Karnataka High Court
Shrishail vs The State Of Karnataka on 1 September, 2023
W.P.No.44326/2018
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 1ST DAY OF SEPTEMBER 2023
PRESENT
THE HON'BLE MRS. JUSTICE K.S.MUDAGAL
AND
THE HON'BLE MR.JUSTICE RAMACHANDRA D. HUDDAR
WRIT PETITION No.44326/2018 (GM-KLA)
BETWEEN:
1. SHRISHAIL
S/O GURULINGAPPA SAYAGAV
AGED ABOUT 62 YEARS
OCC: RTD GENERAL MANAGER
R/AT RAJAPUT GALLI
VIJAYAPUR - 586 103
2. SMT SAVITRI
D/O BASALINGAPPA KHADI
AGED ABOUT 42 YEARS
OCC:GOVT. SERVANT
R/AT C/O G S KADAM
#26, GYAMBA LAYOUT
NEAR CANARA BANK
NARAYANPUR, DHARWAD - 580 001
3. RAJENDAR
S/O MALAKENDRAGOUDA PATIL
AGED ABOUT 54 YEARS
OCC: EX-PRESIDENT OF S S BANK
VIJAYAPUR & AGRICULTURE
R/AT RAJAPUT GALLI
VIJAYAPUR - 586 103
4. GURUPADAYYA
S/O SHRISHAIL GACHINMATH
AGED ABOUT 47 YEARS
OCC: EX-VICE PRESIDENT OF S S BANK
VIJAYAPUR & BUSINESS
W.P.No.44326/2018
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R/AT MATHAPATI GALLI
VIJAYAPUR-586 101
5. APPASAHEB
S/O MALLAPPA PATTANASHETTY
AGED ABOUT 50 YEARS
OCC: AGRICULTURE
R/AT OPPOSITE IBRAHIM ROAJA
ATHANI ROAD
VIJAYAPUR-586 103
6. VIJAYAKUMAR
S/O REVANASIDDAPPA AURANGABAD
AGED ABOUT 38 YEARS
OCC: ADVOCATE
R/AT MULLAGASI ROAD, BASTI DEVAR GALLI
VIJAYAPUR-586 103
7. SURESH
S/O GURULINGAPPA GACHINAKATTI
AGED ABOUT 55 YEARS
OCC: BUSINESS
R/AT GACHINAKATTI COLONY
VIJAYAPUR - 586 103
8. ASHOK
S/O NINGAPPA NYAMAGOND
AGED ABOUT 52 YEARS
OCC: BUSINESS
R/O MATHAPATHI GALLI
VIJAYAPUR-586 103
9. VIJAYAKUMAR
S/O DUNDAPPA IJERI
AGED ABOUT 70 YEARS
OCC:BUSINESS
R/AT PASCHAPUR PETH STATION ROAD
VIJAYAPUR - 586 103
10. SHANTAPPA
S/O SADASHIVAPPA JATTI
AGED ABOUT 68 YEARS
OCC: AGRICULTURE
R/AT MATHAPATI GALLI
VIJAYAPUR-586 103
W.P.No.44326/2018
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11. DR. VIJAYAKUMAR
S/O NANASHABEB PATIL
AGED ABOUT 48 YEARS
OCC: DOCTOR
R/AT VENKATAGIRI COLONY
OPP. ITI COLLEGE
SOLAPUR ROAD, VIJAYAPUR-586 103
12. PRAKASH
S/O SHIVAPPA BAGALI
AGED ABOUT 48 YEARS
OCC: BUSINESS
R/AT JORAPUR PETH
VIJAYAPUR-586 101
13. RAMESH
S/O HANAMATH BIDNUR
AGED ABOUT 45 YEARS
OCC:BUSINESS
R/AT KUMBAR GALLI
BEHIND JUMMAMASID
VIJAYAPUR-586 103
14. SHRIHARSHA
S/O SHIVASHARAN PATIL
AGED ABOUT 32 YEARS
OCC:BUSINESS
R/AT UPPALI BURJ ROAD
NEAR MILAN MEDICAL
VIJAYAPUR-586 103
15. VISHWANATH
S/O SHIVANAGOUDA PATIL
AGED ABOUT 32 YEARS
OCC:BUSINESS
R/AT SAMSKRUTI NAGAR
NEAR ASHARAM
VIJAYAPUR-586 103
16. NINGANAGOUD
S/O RUDRAGOUD PATIL
AGED ABOUT 68 YEARS
OCC: AGRICULTURE
R/AT OPP. ITI COLLEGE
SOLAPUR ROAD, VIJAYAPUR-586 103
W.P.No.44326/2018
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17. SIDDAPPA
S/O YAMANAPPA GANGANALLI
AGED ABOUT 70 YEARS
OCC: AGRICULTURE
R/AT ADAKI GALLI
JORAPUR PETH
VIJAYAPUR-586 101
18. VILASBABU
S/O BASALINGAPPA ALMELKAR
AGED ABOUT 68 YEARS
OCC: BUSINESS
R/AT NEAR SANTHOSHI MATA TEMPLE
JALANAGAR
VIJAYAPUR-586 103
19. SMT BORAMMA
W/O BABU GABBUR
AGED ABOUT 55 YEARS
OCC:HOUSE HOLD
R/AT GABBUR CHAL
SHAHAPETHI GALLI
VIJAYAPUR-586 103 ...PETITIONERS
(BY SMT.PREETI KAREDDY, ADVOCATE FOR
SRI BASAVARAJ KAREDDY, ADVOCATE )
AND:
1. THE STATE OF KARNATAKA
DEPARTMENT OF CO-OPERATION
M S BUILDING
