IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 5TH DAY OF APRIL, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR. JUSTICE S. G. PANDIT WRIT PETITION Nos.31104-31113 OF 2015 (GM-KLA) BETWEEN:
1. RYTHARA SEVA SAHAKARA SANGHA N (RSSSN) SINGANAYAKANAHALLY YELAHANKA HOBLI YELAHANKA REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER.
2. SRI.K.KRISHNA BHAT CHIEF EXECUTIVE OFFICER RYTHARA SEVA SAHAKARA SANGHA (N) YELAHANKA HOBLI YELAHANKA BENGALURU.
3. A.THIMMARAYA GOWDA SON OF AKKANAPPA AGED ABOUT 44 YEARS DIRECTOR, RSSSN RESIDING AT AVALAHALLI, SINGANAYAKANAHALLI POST YALAHANKA HOBLI BENGALURU-560 064.
4. CHANDRU A SON OF LATE ANJINAPPA AGED ABOUT 38 YEARS DIRECTOR, RSSSN RESIDING AT NAGADASANALLI RAJANKUNNTE POST YALAHANKA HOBLI BENGALURU -560 064.
5. SHIVAKUMAR SON OF LATE N.B.NAJJAPPA AGED ABOUT 42 YEARS DIRECTOR, RSSSN RESIDING AT NAGEENALLI SANGANAKAYANAHALLI POST YALAHANKA HOBLI BENGALURU-560 064.
6. MANJUNATH M SON OF LATE MUNIPPAREDDY AGED 39 YEARS DIRECTOR, RSSSN RESIDING AT ADIVISHWANATHAPURA AREKERE POST HESIRAGHATTA HOBLI BENGALURU -562 103.
7. A.C.MARIGOWDA SON OF CHENNEGOWDA, AGED ABOUT 38 YEARS MEMBER, RSSSN RESIDING AT AREKERE POST HESIRAGHATTA HOBLI BENGALURU -560 064.
8. D.NANJAPPA SON OF DODDAPAPPAYA AGED ABOUT 42 YEARS DIRECTOR, RSSSN RESIDING AT SINGANAYAKANAHALLI POST YALAHANKA HOBLI BENGALURU-560 064.
9. RAMMAYYA SON OF CHIKKAMUTHAPPA AGED AOBUT 63 YEARS DIRECTOR, RSSSN RESIDING AT SINGANAYAKANAHALLI POST YALAHANKA HOBLI BENGALURU -560 064.
10. CHENNEGOWDA SON OF MUTTAYYA AGED ABOUT 60 YEARS DIRECTOR, RSSSN RESIDING AT AREKERE POST HESIRAGHATTA HOBLI BENGALURU -560 064.
... PETITIONERS (BY SRI. JAYAKUMAR S PATIL, SENIOR COUNSEL FOR SRI. A MOHAMMED TAHIR, ADVOCATE) AND:
1. STATE OF KARNATAKA DEPARTMENT OF CO-OPERATION AMBEDEKAR VEEDHI VIDHANA SOUDHA BENGALURU -560 001 REPRESENTED BY ITS PRINCIPAL SECRETARY.
