- 1 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION NO. 8709 OF 2021 (CS-RES) BETWEEN: 1. SRI. MAUNESHWAR S/O GANGADHARAPPA ARKACHARI AGED ABOUT 58 YEARS CHAVATI CIRCLE HIREKERUR TALUK HAVERI DIST. 2. SRI. MAILARAPPA S/O JUMMAPPA WADEYAR AGED ABOUT 72 YEARS CHANbALLI ROAD HIREKERUR TALUK HAVERI DIST. 3. SRI. NAGARAJ S/O JUMMAPPA WADEYAR AGED ABOUT 64 YEARS CHAUDESWARI NAGAR HIREKERUR TALUK HAVERI DIST. 4. SRI. GUDAPPA S/O ADIVEPPA MAVARIYAVAR AGED ABOUT 62 YEARS KALIDASANAGAR HIREKERUR TALUK HAVERI DIST. 5. SMT. SUMA W/O NAGENDRAPPA DURGADAVAR AGED ABOUT 42 YEARS VIJAYNAGAR, HIREKERUR TALUK HAVERI DIST. Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 6. SRI. GUDDAPPA S/O NINGAPPA MULIMANI AGED ABOUT 51 YEARS CHANNALLI ROAD SHRINAGARA HIREKERUR TALUK HAVERI DIST. …PETITIONERS (BY SRI. JAYAKUMAR S. PATIL, SENIOR ADVOCATE FOR SRI. VARUN JAYKUMAR PATIL, ADVOCATE) AND: 1. THE STATE OF KARNATAKA DEPARTMENT OF CO-OPERATIVE SOCIETIES REPRESENTED BY ITS SECRETARY M.S. BUILDING BANGALORE-560001 2. KARNATAKA STATE CO-OPERATIVE SOCIETIES AUDIT NO.17, JAYANIVAS, SHAKAR MUTT ROAD, BASAVANAGUDI BANGALORE-560004 3. THE HIREKERUR URBAN CO-OPERATIVE BANK HIREKERUR, HIREKERUR TALUK HAVERI DISTRICT REPRESENTED BY ITS LIQUIDATOR 4. ASSISTANT DIRECTOR CO-OPERATIVE SOCIETIES AUDIT HAVERI DISTICT, G.G. MAGAVI CHAMBERS PB ROAD HAVERI-581110 5. ENQUIRY OFFICER SENIOR AUDITOR OFFICE OF ASSISTANT DIRECTOR DAVANGERE - 3 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 6. THE HIREKERUR AGRICULTURAL CREDIT CO-OPERATIVE SOCIETY HIREKERUR TALUK HAVERI DISTRICT, REPRESENTED BY ITS CEO …RESPONDENTS (BY SRI. S.R.KHAMROZ KHAN, ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NOS.1, 2, 4 AND 5; NOTICE SERVED ON RESPONDENT NOS.3 AND 6) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 26.02.2021 BEARING NO. CE 01 CLM 2021 AT ANNEXURE E ISSUED BY RESPONDENT NO.1 WHEREIN RESPONDENT NO.5 HAS BEEN APPOINTED TO CONDUCT A REAUDIT AND ETC. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER The petitioners have challenged an order bearing No.CE 01 CLM 2021 dated 26.02.2021 issued by the respondent No.1 appointing the respondent No.5 to conduct re-audit of respondent No.3. They have also challenged an order bearing No.TPG/BAV/Hirekerur/04/2020-21 dated 16.03.2021 passed by the respondent No.2 deputing the respondent No.5 to conduct re-audit of respondent No.3. - 4 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 2. (i) The petitioners claim to be the members of the respondent No.3 which was conducting business in banking in Haveri District till the year 2007. The Reserve Bank of India cancelled the banking licence on 30.10.2007, in view of certain violations of Banking Regulation Act, 1949. The respondent No.1 ordered for liquidation of respondent No.3 in terms of an order dated 30.01.2008. Thereafter, it was taken over by the liquidator who is presently representing the respondent No.3. (ii) It is contended that several claims were made against the respondent No.3 which were pending before various Courts in the Country which were being looked into by the liquidator of the respondent No.3. They contend that the audit of the respondent No.3 was conducted regularly every year under the watchful eyes of liquidator. When things stood thus, Smt. S.M. Kori, wife of M.S.Kori, the erstwhile manager of respondent No.3 addressed a letter to the respondent No.2 alleging that the officials belonging to the respondent No.3 were harassing her regarding recovery of loan availed by her and her family members. She also alleged that officials had misappropriated the money belonging to the bank and that - 5 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 they were accepting bribe to return money to the depositors. Prior to such representation, the respondent No.4 had addressed a letter to the respondent No.3 requesting it to produce all documents regarding DICGC for the years 2017- 2018 and 2019-2020. The respondent No.3 had allegedly submitted all the information as sought in the letter dated 23.11.2020. The petitioners contend that the request of Smt. S.M.Kori for re-audit of the respondent No.3 during the tenure of the liquidator was designed to harass the respondent No.3 and the officials of respondent No.3. (iii) It is claimed that the respondent No.2 addressed a letter to the respondent No.4 directing him to visit the premises of respondent No.3 and verify the allegations made in the representation. The respondent No.2 further directed the respondent No.4 to report whether a re-audit is required or not. The respondent No.4 then visited the premises of respondent No.3, prepared a report only for the years 2017-2018, 2018- 2019 and 2019-2020 and stated that more time is required to go through the documents from the year 2008-2009 onwards. The respondent No.4 pointed out that the audit reports were - 6 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 submitted by the respondent No.3 to the concerned authorities but yet the respondent No.4 deliberately did not mention as to why re-audit for the years 2008 to 2020 was required. (iv) The petitioner contends that despite the above, the respondent No.2 issued a notification dated 16.03.2021 appointing the respondent No.5 as an officer to conduct re- audit of the respondent No.3 - bank for the year 2008 till 2020. 