BENGALURU - 560 001
BY ITS SECRETARY
2. THE REGISTRAR
CO-OPERATIVE SOCIETIES
ALI ASKAR ROAD
BENGALURU - 560 052
3. ASST. REGISTRAR
CO-OPERATIVE SOCIETIES
VIJAYAPURA - 586 101
W.P.No.44326/2018
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4. DAVALASA
S/O RAJESAABA GHORPADE
AGED ABOUT 44 YEARS
OCC: REPORTER
R/AT KALADAGI BUILDING
KALADAGI GALLI
VIJAYAPURA-586 101
5. THE HON'BLE UPA LOKAYUKTA
M S BUILDING, BENGALURU ...RESPONDENTS
(BY SRI GOPAL KRISHNA SOODI, HCGP FOR R1 TO R3;
SRI VENKATESH S ARBATTI, SPL. PP FOR R5, R4 SERVED)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
ORDER/REPORT DATED 13.06.2018 (ANNEXURE-D) IN
COMPT/UPLOK/BGM/2995/2015/PP PASSED BY THE HON'BLE
UPA-LOKAYUKTA, BENGALURU.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
ON 04.07.2023, COMING ON FOR PRONOUNCEMENT OF ORDER
THIS DAY, K.S.MUDAGAL J., MADE THE FOLLOWING:
ORDER
The petitioners have called in question Annexure-D the report of respondent No.5 Upalokayukta submitted under Section 12(3) of the Karnataka Lokayukta Act, 1984 ('KL Act' for short) recommending to respondent No.1 to take action against the petitioners for the alleged misappropriation of funds.
2. During the year 2014-2015, petitioner Nos.1 to 4 were the General Manager, Managing Director, President and W.P.No.44326/2018 6 Vice President of Sri Siddeshwara Co-operative Bank Ltd., Rajaputha Galli, Vijayapura and the other petitioners were the Directors of the said bank. The centenary celebrations of the said Bank was held on 27th and 28th of January 2015 spending Rs.62,01,838/-.
3. Respondent No.4 the member of the said Bank filed the complaint before Lokayukta as per Annexure-A dated 08.07.2015 alleging that the petitioners have spent money contrary to the instructions of the Joint Registrar of Cooperative Societies and violated the Rules of the said Bank. On such complaint, respondent No.5 Lokayukta acting under Section 9(3) of the KL Act directed its Technical Audit Cell (for short 'TAC') to conduct preliminary inquiry.
4. Pursuant to such direction, the Deputy Controller (Accounts) of TAC served the notice Annexure-B dated 23.07.2016 to the General Manager of the Bank to furnish the documents mentioned therein. Under letter Annexure-C, the petitioners submitted the same to TAC. Thereafter respondent No.5 submitted Annexure-D dated 13.06.2018 the report under Section 12(3) of the KL Act to respondent No.1 opining W.P.No.44326/2018 7 that the petitioners are prima facie found guilty of misappropriation of the funds of the society. Under the report, respondent No.5 further recommended to the competent authority to take action to recover the misappropriated amount from petitioner No.1 and for removal of petitioner Nos.2 to 19. Based on that recommendation, respondent No.1 under Annexure-E dated 07.08.2018 directed respondent No.2 the Registrar of the Cooperative Societies to take action against the petitioners and submit the report. In turn respondent No.2 directed respondent No.3 the Assistant Registrar of the Cooperative Societies to take action against the petitioners and submit the report within thirty days.