2. KARNATAKA LOKAYUKTA M.S.BUILDING BENGALURU-560 001 REPRESENTED BY ITS REGISTRAR.
3. UPA LOKAYUKTA OFFICE OF THE KARNATAKA LOKAYUKTA M.S.BUILDING BENGALURU -560 001 BY ITS REGISTRAR.
4. THE ADDITIONAL REGISTRAR OF ENQUIRY (10) KARNATAKA LOKAYUKTA M.S.BUILDING BENGALURU -560 001.
5. REGISTRAR OF CO-OPERATIVE SOCIETY ALI ASKAR ROAD BENGALURU -560 001.
6. ASSISTANT REGISTRAR ALI ASKAR ROAD BENGALURU -560 001.
... RESPONDENTS (BY SRI. VENKATESH S ARBATTI, ADVOCATE FOR RESPONDENT Nos. 2 TO 4 SRI. I THARANATH POOJARY, AGA. FOR RESPONDENT Nos.1, 5 AND 6) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE REPORT DATED 31.12.2013 AT ANNEX-F1 ISSUED BY THE R-2 AND ALL FURTHER PROCEEDINGS THEREOF; STRIKING DOWN THE SECTION 2[12] [g] [v] AND WORD 'A CO-OPERATIVE SOCIETY' FROM SECTION 2[12] [e] OF THE KARNATAKA LOKAYUKTA ACT, 1984 AS UNCONSTITUTIONAL AND ETC.
THESE PETITIONS COMING ON FOR PRONOUNCEMENT THIS DAY, S.G. PANDIT J., PASSED THE FOLLOWING:
ORDER The petitioners are before this Court under Articles 226 and 227 of the Constitution of India praying for the following reliefs:
“(a) Issue a writ in the nature of certiorari, or any other appropriate writ, order or direction quashing the Report No.COMPT/UPLOK/BCD/ 144/2006/DRE-1 dated 31.12.2013 at “ANNEXURE-F1” issued by the Respondent No.2 and all further proceedings thereof.
(b) Issue any writ or order striking down the Section 2(12) (g) (v) and word ‘a Co-operative Society’ from Section 2(12) (e) of the Karnataka Lokayukta Act, 1984 as unconstitutional.
(c) Issue a writ in the nature of certiorari, or any other appropriate writ, order or direction quashing the Show cause Notice No. COMPT/UPLOK/BCD/144/2006/ARE-10 dated 21.07.2015 at “ANNEXURE-H” issued by the Respondent No.4 and all further proceedings thereof.
(d) Issue a writ in the nature of certiorari, or any other appropriate writ, order or direction quashing the order No.SaNe-44/Section 64/Enquiry/01/2014-15 dated 29.12.2014 at “Annexure-G” Passed by the Respondent No.6 and all further proceedings thereof.
(e) Declare that the initiation of the Proceeding by the Respondent No.2 to 4 in pursuance of the compliant dated 29.03.2006 at Annexure-B is void and the same is without jurisdiction and not binding on the Petitioners.”
2. Even though several prayers are made in the writ petitions, the petitioners have restricted their prayer with regard to prayers (a), (c) and (d).
3. The first petitioner is a Society, registered under Karnataka Co-operative Societies Act 1959, the second petitioner is its Chief Executive Officer. Petitioners No.3 to 6 are the Directors and petitioners No.7 to 10 are the members of the first petitioner-Society. The First petitioner-Society decided to construct new administrative building adjoining the existing building. The Managing Committee of the first petitioner in its meeting dated 25.6.2005 passed resolution as per Annexure-A, decided to call for tenders for construction of new building and appointed one M/s. Appanna Nirmala Associates as its Consultants. One of the members of the Society by name Sri.Y.S.Channakeshava made a complaint to the second respondent as per Annexure-B alleging misuse of share- holders’ money in construction of the new administrative building. It is stated in the complaint that the tender is accepted for Rs.42,81,000/- which is more than 125% than the tender amount of Rs.34,00,000/-. It is also alleged that the petitioner-Society has finally paid double the tender amount. On the complaint, the second respondent referred it to the Technical Cell of Lokayukta for its report. The second respondent issued notice dated 14.08.2013 along with report of the Technical Wing of the second respondent-Lokayukta, wherein it was reported that a total amount of Rs.59.80 lakhs was paid to the Contractor which is double the tender amount. It is also noted that as per Transparency Act, tender notice is not published in news papers which have large circulation. The petitioner-Society submitted a detailed reply as per Annexure-D consisting of 17 pages. It is stated in the reply that tender was invited by publishing in a news paper. Three Firms had participated in the tender process. M/s. Suresh Constructions was found to be lowest among the three, to whom the construction work was entrusted. As there was escalation in construction cost, the estimated cost also increased. It is also stated in the reply that the complainant has withdrawn his complaint subsequently. The petitioner-Society has also contended in its reply that it is a Society established under the Co-operative Societies Act, that strictly Transparency Act would not apply and every action in respect of the building construction is approved by the Managing Committee and the General Body of the Society.
