Karnataka High Court
Shri K C Onkarappa vs State Of Karnataka on 20 August, 2025
-1-
NC: 2025:KHC:32582-DB
WP No. 9000 of 2020
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF AUGUST, 2025
PRESENT
THE HON'BLE MR. JUSTICE D K SINGH
AND
THE HON'BLE MR. JUSTICE VENKATESH NAIK T
WRIT PETITION NO.9000 OF 2020 (GM-KLA)
BETWEEN:
1. SHRI K.C. ONKARAPPA
SON OF LATE K. CHANNAPPA
AGED ABOUT 49 YEARS
SALES OFFICER AND DGM
DAVANAGERE DISTRICT CENTRAL
CO-OPERATIVE BANK LTD.
NO.311, D, DAVARAJ URS LAYOUT
'A' BLOCK, P.B.ROAD
DAVANAGERE-577 006.
2. SRI M. DAKSHINAMURTHY
AGED ABOUT 59 YEARS
SON OF LATE C.M. SIDDALIGIAH
THE RECOVERY OFFICER UNDER RULE 441
AND ASSISTANT REGISTRAR
DAVANAGERE DISTRICT CENTRAL
Digitally signed by
MOUNESHWARAPPA
NAGARATHNA
CO-OPERATIVE BANK LTD.
Location: High Court
of Karnataka
NO.311, D, DAVARAJ URS LAYOUT
'A' BLOCK , P.B.ROAD
DAVANAGERE-577 006.
...PETITIONERS
(BY SRI GAUTAM S. BHARADWAJ, ADVOCATE)
AND:
1. STATE OF KARNATAKA
REPRESENTED BY THE SECRETARY
DEPARTMENT OF CO-OPERATION
VIDHANA SOUDHA
BENGALURU-560 001.
-2-
NC: 2025:KHC:32582-DB
WP No. 9000 of 2020
HC-KAR
2. THE UPA LOKAYUKTA
M.S.BUILDING
DR. B.R. AMBEDKAR VEEDHI
BENGALURU-560 001.
3. THE REGISTRAR
KARNATAKA LOKAYUKTA
M.S.BUILDING
DR. B.R. AMBEDKAR VEEDHI
BENGALURU-560 001.
4. THE STATION HOUSE OFFICER
DAVANAGERE EXTENSION POLICE STATION
DAVANAGERE-577 004.
5. THE CHIEF EXECUTIVE OFFICER
DAVANAGERE DISTRICT CENTRAL
CO-OPERATIVE BANK LTD.
DAVANAGERE-577 006.
6. SHRI M.G. PARAMESHWARGOUDA
SON OF SIDDANAGOUDA
AGE MAJOR
RESIDING AT HOLE SIRIGERE
TALUK HARIHAR
DISTRICT: DAVANAGERE-581 123.
7. SHRI K. NARASAPPA
SON OF HANAMANTAPPA
AGED ABOUT 62 YEARS
RESIDING AT YALAVATTI VILLAGE
HARIHARA TALUK
DISTRICT: DAVANAGERE-577 530.
8. THE DEPUTY REGISTRAR
CO-OPERATIVE SOCIETIES
DAVANAGERE DISTRICT
ZILLA ADALITHA BHAVANA
DAVANAGERE-577 001.
9. T.R. DWARAKANATH
S/O. LATE RAMCHANDRAPPA
AGED ABOUT 72 YEARS
RESIDING AT 738/1
10TH MAIN ROAD, PJ EXTENTION
-3-
NC: 2025:KHC:32582-DB
WP No. 9000 of 2020
HC-KAR
DAVANAGERE-577 002.
...RESPONDENTS
(BY SMT. PRATHIBHA R.K., AGA FOR R-1, R-4 AND R-8;
SRI VENKATESH S. ARABATTI, ADVOCATE FOR R-2 AND R-3;
SRI YOGESH V. KOTEMATH, ADVOCATE FOR
SRI P.H. VIRUPAKSHAIAH, ADVOCATE FOR R-6 AND R-7;
SRI T. BASAVARAJ, FOR R-5;
SMT. NIREEKSHA D., ADVOCATE FOR SRI SHOWRI H.R.,
ADVOCATE FOR R-9)
***
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF THE
CODE OF CRIMINAL PROCEDURE, 1973, PRAYING TO QUASH THE
ENQUIRY REPORT DATED 1-3-2018 UNDER SECTION 12(1) OF THE
KARNATAKA LOKAYUKTA ACT, 1984 PREPARED BY R-2 ARISING OUT
OF COMPLAINT WHICH IS MARKED AS ANNEXURE-P AND QUASH
THE ENTIRE PROCEEDINGS PENDING ON THE FILE OF R-2 - UPA
LOKAYUKTA IN COMPLAINT INITIATED ON THE COMPLAINT LODGED
BY THE R-5 AND 6 RESPECTIVELY AGAINST THE PETITIONERS
HEREIN AND ETC.
