- 1 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF AUGUST, 2025 PRESENT THE HON'BLE MR. JUSTICE D K SINGH AND THE HON'BLE MR. JUSTICE VENKATESH NAIK T WRIT PETITION NO.2160 OF 2023 (GM-KLA) BETWEEN: SMT. LAKSHMI S. W/O. SRI VINAY KUMAR B.S. AGED ABOUT 33 YEARS ASSISTANT ENGINEER KRIDL RAMANAGARA DISTRICT RESIDING AT NO.4, 'NIDHI SHRI' 19TH CROSS, 21ST MAIN OPP: TEMPLE BELLS PREMIER APARTMENT IDEAL HOME TOWNSHIP RAJARAJESHWARI NAGAR BENGALURU-560 098. …PETITIONER (BY SRI P.P. HEGDE, SENIOR COUNSEL ALONG WITH SRI MAYUR K., ADVOCATE FOR SRI AKSHAY KUMAR JAIN, ADVOCATES) AND: 1. STATE OF KARNATAKA REPRESENTED BY ITS PRINCIPAL SECRETARY VIDHANA SOUDHA BENGALURU-560 001. 2. THE DIRECTOR (RURAL DEVELOPMENT) AND INCHARGE DEPUTY SECRETARY RURAL DEVELOPMENT AND PANCHAYATHRAJ DEPARTMENT M.S. BUILDING BENGALURU-560 001. Digitally signed by MOUNESHWARAPPA NAGARATHNA Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 3. UPA LOKAYUKTHA KARNATAKA LAOKAYUKTHA M.S. BUILDING DR. B.R. AMBEDKAR VEEDHI BENGALURU-560 001. 4. THE ADDITIONAL REGISTRAR ENQUIRIES-3 KARNATAKA LOKAYUKTHA M.S. BUILDING DR. B.R. AMBEDKAR VEEDHI BENGALURU-560 001. 5. MANAGING DIRECTOR AND ENQUIRY AUTHORITY KARNATAKA RURAL INFRASTRUCTURE DEVELOPMENT LTD. GRAMEENABHIVRUDDI BHAVAN 4TH AND 5TH FLOOR ANANDARAO CIRCLE BENGALURU-560 009. 6. SRI CHANDRAMOHAN JOSHI S/O. SHRI K.D. JOSHI AGED ABOUT 48 YEARS RESIDING AT NO.271 5TH MAIN, 9TH CROSS JAYANAGAR MYSORE-570 014. …RESPONDENTS (BY SMT. PRATHIBHA R.K., AGA FOR R-1 AND R-2; SRI VENKATESH S. ARABATTI, ADVOCATE FOR R-3 AND R-4; SRI NATARAJU T., ADVOCATE FOR R-5; R-6-CHANDRAMOHAN JOSHI-SERVED AND UNREPRESENTED) * * * THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO A) ISSUE WRIT OF CERTIORARI QUASHING THE ENQUIRY REPORT DATED 26-7-2022 ISSUED BY RESPONDENT NO.4 IN NO.UPALOK-2/DE/197/2019/ARE 3 VIDE ANNEXURE-C AND ETC. THIS WRIT PETITION, COMING ON FOR FINAL DISPOSAL, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE VENKATESH NAIK T ORAL ORDER (PER: HON'BLE MR. JUSTICE D K SINGH) Heard Sri. P.P.Hegde, learned Senior advocate along with Sri. Mayur K., learned counsel assisted by Sri. Akshay Kumar Jain, learned counsel for the petitioner and Sri. Venkatesh S. Arabatti, learned counsel for respondent Nos.3 and 4 and Smt. Prathiba R.K., learned Additional Government Advocate for respondent Nos.1 and 2. 2. The petitioner was working as Assistant Engineer in the office of Assistant Executive Engineer, Karnataka Rural Infrastructure Development Limited, KRIDL Sub Division, Ramanagaram. A complaint was filed by one Sri. Chandramohan Joshi - respondent No. 6 before the Upa Lokayuktha alleging financial irregularities and misappropriation of the amounts released from the office of the Executive Engineer, KRIDL Sub-Division, towards the execution of infrastructure development works in - 4 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 Ramnagaram Sub Division. The said complaint was investigated by the enquiry officer. The enquiry proceeded against the petitioner, Sri. T. Narayana Swami, Assistant Engineer and Udaya Meghalamane, Junior Engineer. All of them were working in KRIDL, Ramanagaram Sub division. 3. The petitioner was entrusted with the work for carrying out works for an amount of Rs.29,70,000/-. The petitioner had maintained a personal account bearing the No. CBCA/01/000128 at Corporation Bank, Ramanagaram, in which the said amounts were deposited for carrying out the various development works. The charge against the petitioner was that she had withdrawn various amounts through self-drawn cheques from time to time from the said account. The details of the Government money withdrawn by the petitioner through self-drawn cheques have been detailed in the enquiry report. - 5 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 4. The charge was that by depositing the Government funds in the personal account and withdrawing the same on various dates through self-drawn cheques, which was not properly accounted for was in contravention of Article-56 of the PWD Audit Code as well as Articles 15, 16 and 70 of Karnataka Finance Code, and in violation of paragraph 57 of Karnataka PWD Accounts Code. The Investigating Officer/Deputy Controller of Accounts, had asked the petitioner to submit copies of the bank passbook and pass-sheet relating to the personal accounts maintained by her along with the copies of the vouchers, but the documents as desired were not submitted. No documents or vouchers were submitted for verification. Therefore, the charge was that the petitioner had failed to submit the proper accounts for the amount withdrawn by her and spent for the purposes for which the amounts were released. 