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2009 Supreme(Kar) 163

High Court of Karnataka
THE HONOURABLE MR. JUSTICE D.V. SHYLENDRAKUMAR
Altaf Hussain & Another
Versus
State of Karnataka & Others
Writ Petition No. 14661 of 2008 (CS-RES)
Decided on : 03-03-2009

Advocates appeared:
For the Petitioners:Madhusudhan R. Naik, Senior Counsel for M/s. Kamal, Bhanu, Advocates. For the Respondents:R1, R2 & R5, H. Hanumantharayappa, High Court Government Pleader, R3 & R4, S.K. Sailesh, Advocate.

Headnote:KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 - Section 64: [D.V. Shylendra Kumar,J] Enquiry - Non completion of inquiry by authorities into the affairs within stipulated time -Whether inquiry can be quashed? - Held, While sub-section (2-A) to Section 64 of the Act does impress upon all concerned that the inquiry should be completed within outer time-limit of eighteen months, the outer limit cannot be understood as one putting a ban on the inquiry being either beyond this period or as one to abort the inquiry if had not been completed within this time. Stipulation of time-limit is to impress upon the person holding an inquiry that it should be completed expeditiously and to instill a sense of urgency so that the purpose of inquiry is served; that the erring persons are identified and remedial action is taken. Prolongation of an inquiry while is possibly to the disadvantage of the society itself, can only be to the advantage of the persons who might have committed some irregularities. Such persons who might have committed some irregularities. Such persons cannot take advantage of prolongation to characterize an order appointing the Inquiry Officer as bad in law because the time stipulation of eighteen months is over. Section 64(2-A) of the Act cannot be construed as a provision in favour of persons who perhaps were responsible for any irregularities in the management of co-operative Bank and where there is a need for identifying such persons and their role for remedying the irregularities, that cannot be taken advantage of by such persons who claim that just because the inquiry is not completed within eighteen months, they get immunity from such situations. Just because some Inquiry Officers were either indolent, lethargic or deliberately slept over the matter, that cannot give rights in favour of the petitioners to seek for quashing of orders appointing the Inquiry Officer itself. With the Reserve Bank of India having given a report noticing several irregularities of the manner in which given a report noticing several irregularities of the manner in which the affairs of the Bank had been conducted and in that background if an inquiry was required to be held, unless such inquiry is held in a proper manner and completed, the purpose and object of Section 64 of the Act is not served. Unless the situation is a clear case of gross abuse of the power under Section 64 of the Act and for victimising persons, there cannot be any interference by this Court under Article 226/227 of the Constitution of India to quash orders appointing fresh inquiry Officer for holding and completing the inquiry.

       KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 - Section 69 (2-A): [D.V. Shylendra Kumar, J] Inquiry by Registrar - Appointment of successive inquiry officers - Challenged -Supersession of a co-operative Bank - On grounds of irregularities in management reported by Reserve Bank of India inquiry required to be completed with outer time limit of eighteen months - Held, Prolongation of the inquiry or subjecting persons to be inquired on more than one occasion may result in some hardship to concerned persons but it cannot be a cause for quashing alleged order of appointment. None of the earlier officers have submitted a report exonerating petitioners. No right had accrued in favour of petitioners. Reserve Bank of India had reported several irregularities in management of bank and if an inquiry was required to be held, unless such inquiry is held in a proper manner and completed, the purpose and object of Section 64 of the Act is not served. Impugned order cannot be interfered with.

Judgment :

Writ petition by persons claiming to be members/shareholders of the third respondent-Private Co-operative Bank who it appears were on the Board of Directors of the Bank.

2. It is claimed that the first petitioner was the Chairman and second petitioner was a Director at the point of time when the management of the Bank was superseded and management of the affairs of the Bank was entrusted to the second respondent-Joint Registrar of Co-operative Societies.

3. The present writ petition is in the wake of the order dated 11-7-2008 (copy at Annexure-F) passed by the second respondent-Joint Registrar of Co-operative Societies purporting to be an order in exercise of the powers of the Registrar under Section 64 of the Karnataka Co-operative Societies Act, 1959 (for short, `the Act') and for the purpose of inquiring into the manner of management of the Bank earlier, particularly, when it was in the management of the elected representatives of the shareholders of the Bank and in the context appointing one K.B. Chennegowda, retired Assistant Registrar of Co-operative Societies as Inquiry Officer and fixing his remuneration for conducting inquiry at rupees one lakh.

4. This order itself had come to be passed superceding the earlier like order which was in vogue ever since 19-10-2005 whereunder one M.S. Rudraiah also a retired official of the Co-operative Department who retired as Joint Registrar of Co-operative Societies who it appears had not even commenced his inquiry under Section 64 of the Act as per the report of the liquidator who was in charge of the affairs of the society even in terms of communication dated 5-9-2007. Said Rudraiah himself was successor to one Syed Asif, another retired Assistant Registrar who was incharge of the inquiry as per earlier order dated 13-5-2005 and on finding that there was need to replace him.

5. It is in the wake of such series of appointments of Inquiry Officers to conduct the inquiry under Section 64 of the Act, the present writ petition complaining that issuing such orders and appointing successive Inquiry Officers is not only an abuse of the power under Section 64 of the Act but also is at cross purposes to the mandate of completing an inquiry of this nature within the normal duration of twelve months and which can be at the maximum extended to an outer limit of another six months but not beyond as stipulated under Section 64(2-A) of the Act which reads as under:

"64. Inquiry by Registrar

(2-A) An inquiry under sub-section (1) shall be completed within a period of twelve months which may, however be extended by the State Government on the recommendation of the Registrar, for a further period of six months".

6. It is also the version of the petitioners that the society went out of the control of elected representatives even during the year 2001; that it has been managed only by the officials of the Co-operative Department every since 10-4-2004; that while so, the Bank itself was ordered to be wound up and liquidator appointed as per order dated 30-6-2006; that the Bank reached the stage of inviting an order for liquidating the Bank during the tenure of the officials of the department being at the helm of affairs of the Bank; that when such is the position, appointing successive Inquiry Officers to go into the affairs of the manner of the management or the accounts of the Bank for the earlier period and that too keeping it open for as long a period of eight years is nothing but harassment to the petitioners; that the petitioners are unnecessarily being victimised by such thoughtless action on the part of the respondents; that the impugned order is also in contravention of the provisions of Section 64(2-A) of the Act and therefore the impugned order deserves to be quashed by issue of a writ of certiorari.

7. Notice had been issued to the respondents. Sri Hanumantharayappa, learned Government Pleader appears for the State and its officials, Sri Sailesh S.K, learned Counsel appears for the














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