Karnataka High Court

Madhav Narayan Hegde vs The Assistant Registrar Of ... on 6 February, 2024

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                                                            NC: 2024:KHC:5086
                                                         WP No. 50593 of 2019




                        IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                          DATED THIS THE 6TH DAY OF FEBRUARY, 2024

                                            BEFORE
                        THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
                          WRIT PETITION NO. 50593 OF 2019 (CS-RES)
                   BETWEEN:

                   1.    SRI MADHAV NARAYAN HEGDE,
                         S/O. LATE NARAYAN MAHADEV HEGDE,
                         AGED ABOUT 46 YEARS,
                         PERMANENT ADDRESS AT BARAGADDE VILLAGE,
                         KUMTA TALUK, UTTARA KANNADA DISTRICT,
                         PRESENT ADDRESS-NO.23/A,
                         6TH CROSS, 6TH MAIN, NANDINI LAYOUT,
                         BANGALORE-560096.

                   2.    SMT. SAVITRI HEGDE
                         W/O. LATE NARAYAN MAHADEV HEGDE,
                         AGED ABOUT 67 YEARS,
                         PERMANENT ADDRESS AT
                         BARAGADDE VILLAGE, KUMTA TALUK
Digitally signed
by BELUR                 UTTARA KANNADA DISTRICT,
RANGADHAMA               PRESENT ADDRESS-NO.23/A, 6TH CROSS,
NANDINI                  6TH MAIN, NANDINI LAYOUT,
Location: HIGH
COURT OF                 BANGALORE-560096.
KARNATAKA
                   3.    SMT JYOTI NANDAN HEGDE,
                         W/O. NANDAN HEGDE,
                         AGED ABOUT 44 YEARS,
                         R/A GUDDEANGADI, KUMTA TALUK,
                         UTTARA KANNADA DISTRICT.
                                                                ...PETITIONERS

                   (BY SRI M S BHAGWAT, SR. COUNSEL A/W
                   SRI. RAGHAVENDRA G. GAYATHRI, ADVOCATE)
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                                                 NC: 2024:KHC:5086
                                            WP No. 50593 of 2019




AND:

1.   THE ASSISTANT REGISTRAR OF CO-OPERATIVE
     SOCIETIES, KUMTA TALUK, KUMTA-581343.
2.   GRAMEENA SEVA SAHAKARI SANGHA NIYAMITHA,
     BARAGADDE VILLAGE, PIN-581440,
     KUMTA TALUK, UTTARA KANNADA DISTRICT,
     REPRESENTED BY ITS SECRETARY.
3.   SRI SHIVARAM GANAPATHY HEGDE,
     S/O LATE GANAPATHY HEGDE,
     AGED ABOUT 69 YEARS,
     RESIDING AT YELAVALLI VILLAGE - 581 440,
     KUMTA TALUK, UTTARA KANNADA DISTRICT.

4.   SRI NARAYAN GANAPATHY HEGDE,
     S/O LATE GANAPATHY HEGDE,
     AGED ABOUT 63 YEARS,
     RESIDING AT YELAVALLI VILLAGE-581440,
     KUMTA TALUK, UTTARA KANNADA DISTRICT.
5.   SRI KAMALAKAR GANAPATHY HEGDE,
     S/O LATE GANAPATHY HEGDE,
     AGED ABOUT 60 YEARS,
     RESIDING AT: YELAVALLI VILLAGE-581440,
     KUMTA TALUK, UTTARA KANNADA DISTRICT.
                                          ...RESPONDENTS
(BY SRI SIDHARTH BABU RAO, AGA FOR R1,
 SRI JAYAKUMAR S PATIL, SR. COUNSEL A/W
 SRI NAGARAJA HEGDE, ADVOCATE FOR R2
 R3, R4 AND R5 ARE SERVED AND UNREPRESENTED)

(RESPONDENT NO.3 HEREIN i.e., SRI NARAYANA GOVINDA
 BHAT SON OF GOVIND BHAT HAS NOT BEEN MADE AS PARTY,
 AS HE HAD DIED AND HENCE THE CASE AGAINST THIM IS
 ABATED BEFORE THE HON'BLE APPELLATE TRIBUNAL).

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL
FOR RECORDS LEADING TO PASSING OF ORDER DATED
24.09.2019 BY THE HON-BLE KARNATAKA APPELLATE
TRIBUNAL IN APPEAL NO.COP.APL-483/2012 VIDE ANNX-A
AND AFTER PERUSAL ISSUE A DIRECTION OR ANY OTHER
APPROPRIATE                ORDER                 SET
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                                        WP No. 50593 of 2019




ASIDE THE SAME TO THE EXTENT OF THAT PORTION OF THE
SAID ORDER REMANDING THE MATTER TO R-1 FOR FURTHER
EVIDENCE AS LEGAL AND ARBITRARY AND ALLOW THE APPEAL
WITHOUT FURTHER REMITTANCE THE R-1.

