Karnataka High Court
Salamath Credit Co Operative Society ... vs State Of Karnataka on 5 January, 2024
-1-
NC: 2024:KHC:641
WP No. 52977 of 2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
WRIT PETITION NO. 52977 OF 2018 (CS-RES)
BETWEEN:
SALAMATH CREDIT CO-OPERATIVE SOCIETY LTD.,
SIRA TOWN, SIRA TALUK - 572137,
TUMKUR DISTRICT,
REP. BY ITS PRESIDENT.
...PETITIONER
(BY SRI RAMACHANDRA N, ADVOCATE)
AND:
1. STATE OF KARNATAKA,
DEPARTMENT OF CO-OPERATION,
6TH FLOOR, III BLOCK,
MULTI STORIED BUILDING,
DR B R AMBEDKAR VEEDHI,
BENGALURU - 560001,
REP. BY ITS PRINCIPLE SECRETARY.
Digitally
signed by 2. ASSISTANT REGISTRAR OF CO-OPERATIVE
PRAMILA G V
SOCIETIES, MADHUGIRI SUB-DIVISION,
Location:
HIGH COURT MADHUGIRI TOWN, MADHUGIRI TALUK - 572175,
OF TUMKUR DISTRICT.
KARNATAKA
3. SRI ASLAM PASHA,
S/O MOHAMMED GOUSE SAB,
AGED ABOUT 45 YEARS
PIGMI AGENT,
R/AT NO MADHUGIRI ROAD,
YARAB NAGAR, SIRA TOWN AND TALUK,
TUMKUR DISTRICT- 572137.
4. SRI ANSAR PASHA,
-2-
NC: 2024:KHC:641
WP No. 52977 of 2018
S/O ABDUL GHANI SAB,
AGED ABOUT 47 YEARS,
PAID SECRETARY,
SALAMATH CREDIT CO-OPERATIVE SOCIETY LTD.,
SIRA TOWN AND TALUK,
TUMKUR DISTRICT- 572137.
5. SRI ABDUL RAFIQ.
S/O DASTAGIRI SAB.
AGED ABOUT 44 YEARS.
CASHIER.
SALAMATH CREDIT CO-OPERATIVE SOCIETY LTD.,
SIRA TOWN AND TALUK,
TUMKUR DISTRICT- 572137,
PRESENT ADDRESS
C/O SRI JAFFAR,
RETD K P T C L EMPLOYEES,
11TH CROSS, P H COLONY NEAR MAHAVEER
KANNADA PRIMARY SCHOOL, TUMKUR - 572101.
6. SRI G N NOORULLA IMAM HUSSAIN,
S/O LATE HAYATH SAB,
CLERK (CASH),
SALAMATH CREDIT CO-OPERATIVE SOCIETY LTD.,
SIRA TOWN AND TALUK,
TUMKUR DISTRICT- 572137.
...RESPONDENTS
(BY SRI M SRINIVAS KUMAR K, HCGP FOR R1 AND R2
V/O/DT: 29.11.2019 NOTICE TO R4 AND R5 H/S
R3 AND R6 ARE SERVED AND UNREPRESENTED)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ORDER DTD 29.06.2018 PASSED BY THE HON'BLE
KARNATAKA APPELLATE TRIBUNAL IN APPEAL NO.502/2010
FILED BY R-4 AND APPEAL NO.526/2010 FILED BY R-5 VIDE
ANNX-H & J RESPECTIVELY. CONSEQUENTLY CONFIRM THE
ORDER PASSED BY THE R-2 IN SURCHARGE OF PETITION
NO.11/2007-08 VIDE ANNX-E.
-3-
NC: 2024:KHC:641
WP No. 52977 of 2018
THIS PETITION COMING ON FOR DICTATION THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
1. Heard the learned counsel appearing for the
petitioner and the learned Government Advocate appearing for
respondents No.1 and 2. There is no representation by
remaining respondents.
2. The petitioner is assailing the order dated
29.06.2018 passed by the Karnataka Appellate Tribunal in
Appeal No.502/2010 filed by respondent No.4 and the order
passed in appeal No.526/2010 filed by respondent No.5.
3. The brief facts necessary for adjudication of the
petition shall be summarised as under:-
Petitioner is a Co-operative Society registered under the
Karnataka Co-operative Societies Act, 1959 (for short 'Act of
1959'). The contesting respondent No.3 was appointed as
pigmy collector by the petitioner. Respondent No.4 is the
Secretary of the petitioner Society and respondent No.5 is the
Cashier and the respondent No.6 is the Clerk. As far as the
NC: 2024:KHC:641
respondent No.6 is concerned, no liability is fixed under an
enquiry under Section 69 of the Act of 1959.