5. The petitioners seek quashing of Annexure-D on the following grounds:
(i) Section 8(1)(b) of KL Act read with Section 70 of the Karnataka Co-operative Societies Act, 1959 barred respondent No.5 from taking up investigation;
(ii) Before accepting TAC report and submitting the impugned report, the petitioners were not heard in the matter, W.P.No.44326/2018 8 therefore there is violation of principles of natural justice and the provision of Section 9 of the KL Act.
6. Smt.Preeti Kareddy, learned Counsel appearing for Sri Basavaraj Kareddy, learned Counsel on record for the petitioners reiterating the grounds of the petition relies on the following judgment:
(i) Prof. S.N.Hegde & Anr. vs The Lokayuktha & Ors.1
7. Respondent No.5 contested the petition by filing counter to the petition. Sri Venkatesh S.Arbatti, learned Special Public Prosecutor for respondent No.5 reiterating the grounds of statement of objections submits that the petition is premature and untenable one. He further submits that there is sufficient compliance of the provision of Section 9 of the KL Act. He further submits that Section 9(3) of KL Act requires only serving copy of the complaint on the public servant before holding investigation and submission of report. That is sufficiently complied in this case. The ground raised with regard to Section 8(1)(b) of the KL Act is untenable. 1 ILR 2004 KAR 3892 W.P.No.44326/2018 9
8. In support of his submissions, he relies on the following judgments:
(i) T.N.Raviprakash vs. State of Kar., rep. by its Prl. Secy., to Govt., Rev. Dept., & Ors2.
(ii) Fayaz Ahmad Shaikh vs. State of Kar., rep., by the Secy., (Mines)-2, C & I Dept., & Anr.,3.
(iii) A.K.Kraipak v. Union of India4
(iv) S.L.Kapoor v. Jagmohan5
(v) Union of India v. Jesus Sales Corpn6
(vi) N. Gundappa v. State of Karnataka7
(vii) R Malathi v. The Principal Secretary and
others8
9. The other respondents adopted the arguments of Sri Venkatesh S.Arbatti, learned Counsel for respondent No.5.
10. On hearing the submissions of both side and on perusal of the records, the following points arise for consideration are:
(i) Whether the investigation on the complaint in question by Lokayukta was barred by Section 8(1)(b) of the KL Act?2
ILR 2018 KAR 1360 3 ILR 2018 KAR 4192 4 AIR 1970 SC150 5 AIR 1981 SCC136 6 (1996) 4 SCC 69 7 1989 SCC Online Kar 152 8 WP 5981-5983 of 2017 (GM-KLA) D.D 27.04.2017 W.P.No.44326/2018 10
(ii) In submitting the impugned investigation report Annexure-D, Section 9(3) of KL Act was complied? Reg. bar of Section 8(1)(b) of KL Act:
11. According to the petitioners against the alleged actions/violations, the complainant/respondent No.4 has remedy under Section 70 of the Karnataka Co-operative Societies Act. Whenever there is such remedy, unless the complainant avails the same, respondent No.5 is barred from conducting the investigation. Section 8(1)(b) of the KL Act which is relevant for the purpose of this case reads as follows:
"8. Matters not subject to investigation.- (1) Except as hereinafter provided, the Lokayukta or an Upalokayukta shall not conduct any investigation under this Act in the case of a complaint involving a grievance in respect of any action,-
..........................................................................................................
(b) if the complainant has or had, any remedy by way of appeal, revision, review or other proceedings before any Tribunal, Court officer or other authority and has not availed of the same."
12. Reading of the above provision shows that bar under Section 8(1)(b) of the KL Act is applicable to the complaint involving grievance in respect of any action. The W.P.No.44326/2018 11 term grievance is defined in Section 2(8) of KL Act which reads as follows:
"2. Definitions.- In this Act, unless the context otherwise requires,-
(8) "grievance" means a claim by a person that he sustained injustice or undue hardship in consequence of maladministration;"
13. Reading of the above provision shows that to comply Section 2(8) of the KL Act, the complaint should be with regard to any injustice or hardship caused to the complainant due to maladministration.
14. It is not the case of the complainant that he had suffered any loss or hardship due to the alleged misappropriation or malpractice of the petitioners. In respect of the complaint involving grievance, the report under Section 12(1) of K.L. Act applies.
15. In the present case, the impugned report is submitted under Section 12(3) of KL Act which refers to the investigation involving the allegations. The allegation as defined in Section 2(2) of KL Act is in relation to public servant W.P.No.44326/2018 12 abusing his position to make wrongful gain for himself or to any other persons or corrupt motives or lacks integrity etc.
