Aravind M a Vs Additional Registrar of Co. Operative Societies (H and M)

ARAVIND M.A. S/O ANNAJI GOWDA AGE - 43 YEARS, DIRECTOR (NOW DISQUALIFIED) BHARATH ELECTRONIC EMPLOYEES COOPERATIVE HOUSE BUILDING SOCIETY LTD. FIRST FLOOR, B.E COOPERATIVE SOCIETY LTD. BANGALORE - 560 013.

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Digitally signed by PRASHANTH N V Location: High Court of Karnataka

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GOPINATH B.S S/O SUNDERMURTHY A.N AGED ABOUT 53 YEARS DIRECTOR (NOW DISQUALIFIED) BHARATH ELECTRONIC EMPLOYEES COOPERATIVE HOUSE BUILDING SOCIETY LTD. FIRST FLOOR, B.E COOPERATIVE SOCIETY LTD. BANGALORE - 560 013.

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RAGHU M.N S/O NARAYANAPPA AGED ABOUT 42 YEARS DIRECTOR (NOW DISQUALIFIED) BHARATH ELECTRONIC EMPLOYEES COOPERATIVE HOUSE BUILDING SOCIETY LTD. FIRST FLOOR, B.E COOPERATIVE SOCIETY LTD. BANGALORE - 560 013

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&PETITIONERS

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(BY SRI. JAYKUMAR .S. PATIL, SR. ADVOCATE FOR SRI. DEVIPRASAD SHETTY, ADVOCATE)

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AND:

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ADDITIONAL REGISTRAR OF CO OPERATIVE SOCIETIES (H AND M) ALI ASKAR ROAD, BENGALURU - 560 001.

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THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, BENGALURU REGION, SAHAKARA SOWDHA, NO.146, 3^RD FLOOR, 3^RD MAIN ROAD, 8^TH CROSS, MARGOSA ROAD, MALLESHWARAM, BENGALURU - 560 003

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BHARATH ELECTRONICS HOUSE BUILDING CO-OPERATIVE SOCIETY LTD., 1^ST FLOOR, B.E CO-OPERATIVE SOCIETY LTD. JALAHALLI, BENGALURU - 560 013, BY ITS CHIEF EXECUTIVE

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K. ANNADORAI S/O LATE KUPPU SWAMY AGE - NOT KNOWN TO THE PETITIONER, NO.16, AKSHAYA NILAYA, NEAR GANGAMMA TEMPLE, RAMACHANDRAPURA, BANGALORE- 560013

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&RESPONDENTS

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(BY SRI. YOGESH D. NAIK, AGA FOR R1 & 2 SRI. S. RAJASHEKAR, ADVOCATE FOR SRI. M.R. HIREMATHAD, ADVOCATE FOR C/R4

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SRI. KETHAN KUMAR, ADVOCATE FOR R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DTD. 11.07.2025 PASSED IN DISPUTE NO. JRB/DAVA/29-C/06/2019-20 BY R-2 VIDE ANNX-E. AND ETC.,

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THIS WRIT PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MRS. JUSTICE M G UMA

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ORAL ORDER

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The petitioners have approached this Court seeking to issue a writ in the nature of certiorari to quash the order dated 11.07.2025 passed by respondent No.2 produced as per Annexure-E and the orders dated 30.09.2025 and 13.10.2025 passed by respondent No.1 produced as per Annexures-N and P respectively.

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Brief facts of the case are that, the petitioners are the elected Directors of respondent No.3 - Society elected in the election that was held on 01.09.2018. The petitioners were re-elected again in the election that was held on 27.08.2023. It is contended that during 2018, respondent No.2 has passed an order disqualifying the petitioners along with other Directors of the Board for a period of 5 years as per order dated 29.04.2019 passed under Section 29-C of Karnataka Cooperative Societies Act (for short 'the KCS Act'). The said order was challenged before this Court by filing writ petition raising the contentions that Section 29-C could not have been invoked against all the members of the Board. Writ Petition Nos.4971649725 of 2019 came to be allowed vide order dated 29.04.2019 and 24.06.2019 giving liberty to respondent No.2 to issue fresh

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Show Cause Notice to the Directors and to initiate fresh proceedings. Accordingly, respondent No.2 issued fresh Show Cause Notice to all the Directors including the petitioners. Pursuant to the same, the order Annexure-B dated 21.06.2021 came to be passed.

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Being aggrieved by the same, Writ Petition No.19269 of 2021 came to be filed by the petitioner therein. The said writ petition was allowed again remanding the matter to respondent No.2 for fresh consideration. The said order is produced as per Annexure-C. Respondent No.2 took up the matter for consideration again. However, without hearing the petitioners, an order dated 11.07.2025 came to be passed disqualifying the petitioners from respondent No.3 -Society for a period of 5 years acting under Section 29-C(8) (b)(c) and (d) of KCS Act, which is produced as per Annexure-E.

