SRI MADHAV NARAYAN HEGDE v. THE ASSISTANT REGISTRAR OF CO-OPERATIVE

3. SRI SHIVARAM GANAPATHY HEGDE, S/O LATE GANAPATHY HEGDE, AGED ABOUT 69 YEARS, RESIDING AT YELAVALLI VILLAGE - 581 440, KUMTA TALUK, UTTARA KANNADA DISTRICT.

4. SRI NARAYAN GANAPATHY HEGDE, S/O LATE GANAPATHY HEGDE, AGED ABOUT 63 YEARS, RESIDING AT YELAVALLI VILLAGE-581440, KUMTA TALUK, UTTARA KANNADA DISTRICT.

5. SRI KAMALAKAR GANAPATHY HEGDE, S/O LATE GANAPATHY HEGDE, AGED ABOUT 60 YEARS, RESIDING AT: YELAVALLI VILLAGE-581440, KUMTA TALUK, UTTARA KANNADA DISTRICT. …RESPONDENTS (BY SRI SIDHARTH BABU RAO, AGA FOR R1, SRI JAYAKUMAR S PATIL, SR. COUNSEL A/W SRI NAGARAJA HEGDE, ADVOCATE FOR R2 R3, R4 AND R5 ARE SERVED AND UNREPRESENTED) (RESPONDENT NO.3 HEREIN i.e., SRI NARAYANA GOVINDA BHAT SON OF GOVIND BHAT HAS NOT BEEN MADE AS PARTY, AS HE HAD DIED AND HENCE THE CASE AGAINST THIM IS ABATED BEFORE THE HON'BLE APPELLATE TRIBUNAL). THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR RECORDS LEADING TO PASSING OF ORDER DATED 24.09.2019 BY THE HON-BLE KARNATAKA APPELLATE TRIBUNAL IN APPEAL NO.COP.APL-483/2012 VIDE ANNX-A AND AFTER PERUSAL ISSUE A DIRECTION OR ANY OTHER APPROPRIATE ORDER SET - 3 - NC: 2024:KHC:5086 WP No. 50593 of 2019 ASIDE THE SAME TO THE EXTENT OF THAT PORTION OF THE SAID ORDER REMANDING THE MATTER TO R-1 FOR FURTHER EVIDENCE AS LEGAL AND ARBITRARY AND ALLOW THE APPEAL WITHOUT FURTHER REMITTANCE THE R-1. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP THIS DAY THE COURT MADE THE FOLLOWING: ORDER

1. Heard Sri.M.S.Bhagwat, the learned Senior counsel along with Sri.Raghavendra G. Gayathri, the learned counsel appearing for the petitioners, Sri.Sidharth Babu Rao, the learned Government Advocate appearing for respondent No.1 and Sri.Jayakumar S. Patil, the learned Senior counsel along with Sri.Nagaraja Hegde, the learned counsel appearing for the respondent No.2.

2. This petition is filed challenging the order dated

24.09.2019 passed in COP. Appeal No.483/2012 on the file of Karnataka Appellate Tribunal, Bengaluru. In terms of the said order, the appeal is allowed in part and the matter is remanded to the Assistant Registrar of Co-operative Societies, Kumata to hear the dispute afresh in accordance with law. In the process, - 4 - NC: 2024:KHC:5086 WP No. 50593 of 2019 the order passed by the Assistant Registrar of Co-operative Societies in Dispute No.¸À.¤-20/rrJ¸ï/69/2008-09 dated: 28/05/2012 is set aside.

3. Certain other facts necessary for the adjudication of the case can be summarized as under:

4. Petitioners are claiming under one Narayan Hegde who was the employee of respondent No.2-Society. It is an admitted fact that he died while he was in service. One year and eight months after his death, an audit was conducted and the auditor pointed out certain financial irregularities and opined that the ex-employee Narayan Hegde is responsible for the irregularities.