3. Being aggrieved by the said order, the petitioners are before this Court. 4. The learned counsel for the petitioners submits that the respondent No.3 no longer exists as a co-operative society as it is now taken over and a liquidator is appointed and it is reconstituted as a 'Credit Co-operative Society'. He contends that all the accounts of erstwhile respondent No.3 are audited from the year 2008-2009 and 2009-2010 onwards till the year 2019-2020 and therefore there is no need for re-audit of the accounts. Besides this, he contends that the department of co- operative audit has not raised any concern and therefore there is no need for re-audit. - 7 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 5. (i) The writ petition is opposed by the respondent No.1 - State who contends that the petitioners have no locus standi to question the impugned order and they are not aggrieved by it. It is also contended that the petitioners have not produced any material to establish that they are all members of the respondent No.3. It is contended that the respondent No.3 was not working efficiently as contended by the petitioners but it had suffered consecutive financial loss due to financial irregularities and mismanagement and therefore the banking licence of the respondent No.3 was cancelled on 30.10.2007 and a liquidator was appointed. (ii) It is contended that even after appointment of the liquidator, the financial affairs of the respondent No.3 was not conducted in accordance with law and there were several instances of misappropriation and mismanagement. The respondents have quoted an instance where a sum of Rs.2,02,30,891/- was paid as legal fee and expenses for the period 2017 -2018 and 2019-2020. However, no information justifying such payments were found in the audit reports. It is contended that as per the order of the Registrar of co-operative - 8 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 societies dated 07.04.2011 all the employees of the respondent No.3 have been terminated after the liquidation. Inspite of that during the year 2019 - 2020, a sum of Rs.7,05,000/- was paid as gratuity and a sum of Rs.2,08,000/- was paid as ex-gratia although no regular employee was working in the respondent No.3. (iii) It is contended that the respondent No.3 was liquidated during the year 2008 -2009. There was no question of payment of leave salary of Rs.2,92,953/- during the year 2019-2020. The respondent No.1 - State has quoted similar such instances in the statement of objections to justify the re- audit of the accounts of the respondent No.3. 6. The learned Additional Government Advocate reiterated the above contentions and submits that there were several irregularities and financial improprieties during the year 2019-2020 and therefore, the respondent Nos.1 and 2 have felt it necessary to get the same re-audit. - 9 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 7. I have considered the submissions of the learned senior counsel for the petitioner as well as the learned Additional Government Advocate for the official respondents. 8. By the impugned orders, the respondent No.1 had appointed an auditor to re-audit the affairs of the respondent No.3 from the year 2008-2009 till the year 2019-2020 which was primarily due to based on certain allegations that were brought to the notice of respondent No.1. The respondent No.2 has followed up this order by conducting an in-house enquiry and thereafter was satisfied to appoint respondent No.5 to re- audit the affairs of the respondent No.3 from the year 2008- 2009 till 2019-2020. It is not known as to how the petitioners are aggrieved by such an order. It is also not known, how the petitioners are affected by the impugned order. The only person who could be affected is the respondent No.3 or the liquidator who was in the office between the year 2008-2009 till the date the respondent No.3 was reconstituted as a Credit Co- operative Society. - 10 - HC-KAR NC: 2025:KHC:37464 WP No. 8709 of 2021 9. In that view of the matter, without going into the larger question as to whether there was a need for conducting re-audit or not, this writ petition deserves to be disposed off on the ground that the petitioners have no locus-standi to question the impugned order. 10. Hence, the writ petition stands disposed off on the above terms. 11. In view of disposal of main petition, pending interlocutory applications if any, do not survive for consideration and the same stand rejected. Sd/- (R. NATARAJ) JUDGE HJ List No.: 1 Sl No.: 18