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In the meantime, the Registrar has passed the order as per Annexures-F and F1 dated 30.10.2019 imposing penalty on M/s Sri Byraveshwara Enterprises. A criminal proceedings is also initiated invoking Sections 420, 468, 471 read with Section 34 of IPC. The order as per Annexure-L

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came to be passed by allowing IA.1. Being aggrieved by the orders Annexures-E and L, the petitioners have filed Writ Petition No.25737 of 2025. The said writ petition came to be allowed directing respondent No.1 to dispose off the appeal in a time bound manner. Now respondent No1 passed order dated 30.09.2025 and 13.10.2025 produced as per Annexures-N and P respectively. Being aggrieved by the same, the petitioners are before this Court.

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Heard Sri. Jaykumar S. Patil, learned senior advocate for Sri. Deviprasad Shetty, learned counsel for the petitioners and Sri. Yogesh D. Naik, learned Additional Government Advocate for respondent Nos.1 and 2, Sri.Kethan Kumar, learned counsel for respondent No.3 and Sri. S.Rajashekar, learned counsel for Sri. M.R.Hiremathad, learned counsel for respondent No.4. Perused the materials on record.

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Learned senior advocate for the petitioners contended that the charges that were raised against the petitioners and other members of the Board, which was existing then disclose that the same are against the collective decision taken by the Board. None of the charges refer to any of the

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actions taken by the petitioners individually as member of the Board. Under such circumstances, Section 29-C of the KCS Act cannot be invoked. He places reliance on the decisions in Appa

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Saheb R Kerakalamatti Vs Additional Registrar of Cooperative Societies in Karnataka¹ , and Vijaykumar and Others Vs The State of Karnataka and Others,² in support of his contention. Thus, it is the contention of learned senior advocate that Section 29-C of the KCS Act could not have been invoked against all the members of the Board, who are 10 in numbers. Now at the time of passing the impugned order, it is passed only against 3 petitioners herein as they were reelected for the Board which was reconstituted, whereas the other members were not re-elected.

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Learned senior advocate contended that Section 30 of the KCS Act refers to supersession of the Society, Section 31 of the KCS Act refers to appointment of Special Officer, Section 64 of the KCS Act refers to the inquiry by Registrar and Section 69 of the KCS Act refers to Surcharge. These provisions of law

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1 ILR 1987 KAR 1336

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2 WP 17898/2023 DD 05.08.2024

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refers to the members of the Board collectively for their decision, which is the basis of irregularity or fraud as alleged.

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Learned senior advocate contended that respondent No.4 being the complainant was not entitled to be impleaded in the proceedings in view of the specific provisions under Section 29C, which authorizes the Registrar to initiate action whether suo motu or on the information received by him. Once respondent No.4 as complainant filed the complaint which was the basis for initiating proceedings, he cannot be an aggrieved person to be a party in any of the further proceedings. He places reliance on the decision of Hon'ble Apex Court in Kedar Shashikant Deshpande and Others Vs Bhor Municipal Council and Others³ and Ravi Yashwant Bhoir Vs District Collector, Raigad and Others⁴ in support of his contention. He also places reliance on the decision of this Court in S

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Srinivas and Others Vs The State of Karnataka and Others⁵ , where the decision in Kedar Shashikant Deshpande (supra) and Ravi Yashwant Bhoir (supra) were

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3 (2011) 2 SCC 654

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4 (2012) 4 SCC 407

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referred, to contend that the complainant is not a necessary party to be impleaded in the dispute. Therefore, he prays for allowing the petition and to quash Annexures-E, N and P in the interest of justice.

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Per contra, learned Additional Government Advocate opposing the contention taken by the learned senior advocate for the petitioners regarding locus standi of respondent No.4 to be impleaded as a party as per Annexure-N by allowing the application filed by him, places reliance on the decision of this Court in H M Manjunathappa Vs Joint Registrar of Co-operative Societies and Others⁶ to contend that since respondent No.4 was one of the Directors who lodged the complaint with the Registrar and on the basis of such complaint, the proceedings were initiated, he will have the right to protect the economic interest of the society and he is a necessary party.

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Learned counsel for respondent Nos.3 and 4 and learned Additional Government Advocate for respondent Nos.1 and 2 prays for time to convince the Court as to how Section

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29C of the KCS Act could be invoked when the allegations are against all the members of the Board for the decision they have taken collectively. In view of the decision relied on by the learned senior advocate - this position of law that Section 29C of KCS Act could be invoked only against individual members who are the Directors for the fraud or the irregularities committed by them and not against the Board with the collective decision is made clear.