THIS WRIT PETITION, COMING ON FOR FURTHER HEARING,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE D K SINGH
and
HON'BLE MR. JUSTICE VENKATESH NAIK T
ORAL ORDER
(PER: HON'BLE MR. JUSTICE D K SINGH)
Heard Sri. Gautam S. Bharadwaj, learned counsel for the
petitioners, Smt. Prathibha R.K., learned AGA for respondent
Nos.1, 4 and 8, Sri. Venkatesh S. Arabatti, learned counsel for
respondent Nos.2 and 3, Sri. Yogesh V. Kotemath, learned
counsel representing Sri. P.H.Virupakshaiah, learned counsel
NC: 2025:KHC:32582-DB
HC-KAR
for respondent Nos.6 and 7, Sri. T.Basavaraj, learned counsel
for respondent No.5 and Smt. Nireeksha D., learned counsel
representing Sri. Showri H.R., learned counsel for respondent
No.9.
2. Petitioner No. 1 was the Sales Officer, and
petitioner No. 2 was the Recovery Officer in respect of the sale
of the assets of the Bhadra Sahakari Sakkare Karkhane Niyamit
(hereinafter referred to as "Co-operative Sugar Factory"). The
five Co-operative banks form the consortium to advance loan to
the said sugar factory. Details of the principal amount which
due from the sugar factory and the interest thereon and the
total amount due in respect of each bank as of 30.06.2005 are
given as under:
Name of Bank Principal Interest Total
Davanagere DCC Bank 7,27,35,397 - 7,27,35,397
Karnataka State Co- 9,28,87,000 77,11,293 10,05,98,293
operative Apex Bank
Ltd, Bangalore
Chitradurga DCC Bank 1,55,74,233 3,52,326 1,59,26,559
Shimoga DCC Bank 3,48,72,545 24,94,309 3,73,66,854
Bellary DCC Bank Ltd, 2,27,96,405 24,40,842 2,52,37,247
Hospete
NC: 2025:KHC:32582-DB
HC-KAR
Total 23,88,65,480 1,29,98,770 25,18,64,250
3. The consortium banks have approached the Court of
Deputy Additional Registrar of Co-operative Societies,
Bengaluru (CREDIT), by filing Case No.
RCS:CRD:KME:8:180/2011-12 for the recovery of the amount
due against the Co-operative Society. The Award dated
25.04.2015 came to be passed by the said Authority in favour
of the consortium banks. In the award, it was held that the Co-
operative sugar factory was in debt for Rs.25,18,64,250/- as on
30.06.2005 to the five consortium banks and the said amount
with interest at 16% per annum from the date of the decree till
the date of clearing the same was to be paid by the respondent
factory to the banks. It was further directed that the said
amount was to be recovered by the petitioner banks jointly and
severally by selling the movable and immovable properties
attached before the Judgment on 23.09.2006, belonging to the
respondent factory. The said award came to be challenged by
the Co-operative sugar factory before the Karnataka Appellate
Tribunal (KAT) at Bengaluru. However, challenge to the said
award was unsuccessful and the appeal was dismissed by the
Karnataka Appellate Tribunal by the Order dated 04.04.2017.
NC: 2025:KHC:32582-DB
HC-KAR
4. Petitioner No.1 was appointed as the Sales Officer
by petitioner No.2 to conduct the sale of the movable and
immovable properties of the Co-operative Societies to satisfy
the award passed by the Court of Deputy/Additional Registrar
of Co-operative Societies, Bengaluru (CREDIT), dated
25.04.2015.
5. The State Government had fixed the value of the
property of the Co-operative Society at Rs.150 Crores.
