥ÀæPÀgÀt 29-¹/2019-20,
Dgï¹J¸ï/AiÀÄÄ©¹-7/12(L)/¥ÀæPÀgÀt 29-¹/2019-20, even dated 26.02.2020 passed by respondent No.3 under Section 29C of the Karnataka Co-operative Societies Act, 1959 are quashed.
(iii) The case is remitted back to the respondent No.3, who shall hear the petitioners and pass appropriate orders in accordance with law.
(iv) The petitioners shall appear before the respondent No.3 on 08.10.2025 at 3.00 p.m. along with the objections to the notice issued by the respondent No.3 under Section 29C of the Karnataka Co-operative Societies Act, 1959.
(v) The petitioners shall also ensure that by 07.10.2025, the cost of Rs.10,000/- (Rupees Ten Thousand only), as directed above, shall be paid by each of them to Sri. Jayadeva Institute of
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NC: 2025:KHC:37757 WP No. 4997 of 2020 HC-KAR Cardiovascular Sciences and Research, Bengaluru.
(vi) If the petitioners fail to take advantage of this by not paying cost or by not filing objections before respondent No.3, the respondent No.3 is at liberty to proceed in accordance with law.
(vii) The respondent No.3 is directed to conclude the proceedings as early as possible, at any rate, within a period of three months from the date of petitioners filing objections.
Sd/-
(R. NATARAJ) JUDGE PMR List No.: 1 Sl No.: 33