4. It is the case of the petitioner that the respondents
No.3 to 6 in collusion misappropriated an amount of
Rs.17,33,796/- between 2003 to 2007 while working as the
employees of the petitioner Society. It is further claimed that
after suspecting the misappropriation, an audit was conducted
and in terms of the said audit report, it is noticed that
respondents No.3 to 5 have misappropriated an amount of
Rs.17,33,796/- and pursuant to the audit report, the
proceedings were initiated under Section 69 of the Act of 1959,
to recover the said amount and it is further stated that based
on the audit report under Section 69 of the Act of 1959,
Surcharge proceedings were initiated under Section 69 of the
Act of 1959.
5. In the proceedings under Section 69 of the Act of
1959, the notices were issued to the respondents, and
contesting respondents appeared and contested the matter.
The petitioner led evidence in the said proceedings apart from
producing the audit report, the petitioner also produced other
NC: 2024:KHC:641
relevant records namely the Cash Books, Register, Pigmy Books
maintained in the normal course of the business of the
petitioner Society. The Assistant Registrar after considering the
materials on record, has passed an order to recover
Rs.17,33,796/-. In terms of the order dated 20.9.2010 the
second respondent has fixed the liability on the respondents
No.3 to 5 in the following manner:-
The 3rd respondent namely the first defendant
before the Assistant Registrar is held liable to repay
60% of the amount and 4th respondent i.e., the 2nd
defendant before the Assistant Registrar is held liable
to repay 20% of the amount and 5th respondent who
is the 3rd defendant is liable to pay 20% of the
amount and the Assistant Registrar has also imposed
interest liable @ 12% p.a. from 23.01.2008 till the
recovery of the entire amount. The claim against the
4th defendant before the Assistant Registrar who is
the 6th respondent is rejected and he has further
ordered attachment of the property of the
respondents No.3 to 5 to recover the amount
determined in the said proceedings.
6. Aggrieved by the aforementioned order,
respondents No.4 and 5 filed appeals before the Karnataka
NC: 2024:KHC:641
Appellate Tribunal. The Appellate Tribunal solely on the premise
that the auditor is not examined has set-aside the order passed
by the Assistant Registrar and remanded the matter to the 2nd
respondent to consider the case afresh.
7. Learned counsel for the petitioner would submit
that the judgments relied upon by the Appellate Authority to
remand the matter to the 2nd respondent by holding that the
auditor ought to have been examined to prove the contents of
the audit report are not the judgments on the point where the
Court has held that the auditor is to be examined to prove the
contents of the audit report. It is also his contention that in the
aforementioned judgments relied upon by the Tribunal, there is
no declaration of law i.e. the auditor is to be examined to prove
the contents of the audit report.
8. He would further urge that even in the absence of
audit report, the Tribunal was under obligation to consider the
other documentary evidence which substantiated the claim of
the petitioner Society. Without referring to the remaining
documents which are considered by the Assistant Registrar, the
NC: 2024:KHC:641
Tribunal could not have remanded the matter to the 2nd
respondent authority to consider the matter afresh.
9. This Court has considered the contentions raised at
the Bar.
10. It is to be noticed that before the Assistant
Registrar, the contesting respondents have filed statement of
objection. In the statement of objection, objection is not raised
to the correctness of the auditor's report. Even before the
Appellate Tribunal, objection is not raised relating to the
correctness of the auditor's report. There is no law which
compels the party relying on the auditor's report to examine
the auditor. However, if the correctness of the report is
disputed then the party relying on the audit report has to prove
it in accordance with law. One of the modes is to examine the
auditor who has audited the accounts. Since a stand is not
taken that the report is incorrect, the Tribunal is not justified in
setting aside the order and remanding the matter to the
Assistant Registrar.
11. It is also relevant to note that the petitioner -
Society has based its claim against the contesting respondent
NC: 2024:KHC:641
on several documents. Apart from the auditor's report, the
Tribunal was required to look into the said documents to arrive
at a conclusion. Merely on the premise that the auditor is not
examined, the matter is remitted.
12. This Court has perused the judgments relied upon
by the Tribunal. It is relevant to note that the ratio laid down in
the aforementioned judgments, are not applicable to the case
on hand for the simple reason that the case is not based
entirely on the auditor's report and also as already noticed
there is no objection to the auditor's report.
13. Under these circumstances, the reasons assigned
by the Tribunal are unsustainable. Since the Tribunal has not
adverted its mind to other documents on which the claim is
based, the matter has to be remitted to the Tribunal for fresh
consideration in accordance with law.
14. Hence the following:
NC: 2024:KHC:641
ORDER
(i) The Writ Petition is allowed.
(ii) The impugned order dated 29.06.2018 passed
by the Karnataka Appellate Tribunal in Appeal
No.502/2010 and Appeal No.526/2010 are set
aside.
(iii) Karnataka Appellate Tribunal shall consider the
appeals on merits in the light of the
observation made above.
(iv) As the appeal is of the year 2010, the Tribunal
shall give priority hearing to the said appeals.
Sd/-
JUDGE
CHS/GVP