However, the petitioner was of the opinion that the value of the
property of the Co-operative Society was around
Rs.76,22,50,000/- and the liabilities of the Bhadra Co-operative
Sugar Factory as on 31.03.2016 were
Rs.101,80,87,830.81/-. It appears that no one came forward
even upto the minimum price fixed by the Government at
Rs.150 Crores. One Sri. B.Karibasappa, representing the
Davanagere Sugarcane Grower's Society (R), which was
registered just 15 days before the date of auction, quoted a
sum of Rs.54 Crores for the properties of the sugar factory
which were put in auction. The petitioner brought to the notice
NC: 2025:KHC:32582-DB
HC-KAR
of the banks the aforesaid facts and asked the banks either to
accept the bid of Sri B. Karibasappa or reject the same.
6. This auction proceedings have been challenged by
the Co-operative Society by filing a revision under Section 108
of the Karnataka Co-operative Society Act, 1959, before the
Revisional Authority being, Revision No. CO/05/CAP/2017,
which is still pending for final disposal.
7. When the case stood, thus, the 6th and 7th
respondents have approached the Karnataka Lokayuktha by
filing the complaint making the allegation primarily of
undervaluing the assets of the Co-operative Society at the
hands of the petitioners. The Lokayuktha has conducted the
investigation and submitted the report under Section 12 (3) of
the Karnataka Lokayuktha Act on 01.03.2018, directing the
Competent Authority to initiate disciplinary action against the
officials who were involved in conducting the auction
proceedings of the assets of the Co-operative society.
8. Mr. Gautam Bharathwaj, learned counsel for the
petitioners, has submitted that the petitioners were not given
any opportunity to present their case before the Lokayuktha
NC: 2025:KHC:32582-DB
HC-KAR
because no notice was issued to them and the entire enquiry
had been conducted behind their back. He has also submitted
that the complaint before the Lokayuktha was not maintainable
in view of Section 8 (1)(b) of the Karnataka Lokayuktha Act as
there is an alternate remedy available of filing the revision
impugning the auction proceedings and in fact the revision is
pending against the auction proceedings before the Revisional
Authority.
9. Mr. Venkatesh S. Arabatti, the learned counsel
representing Lokayuktha, submits that he does not dispute the
fact that the petitioners were not put to notice by the
Lokayuktha and they did not have the opportunity to present
their case before the Lokayuktha. He further submits that there
is no force in the submission of the learned counsel for the
petitioners that the complaint before the Lokayuktha was not
maintainable. The complaint before the Lokayuktha is
regarding the malicious action of the petitioners in fixing the
sale price below the minimum sale price fixed by the
Government itself, which is Rs.150 Crores. He has also
submitted that the Lokyuktha has enquired about the
NC: 2025:KHC:32582-DB
HC-KAR
allegations, and therefore, the report of the Lokayuktha in
respect of misconduct committed by the petitioners is neither
illegal nor barred under Section 8(1)(b) of the Karnataka
Lokayuktha Act. Section 8(1)(b) has not applicable to the facts
of the present case. The complaint before the Lokayuktha is
about the misconduct of the petitioner and not in respect of the
auction proceedings against where the revision is pending.
10. We have considered the submissions. It is
appropriate for this Court not to give finding regarding
maintainability of the complaint, and it would be open to the
petitioners to contend the same before the Lokayuktha.
However, since the petitioners were not served with notice and
they did not have any opportunity to participate in the
proceedings, and the report has been submitted under Section
12(3) of the Karnataka Lokayuktha Act against them, though
they are not named, but the fact remains that the petitioners
are the only officials, who were involved in conducting the
auction proceedings of the assets of the respondent - sugar
factory. As there has been a violation of the principles of
natural justice, we set aside the report and remand back the
- 10 -
NC: 2025:KHC:32582-DB
HC-KAR
matter to the Lokayuktha to conduct a fresh enquiry by issuing
notice to the petitioners. The relevant incriminating materials
against the petitioners should be provided to them for their
response, to the show-cause notices.
11. With the aforesaid observation, the writ petition is
disposed of. The report dated 01.03.2018 (Annexure-P) is set
aside and the matter is remanded back to the Lokayuktha to
conduct fresh enquiry as directed above. All consequential
auction taken in pursuance to the report dated 01.03.2018
(Annexure-P) of the Lokayuktha are also set aside.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(VENKATESH NAIK T)
JUDGE
AM