16. The complaint of respondent No.4 is that the petitioners indulging in nepotism misappropriated the funds of Bank. Thus Section 8(1)(b) of KL Act refers to the complaint involving grievance and not allegations. The same view was taken up by this Court in T.N.Raviprakash's case and Fayaz Ahmad Shaikh's case referred to supra relied on by learned Counsel for respondent No.5. Therefore there is no merit in the contention that respondent No.5 was barred from investigation into the complaint.
Reg. Compliance of Section 9(3) of KL Act:
17. The petitioners contend that except requiring them under Annexure-B letter of TAC to furnish the documents, they were not heard in the matter on the TAC report before its submission. Therefore the report was violative of principles of natural justice. Whereas learned Special Public Prosecutor for respondent No.5 submits that what is required to be done in Sections 9(3) and 9(4) of KL Act is only forwarding the W.P.No.44326/2018 13 complaint to the petitioners and not hearing them, the complaint was forwarded to them. Therefore there is sufficient compliance of Section 9(3) of KL Act. He submits that Section 9(4) of KL Act does not contemplate hearing of the petitioners or public servants and such interpretation is wrong.
18. Section 9(3)(a) & (b) and Section 9(4) of KL Act are relevant for the purpose of this case which reads as follows;
"9. Provisions relating to complaints and investigations.- (1)......................................................................
(2) ....................................................................................... (3) Where the Lokayukta or an Upalokayukta proposes, after making such preliminary inquiry as he deemed fit, to conduct any investigation under this Act, he,-
(a) shall forward a copy of the complaint and in the case of an investigation initiated suo moto by him, the opinion recorded by him to initiate the investigation under sub-section (1) or (2), as the case may be, of section 7 to the public servant and the competent authority concerned;
(b) shall afford to such public servant an opportunity to offer his comments on such complaint or opinion recorded under sub-section (1) and (2) of section 7 as the case may be; .........................................................." W.P.No.44326/2018 14
19. The above provisions required the Lokayukta or Upalokayukta to forward copy of the complaint to the public servant and afford the public servant an opportunity to offer his comments on such complaint.
20. In the present case, admittedly, respondent No.5 has not forwarded the complaint to the petitioners, but he entrusted the matter to TAC for preliminary inquiry. As per Annexure-B, the letter issued by TAC to the Chief Manager of the Bank does not specifically say that the copy of the complaint was forwarded, but only refers to the complaint of respondent No.4 and requires the petitioners to submit the documents at Sl.Nos.1 to 8 mentioned therein.
21. Section 9(3)(b) of KL Act requires respondent No.5 to afford to the public servant an opportunity to offer his comment on the complaint. Neither TAC served its report on the petitioners nor respondent No.5 on receiving such report before indicting them in the matter served copy of the report on them giving opportunity to them to explain the same. The question is whether Section 9(3) (a) & (b) and (4) of KL Act shall be construed/interpreted to the effect that it is sufficient W.P.No.44326/2018 15 if the complaint is flung on the public servant and he need not be heard on any other record during the course of investigation. It is material to note that in Prof. S.N.Hegde's case referred to supra vires of Section 9(4) of KL Act was challenged before this Court on the ground that it does not provide for adherence to the principles of natural justice. Therefore liable to be struck down. In that case was contended that the procedure contemplated under Section 9(4) of KL Act that the investigation may be conducted either in public or in camera was arbitrary as the same does not require adherence to the principles of natural justice. This Court while upholding the validity of Section 9(4) of KL Act in paras 90 to 93 of the said judgment held that adherence to the principles of natural justice, even during the course of investigation is inherently embedded in Section 9(4) of KL Act. Therefore the said Section is valid. In para 92 of the said judgment it was held that Section 9 of the KL Act insists observance of the principles of natural justice, even before Lokayukta decides to conduct the investigation after making preliminary inquiry and Lokayukta should not embark upon the investigation without hearing the public servant. It was held that in the absence of express W.P.No.44326/2018 16 prohibition contained in the statute exempting the authorities from following the principles of natural justice, the principles of natural justice is engrafted into the provisions of law by implication. It was further held that when statute is silent on such aspect, the aforesaid rule can be read into by implication. For better appreciation, paras 91 to 94 of the judgment are reproduced as below:
"91. The aforesaid judgment has been affirmed by a Division Bench of this Court in State of Karnataka v. N. Gundappa (ILR 1990 KAR 4188), wherein it has been held as under:-
"We have not the slightest hesitation in holding that the proceedings under Section 9 of the Karnataka Lokayukta Act, 1984 are quasi judicial in nature. Our reasons are as under:
Firstly there is a complaint. Secondly there is a preliminary enquiry to conduct investigation. Thirdly a copy of the complaint is forwarded to the public servant and the Competent Authority concerned. Fourthly the public servant is afforded an opportunity to offer his comments on such complaint. Thereafter should the Lokayukta submit a report as to what consequences follow are delineated under Section 13 of the Act. Having regard to the serious consequences contemplated thereunder, the conclusion is inescapable that it is quasi judicial in nature. Not only W.P.No.44326/2018 17 that, Section 14 of the Act also contemplates initiation of prosecution".
