Case Note & Summary
The petitioner, Sri Shivananjappa, was the Secretary of the Taluk Agricultural Produce Co-operative Marketing Society Limited, Chamarajanagar Taluk from 1991-1992 to 31.12.2000. He retired on 31.8.2006. An enquiry under Section 64 of the Karnataka Co-operative Societies Act, 1959 was initiated into the affairs of the third respondent Society, which found that the petitioner had committed irregularities and determined his liability at Rs.24,13,932.13. Based on the enquiry report, an order under Section 68 was passed, and the third respondent initiated surcharge proceedings under Section 69, which were pending before the first respondent. The third respondent sought permission to prosecute the petitioner by communication dated 12.10.2009. The first respondent issued a show cause notice dated 20.10.2009, to which the petitioner replied on 19.12.2009 opposing the grant of sanction. Despite this, the first respondent granted sanction to prosecute the petitioner under Section 111(2) of the Act vide order dated 9.2.2010 (Annexure 'D'), which was challenged in this writ petition. The petitioner's counsel made two submissions: first, that prosecution cannot be initiated before conclusion of surcharge proceedings under Section 69(1); second, that the sanction was granted without considering the petitioner's reply and without recording a finding on good faith. The respondents argued that there is no bar to simultaneous prosecution and that a show cause notice was issued. The court held that while there is no bar to simultaneous proceedings, the sanction order was invalid because the first respondent did not consider the petitioner's reply and did not record a finding on whether the petitioner acted in good faith. The court quashed the sanction order and directed the first respondent to reconsider the matter afresh after giving the petitioner an opportunity of hearing and passing a reasoned order.
Headnote
A) Co-operative Law - Sanction to Prosecute - Section 111(2) Karnataka Co-operative Societies Act, 1959 - Requirement of Consideration of Reply - The first respondent granted sanction to prosecute the petitioner without considering his reply to the show cause notice, and without recording a finding as to whether the petitioner acted in good faith. Held that the sanction order is invalid and liable to be quashed (Paras 4-6).
B) Co-operative Law - Surcharge Proceedings - Section 69(1) Karnataka Co-operative Societies Act, 1959 - Simultaneous Prosecution - The petitioner argued that prosecution cannot be initiated before conclusion of surcharge proceedings under Section 69(1). The court did not accept this submission, holding that there is no bar to simultaneous proceedings (Para 5).
Issue of Consideration
Whether the sanction to prosecute under Section 111(2) of the Karnataka Co-operative Societies Act, 1959 is valid when the reply to show cause notice was not considered and no finding on good faith was recorded, and whether prosecution can be initiated before conclusion of surcharge proceedings under Section 69(1).
Final Decision
The writ petition is allowed. The order at Annexure 'D' dated 9.2.2010 is quashed. The first respondent is directed to reconsider the matter afresh after giving the petitioner an opportunity of hearing and pass a reasoned order in accordance with law.
Law Points
- Sanction to prosecute under Section 111(2) of Karnataka Co-operative Societies Act
- 1959 requires consideration of reply to show cause notice and a finding on good faith
- simultaneous surcharge proceedings under Section 69(1) do not bar prosecution
Case Details
2013 LawText (KAR) (06) 23
Writ Petition No.23878/2010 (CS-RES)
Sri M.R.Rajagopal for petitioner; Sri Nasrulla Khan, HCGP for R1; Sri M.V.Charati & H.M.Manjesh for R2 and R3
The Deputy Registrar of Co-op. Society, Chamarajanagara District; Sri N. Manjunath; The Secretary Taluk Agricultural Produce Co-op. Marketing Society Ltd., Chamarajanagara Tq. & Dist.
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Nature of Litigation
Writ petition challenging the validity of sanction to prosecute under Section 111(2) of the Karnataka Co-operative Societies Act, 1959.
Remedy Sought
Quashing of the order dated 9.2.2010 granting sanction to prosecute the petitioner.
Filing Reason
The petitioner challenged the sanction order on grounds that his reply to show cause notice was not considered and no finding on good faith was recorded.
Previous Decisions
An enquiry under Section 64 was conducted, a report under Section 68 was submitted, and surcharge proceedings under Section 69 were initiated and pending.
Issues
Whether the sanction to prosecute under Section 111(2) of the Karnataka Co-operative Societies Act, 1959 is valid when the reply to show cause notice was not considered and no finding on good faith was recorded.
Whether prosecution can be initiated before conclusion of surcharge proceedings under Section 69(1) of the Act.
Submissions/Arguments
Petitioner: After enquiry under Section 64 and report under Section 68, surcharge proceedings under Section 69(1) are pending; prosecution before conclusion of those proceedings is not permissible. Also, sanction was granted without considering petitioner's reply and without recording a finding on good faith.
Respondents: There is no bar to simultaneous prosecution with surcharge proceedings. A show cause notice was issued and petitioner replied, but the authority considered the matter and granted sanction.
Ratio Decidendi
The sanction to prosecute under Section 111(2) of the Karnataka Co-operative Societies Act, 1959 requires the authority to consider the reply to the show cause notice and to record a finding on whether the person acted in good faith. Failure to do so renders the sanction order invalid. However, there is no bar to initiating prosecution simultaneously with surcharge proceedings under Section 69(1).
Judgment Excerpts
In this case, the petitioner has called in question the validity of the order at Annexure ‘D’ dated 9.2.2010 whereby the first respondent has granted sanction to prosecute the petitioner under sub-section (2) of Section 111 of the Karnatata Co-operative Societies Act, 1959.
Learned Counsel for the petitioner has made two fold submissions. Firstly, he submits that after holding an enquiry under Section 64, a report was submitted to the competent authority under Section 68 of the Act. This was followed by surcharge proceedings under Section 69(1). Before conclusion of the proceedings under Section 69(1), prosecuting the petitioner is not permissible in law. Secondly, it is contended that the sanction cannot be given without granting the person concerned an opportunity to represent his case. Though the petitioner has sent the reply to the show cause notice, the same has not been considered by the first respondent. It is argued that before the grant of sanction, the second respondent has not recorded a finding as to whether petitioner has acted in good faith or not.
On the other hand, learned HCGP appearing for the first respondent submits that there is no bar for the competent authority to prosecute the petitioner simultaneously with the surcharge proceedings under Section 69(1). It is further argued that a show cause notice was issued to the petitioner and the petitioner has sent his reply.
Procedural History
An enquiry under Section 64 of the Karnataka Co-operative Societies Act, 1959 was conducted into the affairs of the third respondent Society. Based on the report, an order under Section 68 was passed, and surcharge proceedings under Section 69 were initiated. The third respondent sought permission to prosecute the petitioner on 12.10.2009. The first respondent issued a show cause notice on 20.10.2009, to which the petitioner replied on 19.12.2009. The first respondent granted sanction to prosecute on 9.2.2010. The petitioner filed this writ petition challenging the sanction order.
Acts & Sections
- Karnataka Co-operative Societies Act, 1959: Section 64, Section 68, Section 69, Section 69(1), Section 111, Section 111(2)
- Constitution of India: Article 226, Article 227
