The petitioner - Co-operative Society is before

this Court aggrieved of the impugned order dated

01.10.2021 in Appeals No.2 & 3 /2020-2021 passed

by the third respondent-Deputy Registrar of Co-

operative Societies.

2. The petitioner - Co-operative Society had

initiated action against respondents No.1 and 2, the

Directors of the Society, on the ground that they had

defaulted in repaying the loans due to the Society and

in terms of Clause (a) of Sub-Section (1) of Section

29-C of the Karnataka Co-operative Societies Act,

1959 (hereinafter referred to as ‘the Act’ for short), no

person shall be eligible to continue as a member of

the Board of any Co-operative Society, if he is in

default to that Society in respect of any dues from him

as borrower.

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3. It is the contention of the petitioner that the

fourth respondent-Assistant Registrar of Co-operative

Societies (ARCS for short) had visited the Head Office

of the Society, verified all the records and books of

account and sought for the details of the borrowers,

more particularly, the Directors who had borrowed

money from the Society. Accordingly, the Chief

Executive Officer of the Society furnished information

to the ARCS vide communication dated 17.06.2020.

It is also the contention of the petitioner that the

ARCS sought information consequent to a complaint

said to have been made in terms of Annexure ‘A’.

Annexure ‘A’ is an anonymous letter addressed to the

ARCS to take action against a Director who is in

default to the Society. Reliance is sought to be made

on the reply statements said to have been given by

respondents No.1 and 2, admitting that they were due

to the Society. Annexures ‘D’ and ‘E’ are in fact,

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statements said to have been made by respondents

No.1 and 2 in writing, admitting that they had

defaulted in making the repayments.

4. On going through Annexures ‘D’ and ‘E’, this

Court finds that the two statements do not bear any

signature. It is also seen from the statements that

the outstanding amounts due are said to have been

paid on 24.06.2020, i.e., two days prior to making of

such statement. Nevertheless, action was initiated by

the fourth respondent-ARCS for disqualification of

respondents No.1 and 2 invoking the provisions

contained in Section 29-C of the Act. Showcause

notice is said to have been issued by the ARCS on

18.06.2020 to respondents No.1 and 2. Respondents

No.1 and 2 appeared before the ARCS on 26.06.2020

and submitted before the ARCS that they had already

paid the outstanding amount due on 24.06.2020.

They also submitted that they were unable to pay two

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EMIs in time, on account of the COVID-19 pandemic

and

the

lockdowns

announced

by

the

State

Government. Nevertheless, the ARCS proceeds to

pass an order dated 30.06.2020 declaring respondents

No.1 and 2 as defaulters and consequently, they had

incurred disqualification in terms of the provisions of

the Act.

5. Respondents No.1 and 2 approached the third

respondent-Deputy Registrar of Co-operative Societies

(‘DRCS’ for short), preferring an appeal in terms of

Section 106(3) of the Act. The DRCS passed an

interim order dated 02.07.2020 staying the orders

passed by the ARCS. Aggrieved, the petitioner-

Society approached this Court in W.P.No.12770/2020

contending that although caveat petitions were filed

before the DRCS, the DRCS passed the interim orders

without hearing the petitioner-Society. During the

course of the proceedings in W.P.No.12770/2020, the

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DRCS brought to the notice of this Court that the

caveat petitions were filed along with vakalaths after

02.07.2020 and therefore, the DRCS had not notified

the petitioner-Society before passing the interim order

dated 02.07.2020. Consequently, this Court disposed

of the writ petition on 08.12.2020 granting liberty to

the petitioner-Society to file an application for

vacating the interim orders and if such applications

are filed, the DRCS was required to consider the same

and pass orders within an outer limit of f