HC sets aside Upa-Lokayukta recommendation against Sri Siddeshwara Co-op Bank directors

NT Correspondent

Bengaluru: The High Court of Karnataka has quashed a recommendation by the Upa-Lokayukta to the Department of Co-operation to recover Rs.62,01,838 from the directors of the Sri Siddeshwara Co-operative Bank who had allegedly spent it in 2015 for the centenary celebrations violating the instructions of the Joint Registrar of Cooperative Societies and also violated the Rules of the bank.

The Upa Lokayukta had also recommended that the 18 directors be removed from their posts.

The then directors including the General Manager, Managing Director, President and Vice President of the bank had challenged the June 13, 2018 recommendation on grounds the complaint against them was not served on them and they were also not heard on the Technical Audit Cell (TAC) report of the Lokayukta.

Finding fault with the Upa-Lokayukta’s action, the HC bench of Justice KS Mudagal and Justice Ramachandra D Huddar said, “investigation under Section 9(4) of Karnataka Lokayukta Act did not exclude observance of principles of natural justice and if such procedure is not followed, the report is liable to be struck down. It is not open to respondent No.5 (UpaLokayukta) to claim that it was sufficient to serve the copy of the complaint on the petitioners and they need not have been heard on the TAC report before submitting the impugned investigation report.”

Centenary celebrations The Centenary Celebrations of the Bank was held on January 27 and 28 of 2015. A member of the bank, Davalasa, alleging that Rs.62,01,838 was spent on it against the Rules filed a complaint with the Lokayukta.

The TCA of the Lokayukta was directed to conduct a preliminary inquiry. Notice was served on the General Manager of the bank to furnish necessary documents.

Thereafter, based on the TAC report the Upa-Lokayukta made the recommendations. This was challenged in the HC in 2018. The HC bench gave its judgement recently.

The HC pointed to the many lapses in the procedure in the investigation.

“In the present case, admittedly, respondent No.5 (Upa-Lokayukta) has not forwarded the complaint to the petitioners, but he entrusted the matter to TAC for preliminary inquiry. The letter issued by TAC to the Chief Manager of the Bank does not specifically say that the copy of the complaint was forwarded, but only refers to the complaint and requires the petitioners to submit the documents mentioned therein,” it noted.

Quoting an earlier judgement which held that principles of natural justice had to be followed, the HC struck down the TAC report stating, “Since admittedly TAC report was not served on the petitioners and they were not heard on TAC report before submission of TAC report, as per the judgment in Prof. S.N.Hegde’s case referred to supra, the said report is liable to be struck down.”