92. A reading of Section 9 of the Act makes it clear that the legislature took care to insist upon the observations of the principles of natural justice even before the Lokayukta decides to conduct an investigation under the Act after making preliminary enquiry. If the intention was that without hearing the public servant the Lokayukta should not embark upon an investigation and took care to specifically provide for the observance of principles of natural justice as contained in Section 9(3), it cannot be said after satisfying the aforesaid provision, the Lokayukta is under no obligation to follow the principles of natural justice while actually conducting an investigation into the complaint after the public servant offered his comments, denying the allegations made against him. The principles of natural justice and the necessities for its observance in any manner of investigation or enquiry is sine quo non of every judicial or quasi-judicial act.
93. It is true that there is no express provision in Section 9 requiring that audi alteram partem rule should be followed after the Lokayukta or Upalokayukta decides to proceed with the investigation under sub-section (4) of Section 9 of the Act. Absolute discretion is conferred on them. Such procedure for conducting any such investigation which they consider appropriate in the circumstances of the case. Merely because it is not so stated it cannot be said the law does not require the Lokayukta not to follow the principles of natural justice. W.P.No.44326/2018 18 On the contrary, it is settled law that in the absence of an express prohibition contained in the statute exempting the authorities from following the principles of natural justice, the principles of natural justice is engrafted into the provision of law by implication. When the statute is silent on this aspect, the aforesaid rule can be read into it by implication. This is the principle stated by Byles, J. in Cooper v. Wandsworth Board of Works (1863)14 C.B.N.S. 180 "A long course of decisions, beginning with Dr. Bentley's case (1723)1 STR 557 and ending with some very recent cases, establish that although there are no positive words in the statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the Legislature". When absolute discretion is conferred on the Lokayukta and Upalokayukta because of their past judicial statute the Legislature with due respect to the high office held by them thought it fit to confer on them absolute discretion with the fond hope that the procedure which will be followed by them will never be attacked on the ground of not following the principles of natural justice.
94. Therefore, it cannot be said that Section 9(4) of the Act suffers from the vice of arbitrariness and unbridled power conferred on the authorities, thus, violating Article 14 of the Constitution. However, having regard to the provisions contained in Sections 9, 11, 12, the procedure for conducting, investigation under Section 9(4) do not exclude the observance of principles of natural justice and if such a procedure is not followed, it is the report which is liable to be struck down and not the provision of a statute. If such provision were held to be W.P.No.44326/2018 19 incorporated in Sub-section (4) of Section 9 of the Act by necessary implication, as I hold it must be, then the procedure prescribed by the Act would be right, fair and just and it would not suffer from the vice of arbitrariness of unreasonableness. Therefore, it would be in conformity with the requirement of Articles 14 and 21 and does not fall foul of those articles."
22. Reading of the above judgment clearly shows that investigation under Section 9(4) of KL Act did not exclude observance of principles of natural justice and if such procedure is not followed, the report is liable to be struck down. The ratio laid down in the above judgment clearly shows that it is not open to respondent No.5 to claim that it was sufficient to serve the copy of the complaint on the petitioners and they need not have been heard on TAC report before submitting the impugned investigation report.
23. The judgment in S.L.Kapoor's case, Jesus Sales Corporation's case referred to supra are not applicable. Reading of the judgment in Gundappa's case referred to supra shows that there was allegation of non compliance of Section 9(3) of KL Act and not about Section 9(4) of KL Act. Since admittedly, the copy of TAC was not served on the petitioners, W.P.No.44326/2018 20 the judgments in Gundappa's case cannot be justifiably applied to the facts of the present case.
24. Since admittedly TAC report was not served on the petitioners and they were not heard on TAC report before submission of TAC report, as per the judgment in Prof. S.N.Hegde's case referred to supra, the said report is liable to be struck down. Hence the following:
ORDER The petition is allowed.
Impugned report of respondent No.5 at Annexure-D dated 13.06.2018 under Section 12(3) of KL Act is hereby quashed.
Liberty is reserved to respondent No.5 to proceed in accordance with law in the light of the observations made above.
Sd/-
JUDGE Sd/-
JUDGE KSR