       THIS PETITION COMING ON FOR PRELIMINARY HEARING
IN 'B' GROUP THIS DAY THE COURT MADE THE FOLLOWING:

                           ORDER

1. Heard Sri.M.S.Bhagwat, the learned Senior counsel

along with Sri.Raghavendra G. Gayathri, the learned counsel

appearing for the petitioners, Sri.Sidharth Babu Rao, the

learned Government Advocate appearing for respondent No.1

and Sri.Jayakumar S. Patil, the learned Senior counsel along

with Sri.Nagaraja Hegde, the learned counsel appearing for the

respondent No.2.

2. This petition is filed challenging the order dated

24.09.2019 passed in COP. Appeal No.483/2012 on the file of

Karnataka Appellate Tribunal, Bengaluru. In terms of the said

order, the appeal is allowed in part and the matter is remanded

to the Assistant Registrar of Co-operative Societies, Kumata to

hear the dispute afresh in accordance with law. In the process,

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the order passed by the Assistant Registrar of Co-operative

Societies in Dispute No.¸À.¤-20/rrJ¸ï/69/2008-09 dated:

28/05/2012 is set aside.

3. Certain other facts necessary for the adjudication of

the case can be summarized as under:

4. Petitioners are claiming under one Narayan Hegde

who was the employee of respondent No.2-Society. It is an

admitted fact that he died while he was in service. One year

and eight months after his death, an audit was conducted and

the auditor pointed out certain financial irregularities and

opined that the ex-employee Narayan Hegde is responsible for

the irregularities.

5. Based on the Auditor's report a dispute is raised by

respondent No.2 Society before respondent No.1, the Assistant

Registrar of Co-operative Societies. Since the employee had

died, the dispute is raised against the legal representatives of

the deceased employee. His legal representatives namely the

petitioners herein, resisted the petition by filing statement of

objections.

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6. During the course of the trial, the Chief Executive

Officer of the Society was examined as P.W.1. He produced

certain documents which are marked. Thereafter, the Auditor

whose report was the basis to make a claim is also examined

as P.W.-2. The case was adjourned for further examination. His

cross-examination could not be commenced as he did not turn

up on the day fixed for his appearance. The Assistant Registrar

of Co-operative Societies heard the matter on merits and

passed an award fixing the liability on the present petitioners.

7. This award is called in question by filing an appeal

before the Karnataka Appellate Tribunal. Before the Appellate

Tribunal, it is contended that the report of the Auditor could not

have been the basis to pass the award as the Auditor has not

subjected himself to the cross-examination. In addition, few

other grounds are raised in the appeal memo. However, the

Appellate Tribunal found that the matter requires to be

remitted to the Assistant Registrar of Co-operative Societies to

enable the parties to lead the evidence of the Auditor and the

matter is remanded by setting aside the award passed by the

Assistant Registrar of Co-operative Societies.

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8. Against the aforementioned order remanding the

matter, the petitioners are before this Court.

9. Sri.M.S.Bhagwat, the learned Senior counsel

appearing for the petitioners raised a contention that the order

of remand is unsustainable as there is no material placed

before the Assistant Registrar of Co-operative Societies to

consider the case afresh. In the absence of any credible

materials, to substantiate the claim made by the respondent -

Society, the matter could not have been remanded to

respondent No.1- the Assistant Registrar of Co-operative

Societies.

10. It is also urged by the learned Senior counsel for

the petitioners that the Division Bench of this Court has taken a

view that the Auditor's report cannot be the basis for passing

an award. It is also his further contention that the Account

book alone cannot be the basis for passing the award where the

claim is made to recover the amount. In support of his

contention he has relied on the following three judgments:

(a) M/s. Emta Coal Limited and Another vs. M/s.

Karnataka Power Corporation Limited reported

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in CDJ 2016 Kar HC 157 in W.P.Nos.2995 to

(b) Corporation Bank vs. Mohandas Baliga reported in ILR 1993 KAR 201

11. Sri.Jayakumar S. Patil, the learned Senior counsel

appearing for respondent No.2 would contend that the appeal is

allowed and the matter is remanded to the Assistant Registrar

of Co-operative Societies primarily based on the contention

raised by the present petitioners who urged before the

Appellate Authority that opportunity is not given to them to

discredit the audit report. Under these circumstances, he would

submit that there is no scope to interfere in the order of

remand. It is also urged that an opportunity is given to both

parties to lead evidence to substantiate their respective claim.