4. Statement of objections is filed on behalf of Respondents No.2 to 4 stating that during the course of investigation, it was revealed that Sri.Krishna Bhat, the then Managing Director of the Bank is responsible for the misdeeds of the Society and has rightly recommended action against him. As the second petitioner is a public servant, action is recommended against him for dereliction of duty.
5. Heard the learned counsel for the petitioners and learned counsel for the respondents.
6. The learned Senior Counsel appearing for the petitioners submits that 12(1) report of the Lokayukta is a non-speaking order and the second respondent has failed to consider the contentions raised by the petitioners in their reply submitted in pursuance of the notice at Annexure-C1. It is his further submission that the report is not inconsonance with Section 12(1) of the Karnataka Lokayukta Act, as such, all further actions in pursuance of the said report are bad in law. It is submitted that the second respondent has not applied its mind to the material on record while submitting report under Section 12(1) of the Act.
7. Per contra, learned counsel for respondents No.2 to 4 submits that the second respondent looking into the material on record has rightly submitted report under Section 12(1) of the Act. He submits that there is dereliction of duty on the part of second petitioner and he submits that as per Section 2(12)(e) of the Lokayukta Act, the second petitioner is a public servant.
8. On hearing the learned counsels for the parties and also on perusal of the writ papers we are of the view that Annexure-F1 dated 31.12.2013 report under Section 12(1) of the Karnataka Lokayukta Act is the result of total non-application of mind on the part of respondents. Section 12(1) of the Act reads as follows:
“12(1) If, after investigation of any action involving a grievance has been made, the Lokayukta or an Upa-lokayukta is satisfied that such action has resulted in injustice or undue hardship to the complainant or to any other person, the Lokayukta or an Upalokayukta shall, by a report in writing, recommend to the competent Authority concerned that such injustice or hardship shall be remedied or redressed in such manner and within such time as may be specified in the report.”
9. From the reading of the above provision, it would make it clear that if, after investigation of any action involving a grievance, the Lokayukta or an Upa Lokayukta is satisfied that such action has resulted in injustice or undue hardship to the complainant or to any other person, the Lokayukta or Upa Lokayukta shall by report in writing recommend to the Competent Authority to rectify such injustice or hardship or to redress in such manner, within such time, as specified in the report. In the case on hand, the complainant filed complaint before the second respondent alleging irregularity in tender for the construction of administrative building of the first petitioner-Society. In the complaint it is alleged that the tender is accepted for a sum, which is more than 125% than the tender amount and final payment is made double the tender amount. It is also alleged that the petitioners have not followed the Transparency Act while accepting the tenders. Moreover, the petitioners contended in their reply that the second petitioner is not a public servant, the Transparency Act would have no application, and the complainant ought to have raised dispute under Section 70 of the Co-operative Society Act and complaint is not maintainable before the second respondent.
10. On perusal of Annexure-F1 report, there is no consideration at all, to the contentions raised by the petitioners herein. The report would only say that there is fragrant violation of recognized tender procedure. Payment for construction is exorbitant. None of the contentions raised by the petitioners with regard to maintainability of complaint, whether second petitioner is a public servant or whether Transparency Act would be applicable to the petitioner-Society is considered. The report shall stand on its own legs and the respondents cannot improve the same in their statement of objections.
11. For the aforesaid reasons, the petitions are partly allowed. Annexure-F1 dated 31.12.2013 report under Section 12(1) of the Lokayukta Act is set aside. The matter is remitted to the second respondent for a fresh consideration after giving opportunity to both the parties. In view of setting aside Annexure-F1 dated 31.12.2013, further proceedings initiated in pursuance of the said report are also set aside. Accordingly, the writ petitions are partly allowed.
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JUDGE JUDGE mpk/-* CT:bms