5. Based on the Auditor's report a dispute is raised by respondent No.2 Society before respondent No.1, the Assistant Registrar of Co-operative Societies. Since the employee had died, the dispute is raised against the legal representatives of the deceased employee. His legal representatives namely the petitioners herein, resisted the petition by filing statement of objections. - 5 - NC: 2024:KHC:5086 WP No. 50593 of 2019

6. During the course of the trial, the Chief Executive Officer of the Society was examined as P.W.1. He produced certain documents which are marked. Thereafter, the Auditor whose report was the basis to make a claim is also examined as P.W.-2. The case was adjourned for further examination. His cross-examination could not be commenced as he did not turn up on the day fixed for his appearance. The Assistant Registrar of Co-operative Societies heard the matter on merits and passed an award fixing the liability on the present petitioners.

7. This award is called in question by filing an appeal before the Karnataka Appellate Tribunal. Before the Appellate Tribunal, it is contended that the report of the Auditor could not have been the basis to pass the award as the Auditor has not subjected himself to the cross-examination. In addition, few other grounds are raised in the appeal memo. However, the Appellate Tribunal found that the matter requires to be remitted to the Assistant Registrar of Co-operative Societies to enable the parties to lead the evidence of the Auditor and the matter is remanded by setting aside the award passed by the Assistant Registrar of Co-operative Societies. - 6 - NC: 2024:KHC:5086 WP No. 50593 of 2019

8. Against the aforementioned order remanding the matter, the petitioners are before this Court.

9. Sri.M.S.Bhagwat, learned Senior counsel appearing for the petitioners raised a contention that the order of remand is unsustainable as there is no material placed before the Assistant Registrar of Co-operative Societies to consider the case afresh. In the absence of any credible materials, to substantiate the claim made by the respondent - Society, the matter could not have been remanded to respondent No.1- the Assistant Registrar of Co-operative Societies.

10. It is also urged by the learned Senior counsel for the petitioners that the Division Bench of this Court has taken a view that the Auditor's report cannot be the basis for passing an award. It is also his further contention that the Account book alone cannot be the basis for passing the award where the claim is made to recover the amount. In support of his contention he has relied on the following three judgments: (a) M/s. Emta Coal Limited and Another vs. M/s. Karnataka Power Corporation Limited reported - 7 - NC: 2024:KHC:5086 WP No. 50593 of 2019 in CDJ 2016 Kar HC 157 in W.P.Nos.2995 to (b) Corporation Bank vs. Mohandas Baliga reported in ILR 1993 KAR 201 (c) Chandradhar Goswami and Others vs. Gauhati Bank Ltd reported in AIR 1967 SC 1058.

11. Sri.Jayakumar S. Patil, the learned Senior counsel appearing for respondent No.2 would contend that the appeal is allowed and the matter is remanded to the Assistant Registrar of Co-operative Societies primarily based on the contention raised by the present petitioners who urged before the Appellate Authority that opportunity is not given to them to discredit the audit report. Under these circumstances, he would submit that there is no scope to interfere in the order of remand. It is also urged that an opportunity is given to both parties to lead evidence to substantiate their respective claim. This being the position, the petitioners cannot be considered as aggrieved persons and given the fact that the petition is filed under Article 227 of Constitution of India, hardly there is any scope to interfere in the impugned order. - 8 - NC: 2024:KHC:5086 WP No. 50593 of 2019

12. This Court has considered the contentions raised at the bar and also perused the records.

13. As can be noticed from the impugned order the matter is remitted to the 1st respondent- the Assistant Registrar of Co-operative Societies to consider the case afresh by giving an opportunity to both parties to lead evidence. In other words all contentions are kept open and the Appellate Authority has not recorded any finding on merits.

14. As could be seen from the order passed by the Assistant Registrar of Co-operative Societies, reliance was placed on the Auditor's report while passing the award. Admittedly, the Auditor is not cross-examined as he did not turn-up for the cross-examination. In this context the matter is remanded to enable the parties to lead fresh evidence.