This being the position, the petitioners cannot be considered as

aggrieved persons and given the fact that the petition is filed

under Article 227 of Constitution of India, hardly there is any

scope to interfere in the impugned order.

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12. This Court has considered the contentions raised at

the bar and also perused the records.

13. As can be noticed from the impugned order the

matter is remitted to the 1st respondent- the Assistant Registrar

of Co-operative Societies to consider the case afresh by giving

an opportunity to both parties to lead evidence. In other words

all contentions are kept open and the Appellate Authority has

not recorded any finding on merits.

14. As could be seen from the order passed by the

Assistant Registrar of Co-operative Societies, reliance was

placed on the Auditor's report while passing the award.

Admittedly, the Auditor is not cross-examined as he did not

turn-up for the cross-examination. In this context the matter is

remanded to enable the parties to lead fresh evidence.

15. Considering the contentions raised before the

Appellate Authority that opportunity is denied to the petitioners

to cross-examine the Auditor, and considering the fact that the

award is passed primarily placing reliance on the Auditor's

report, the Appellate Authority has remanded the matter by

setting aside the award.

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16. Considering the scope of the present petition which

is filed under Article 227 of Constitution of India, this Court

does not find any reason to interfere with the said order.

17. Before concluding, this Court has to refer to the

judgment cited by the learned Senior counsel appearing for

petitioner. In M/s. Emta Coal Limited and Another vs. M/s.

Karnataka Power Corporation Limited1, as can be noticed

from the said judgment, based on an audit report of the CAG, a

notice was issued to the contractor to recover certain dues.

However, based on the very said notice which was based on the

audit report, it is further stated in the notice that the amount

due to the contractor will be deducted periodically. It is also

forthcoming that the authority who issued notice was holding

the amount that was due to the contractor. This notice was

called in question. This Court has examined the scope of the

notice and has concluded that based on CAG report, there

cannot be a recovery without an adjudication of the claim in the

manner known to law. Under these circumstances, the

CDJ 2016 Kar HC 157 in W.P.Nos.2995 to 2998/2016

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aforementioned judgment cannot be made applicable to the

present set of facts of the case as respondent No.2 Society

based on the Auditor report has initiated procedure

contemplated under law to recover the alleged dues.

18. In the case of Corporation Bank vs. Mohandas

Baliga2, this Court was examining the evidentiary value of the

entries in the books of accounts. The Court has again given a

finding that the books of accounts alone cannot be basis to

accept a claim. Books of accounts are to be supported by some

other documents in support of the entries in the books of

accounts. In this case the respondent No.2 Society tried to

justify the entries in the books of accounts based on the

Auditor's report and the Auditor's report for the reasons already

aforesaid was not accepted by the Appellate Authority and the

matter is remitted to the respondent No.1-Assistant Registrar

of Co-operative Societies to consider the case afresh by giving

an opportunity to the parties to lead evidence on the disputed

Auditor report. The ratio laid down in the said judgment has to

be considered after recording the evidence before the Registrar.

ILR 1993 KAR 201

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19. In case of Chandradhar Goswami and Others

vs. Gauhati Bank Ltd3 the Hon'ble Apex Court was again

examining the evidentiary value of the books of accounts and

again in the facts and circumstances of the said case, the Court

has come to the conclusion that the books of accounts alone

can be the ground to accept the claim made by the party based

on the books of accounts. Since the matter is remitted to the

1st respondent-Assistant Registrar of Co-operative Societies to

adduce evidence and opportunity is given to both the parties to

adduce evidence, this Court is of the view that whether the

ratio laid down in the aforementioned case has to be considered

after recording the evidence before the Registrar.

20. Though it is urged that the document produced

before the Registrar are the Xerox copies and they are

inadmissible in evidence, since the Tribunal has remanded the

matter to the Assistant Registrar of Co-operative Societies, to

decide in accordance with law, this Court is of the view that the

objection relating to the admissibility of the Xerox copies or the

AIR 1967 SC 1058

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secondary evidence shall be considered by the Assistant

Registrar of Co-operative Societies in accordance with law.

21. Under these circumstances, this Court does not find

any merit to interfere with the impugned order.

22. Hence, the following:

ORDER

(i) The Writ Petition is dismissed.

(ii) Respondent No.1-Assistant Registrar of

Co-operative Societies shall consider the claim of

the parties by recording the evidence to be to be

adduced by the parties in accordance with law and

it is further made clear that this Court has not

expressed any opinion on any documents including

the audit report which are already produced.