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Learned Additional Government Advocate also submitted that, if Section 29-C is not made applicable to each of the members to constitute the Board, there is no other provision in the statute that can be made applicable to such a situation. Since the word 'member' used in Section 29-C of the KCS Act includes the members it cannot be held that Section 29-C could be invoked only against individual member and not collectively as the members of the Board. Therefore, he prays for dismissal of the petition.

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Learned counsel for respondent No.4 supporting the contention taken by the learned Additional Government Advocate also contends that, if for any reason this Court forms

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an opinion that in the given situation Section 29-C could not have been invoked, liberty may be reserved in favour of the respondents to prosecute the petitioner, in accordance with law.

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On perusal of the materials on record in the light of the submissions made by the learned senior advocate for the petitioners, the learned Additional Government Advocate and learned counsel for the respondents, the grievance was raised by respondent No.4 by filing the complaint the tenor of allegations if considered in the light of the decisions referred to above, the decisions were taken by the petitioners as members of the Board collectively and not in their individual capacity as the members of the Board.

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In Appa Saheb R Kerakalamatti (supra), the Co-

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ordinate Bench of this Court way back in the year 1985 dealt with the ambit of Section 126-A of KCS Act and held in para Nos.6 and 7 as under:

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"6-The wording of Section 126-A indicates that action to remove a member from the Managing Committee and to disqualify him for being a member of the Managing Committee could be taken if he commits any of the misconducts specified in Clauses (b)(c) or (d)

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of the sub-section. On consideration Sections 30 and 30A is to empower the Registrar and the Government to take action against acts of omission and commission by committee of management of societies, Section 126-A contemplates action against acts of commission or omission of a member as an individual and not in respect of the decision of a committee to which he was a party."

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"If the intention of the Legislature was to create individual liability for the actions of the committee of society, it would have done so by the use of express words to that effect in Section 126-A. No such provision is incorporated in Section 126-A of the Act. Therefore, it is clear that purpose with which Section 126-A has been introduced into the Act are -

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(i) To remove a person from the membership of the Managing Committee of a society if he had become subject to any of the disqualification mentioned u/s 29-C of the Act, and

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(ii) If it is found that he had acted fraudulently or with gross negligence or in contravention of the provisions of the Act, rules or bye-laws or had acted persistently against the direction or orders issued under the Act individually or it is found that the member was not discharging his duties properly.

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For these reasons, I hold that action u/s 126-A of the Act is permissible for misconduct committed by a member individually and not in respect of decisions or acts of the committee of management or its subcommittee to which he was a party as its member."

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Thus, it made the position very clear. It is stated that

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this Court consistently up-held such a contention regarding applicability of two provisions of law i.e. Section 29C and 30 of KCS Act. In-spite of that, the legislatures have not thought it fit

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to amend Section 29-C to make it applicable explicitly to the collective decisions of the members as a Board. In Vijaykumar and Others (supra), the Co-ordinate Bench once again held in para Nos.5 and 7 as under:

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"5-will clearly indicate that the impugned notice is directed against the entire Board of Management and not against any individual and illegalities are said to have been committed by any one of the members of the Board of Management for the purpose of incurring disqualification as contemplated under Section 29C(8)(b)(c)(d) of the Act.

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7. A plain reading of the aforesaid provision will clearly indicate that the illegalities collectively said to have been committed by any member of the Board of Management cannot be brought within the scope and ambit of proceedings under Section 29(C)(8) of the Act for the purpose of disqualification proceedings against the individuals of the Board of Management."

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In view of the above, I am of the opinion that the contention raised by the learned senior advocate for the petitioners is required to be up-held as the position of law is very well settled. When the impugned orders referred to the collective act of the petitioners as the members of the Board, I do not find any justification to invoke Section 29-C of the KCS

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Act. However, as requested by the learned counsel for respondent No.4 being the complainant, liberty may be reserved to invoke appropriate provisions of law and to prosecute the petitioners, if respondent No.4 or any other respondents are advised to do so.

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Accordingly, the petitioners are entitled for the relief as prayed for. Hence, I proceed to pass the following:

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ORDER

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(i) The writ petition is allowed .

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(ii) The order dated 11.07.2025 passed in Dispute No.JRB/DAVA/29-C/06/2019-20 by respondent No.2 produced as per AnnexureE, and the orders dated 30.09.2025 and 13.10.2025 passed in Appeal No.ANI/WA&E/ D2/DAP/09/2025-26 by respondent No.1 produced as per Annexures-N and P, are hereby quashed.

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(iii) Liberty is reserved with the respondents to invoke appropriate provisions of law to prosecute the petitioners, in accordance with law, if he/they is/are advised to do so.

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