15. Considering the contentions raised before the Appellate Authority that opportunity is denied to the petitioners to cross-examine the Auditor, and considering the fact that the award is passed primarily placing reliance on the Auditor's report, the Appellate Authority has remanded the matter by setting aside the award. - 9 - NC: 2024:KHC:5086 WP No. 50593 of 2019

16. Considering the scope of the present petition which is filed under Article 227 of Constitution of India, this Court does not find any reason to interfere with the said order.

17. Before concluding, this Court has to refer to the judgment cited by the learned Senior counsel appearing for petitioner. In M/s. Emta Coal Limited and Another vs. M/s. Karnataka Power Corporation Limited1, as can be noticed from the said judgment, based on an audit report of the CAG, a notice was issued to the contractor to recover certain dues. However, based on the very said notice which was based on the audit report, it is further stated in the notice that the amount due to the contractor will be deducted periodically. It is also forthcoming that the authority who issued notice was holding the amount that was due to the contractor. This notice was called in question. This Court has examined the scope of the notice and has concluded that based on CAG report, there cannot be a recovery without an adjudication of the claim in the manner known to law. Under these circumstances, the 1 CDJ 2016 Kar HC 157 in W.P.Nos.2995 to 2998/2016 - 10 - NC: 2024:KHC:5086 WP No. 50593 of 2019 aforementioned judgment cannot be made applicable to the present set of facts of the case as respondent No.2 Society based on the Auditor report has initiated procedure contemplated under law to recover the alleged dues.

18. In the case of Corporation Bank vs. Mohandas Baliga2, this Court was examining the evidentiary value of the entries in the books of accounts. The Court has again given a finding that the books of accounts alone cannot be basis to accept a claim. Books of accounts are to be supported by some other documents in support of the entries in the books of accounts. In this case the respondent No.2 Society tried to justify the entries in the books of accounts based on the Auditor's report and the Auditor's report for the reasons already aforesaid was not accepted by the Appellate Authority and the matter is remitted to the respondent No.1-Assistant Registrar of Co-operative Societies to consider the case afresh by giving an opportunity to the parties to lead evidence on the disputed Auditor report. The ratio laid down in the said judgment has to be considered after recording the evidence before the Registrar. 2 ILR 1993 KAR 201 - 11 - NC: 2024:KHC:5086 WP No. 50593 of 2019

19. In case of Chandradhar Goswami and Others vs. Gauhati Bank Ltd3 the Hon'ble Apex Court was again examining the evidentiary value of the books of accounts and again in the facts and circumstances of the said case, the Court has come to the conclusion that the books of accounts alone can be the ground to accept the claim made by the party based on the books of accounts. Since the matter is remitted to the 1st respondent-Assistant Registrar of Co-operative Societies to adduce evidence and opportunity is given to both the parties to adduce evidence, this Court is of the view that whether the ratio laid down in the aforementioned case has to be considered after recording the evidence before the Registrar.

20. Though it is urged that the document produced before the Registrar are the Xerox copies and they are inadmissible in evidence, since the Tribunal has remanded the matter to the Assistant Registrar of Co-operative Societies, to decide in accordance with law, this Court is of the view that the objection relating to the admissibility of the Xerox copies or the 3 AIR 1967 SC 1058 - 12 - NC: 2024:KHC:5086 WP No. 50593 of 2019 secondary evidence shall be considered by the Assistant Registrar of Co-operative Societies in accordance with law.

21. Under these circumstances, this Court does not find any merit to interfere with the impugned order.

22. Hence, the following: ORDER (i) The Writ Petition is dismissed. (ii) Respondent No.1-Assistant Registrar Co-operative Societies shall consider the claim of the parties by recording the evidence to be to be adduced by the parties in accordance with law and it is further made clear that this Court has not expressed any opinion on any documents including the audit report which are already produced. (iii) All contentions are kept open. (iv) Parties shall appear before the Assistant Registrar of Co-operative Societies on 01.03.2024 at 03:00 p.m. - 13 - NC: 2024:KHC:5086 WP No. 50593 of 2019 (v) Since the proceeding was initiated in the year 2008, the matter be disposed of within six months from the receipt of copy of this Order. GVP List No.: 1 Sl No.: 18 Sd/- JUDGE