5. Two other charges against the petitioner were that she was entrusted with several works relating to the - 6 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 construction of guest house of Forest Department at Ramanagara bearing Work Code Nos. 30064, 30067, 33711, but no technical sanction was obtained for these works, the estimates were not prepared for execution of those works prior to their execution and therefore, it was alleged that provisions relating to technical sanction as provided under Karnataka PWD Code had been contravened and violated by the petitioner. 6. The further charge was that acts of the petitioner, without obtaining technical sanction and depositing the amount in her personal account and withdrawing the same through self cheques, without properly maintaining accounts, were in dereliction of duty and misconduct on her part. It was further said that the misconduct had resulted in misappropriation of sum of Rs.29,70,000/-. 7. The enquiry officer was of the view that the petitioner, along with two other delinquent employees, by - 7 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 depositing the amount released towards the execution of the work in their personal account, withdrawal of the same through self-drawn cheques as well as ATM, which were far away from the place of work and execution of the works without sanction and technical approval from the Competent Authority, had committed misconduct and these actions were in violation of Articles 3, 15, 16, 70, 72 (a) of Karnataka Finance Code and paragraph 45, 46, 57, 87, 204 and 205 (d) of Karnataka PWD Accounts Code Volume-I . 8. It was also alleged that they had failed to maintain the absolute integrity and devotion to the duty, resulting in misconduct as defined in Rule 3 (1) (i) to (iii) of Karnataka Civil Services (conduct) Rules 1966. The enquiry officer also held that the petitioner and two other delinquent employees had acted in criminal breach of trust. They were public servant and they have misappropriated the Government money, which was sanctioned for execution of the work. - 8 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 9. The enquiry officer in report dated 26.07.2022 (Annexure - C), though held that the 11 works were entrusted to the petitioner and those works were carried out. It was also said that the execution of the works found to be satisfactory. The accounts were audited and no objections from the Principal Accountant General, Bangalore, were put in the accounts. However, the Enquiry officer was of the view that since the amounts sanctioned for carrying out the work were kept in the personal account, it would have certainly earned some interest, which was not accounted for. It was therefore, said that the petitioner and another two delinquent employees would be liable for misappropriation of the interest earned on the deposit and the said charge was found proved against the petitioner and two others. The enquiry officer was of the view that all 3 delinquent employees would be liable to pay 10% interest on the Government Fund, which was deposited in their personal account for carrying out the various works. The learned - 9 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 Upa-Lokayuktha considered the said report of the enquiry officer and recommended the following action to be taken against the petitioner, “It is hereby recommended to the Government to impose penalty of withholding two annual increments favoured to the DGO No. 2, Smt. Lakshmi, Assistant Engineer, KRIDL, Office of the Assistant Executive Engineer, Ramanagaram Sub Division, Hanumanth Nagar, Ramanagar with cumulative effect and also to recover 10% interest on the Government Fund of Rs.29,70,000/- for the period from 24.09.2012 to 29.02.2016”. 10. The learned senior counsel appearing for the petitioner Sri. P.P.Hegde, submits that the personal accounts were opened as per the circular dated 25.07.2015. He further submitted that no audit objections were raised at any point of time and as per the report, the 11 works, which were entrusted to the petitioner, were carried out to the satisfaction of the authorities. When it was permitted to open the personal account for depositing - 10 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 the funds released for carrying out the work and no audit objection was raised by the Office of the Principal Account General and the works were carried out to the satisfaction of the higher authorities, the impugned punishment order withholding of two increments without cumulative effect and the 10% interest on the deposit made are wholly illegal and liable to be set aside. 11. Sri. Venkatesh S. Arabatti, the learned counsel representing respondent Nos.3 and 4, as well as the learned Additional Government Advocate for respondent Nos.1 and 2, have supported the impugned punishment order and submitted that from the report it is evident that the petitioner had withdrawn the amount through self- drawn cheques, which was not permitted. Even if the petitioner and two other delinquent employees were entitled to open the bank account in their name, the Circular did not provide that they should withdraw the amount through self-drawn cheque or through ATM. There is no explanation coming forth from the petitioner or other - 11 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 two delinquent employees regarding withdrawing the amount through self-drawn cheques and through ATM, this itself amounts to misconduct. However, it appears that the petitioner and other two employees have been let off lightly by imposing only minor punishment. Their conduct of withdrawing the various amounts of the Government funds through self-drawn cheques amounts to misappropriation of the Government funds. Therefore, there is no illegality in the impugned order of punishment. 12. We have considered the submissions advanced on behalf of the respective parties and perused the enquiry report as well as the recommendation of the Lokayuktha and the punishment order. 13. We find substance in the submission of the learned counsel representing the respondents that even if it is accepted that the petitioners were permitted to open the personal account to deposit the Government money for carrying out the work, there is nothing in the Circular - 12 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 which could have permitted them to withdraw the Government money through their self-drawn cheques and by ATM. We therefore find that the petitioners cannot be absolved completely from misconduct of withdrawing the Government money through self-drawn cheques and ATM. 14. So far as the question of 10% interest is concerned, the statement of the account has been furnished today for our perusal. We have perused the statement of account in which there has been no interest accrued on the amounts deposited in the personal account of the petitioner. Therefore, there is no basis for imposing 10% interest on the amount of Rs.29,70,000/-. Thus, we uphold the penalty for withholding two increments with cumulative effect, but we set aside the penalty so far as imposing the 10% interest on the amount of Rs.29,70,000/- from 24.09.2012 to 29.02.2016. Thus, we allow this Writ Petition in part. - 13 - HC-KAR NC: 2025:KHC:32702-DB WP No. 2160 of 2023 15. We therefore, direct to return the amount recovered from the petitioner in compliance with the order passed in the disciplinary proceeding, so far the penalty of 10% interest on the amount of Rs.29,70,000/- for the period from 24.09.2012 to 29.02.2016 is concerned, within a period of six weeks from today. 16. The amount deposited by the petitioner pursuant to the order passed by respondent No.5 vide Annexure-H, shall be returned to the petitioner, if any, within a period of six weeks. Sd/- (D K SINGH) JUDGE Sd/- (VENKATESH NAIK T) JUDGE AM List No.: 1 Sl No.: 47