- 1 - NC: 2025:KHC-D:270 CRL.P No. 101660 of 2021 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 8TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR CRIMINAL PETITION NO. 101660 OF 2021 (482(Cr.PC)/528(BNSS)) BETWEEN: 1. SRI. DATTATREYA S/O. SHANKAR UGARE AGE. 58 YEARS, OCC. SECRETARY, R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BEALGAVI-590001. 2. SRI. SIDDAGOUDA S/O. TATHOBA MAGADUM AGE. 54 YEARS, OCC. AGRICULTURE, R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BEALGAVI-590001. 3. SRI. SUNIL S/O. DHANAPAL KHICHADE AGE. 45 YEARS, OCC. AGRICULTURE, R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BEALGAVI-590001. 4. SRI. ANNASAB S/O. DADA MADABHANVI AGE. 78 YEARS, OCC. AGRICULTURE, R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BEALGAVI-590001. 5. SRI. MAHAVEER S/O. KALAGOUDA @ KALLAPPA MANGASULE, AGE. 55 YEARS, OCC. AGRICULTURE, R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BEALGAVI-590001. 6. SRI. MOHAN S/O. YALLAPPA KOOGE AGE. 58 YEARS, OCC. AGRICULTURE, R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BEALGAVI-590001. 7. SRI. DHARMA S/O. RUDRA KAMBALE AGE. 60 YEARS, OCC AGRICULTURE R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BEALGAVI-590001. Digitally signed by B K MAHENDRAKUMAR Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2025.01.21 09:48:54 +0530 - 2 - NC: 2025:KHC-D:270 CRL.P No. 101660 of 2021 8. SRI. RAYAGOUDA S/O. APPU PATIL AGE. 50 YEARS, OCC. AGRICULTURE, R/O. CHANDUR VILLAGE, TAL. CHIKODI DIST. BEALGAVI-590001. 9. SMT. LAKSHMIBAI W/O. APPA PAKALE AGE. 73 YEARS, OCC. HOUSEWIFE, R/O. CHANDUR VILLAGE, TAL. CHIKODI, DIST. BELAGAVI-590001. …PETITIONERS (BY SRI. SRINAND A. PACHHAPURE, ADVOCATE) AND: 1. THE STATE OF KARNATAKA THROUGH ANKALI POLICE STATION, NOW REP. BY STATE PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, DHARWAD BENCH, AT DHARWAD-580001. 2. SRI. ADINATH S/O. ARIHANT KARNAWADI AGE. 39 YEARS, OCC. INSPECTOR OF CO OPERATIVE SOCIETIES, OFFICE OF CO-OPERATIVE DEVELOPMENT OFFICER, NOW ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES, CHIKODI, TAL. CHIKODI, DIST. BELAGAVI-590001. …RESPONDENTS (BY SRI. T.HANUMAREDDY, AGA FOR R1; NOTICE TO R2 IS SERVED) THIS CRIMINAL PETITION IS FILED U/S 482 OF CR.PC SEEKING TO QUASH THE PROCEEDINGS IN C.C NO.405/2021 PENDING ON THE FILE OF II ADDL.CIVIL JUDGE AND JMFC, CHIKKODI REGISTERED FOR THE OFFENSE PUNISHABLE UNDER SECTION 406, 408, 409 AND 420 OF IPC, ORDER SHEET MARKED AT ANNEXURE-A IN SO FAR AS PETITIONERS ARE CONCERNED. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - NC: 2025:KHC-D:270 CRL.P No. 101660 of 2021 CORAM: THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR ORAL ORDER The petitioners are sought to be prosecuted for the offences punishable under Sections 406, 408, 409, and 420 of the Indian Penal Code (IPC). 2. The case of the prosecution is that the petitioners, as office bearers of the Managing Committee of Prathamika Krishi Pattina Sahakari Sangha, Chandur, Taluk Chikodi, during the period from 28.03.2011 to 31.03.2017, failed to maintain a mandatory balance of ₹10 lakhs and instead maintained ₹40 lakhs in cash at hand, thereby causing a loss to the Society. Further, it is alleged that the accused, without obtaining permission from the competent authority, constructed a building on land belonging to the Society, resulting in additional losses. Moreover, the accused allegedly invested in shares of Reliance Life Insurance in their individual capacity, again without the necessary approval, thereby causing financial harm to the Society. The learned Magistrate, upon accepting the charge sheet, took cognizance of the offences. Aggrieved by this, the present petition has been filed. 3. Learned counsel for the petitioners submitted that the enquiry report prepared under Section 64 of the Karnataka Co-operative Societies Act, 1959 (the Act), was the basis for lodging the FIR. However, this enquiry report was set aside by the appellate authority under Section 106 of the Act and remanded to the competent authority for fresh consideration. Since the enquiry report formed the foundation for the FIR, its setting aside renders the continuation of criminal proceedings unsustainable. - 4 - NC: 2025:KHC-D:270 CRL.P No. 101660 of 2021 4. In response, the learned Additional Government Advocate submitted that the charge sheet materials disclose prima facie the commission of the alleged offences. He argued that the veracity of the allegations should be tested during the trial and cannot be adjudicated in the present petition. Further, he contended that the setting aside and remand of the enquiry report does not absolve the petitioners of their criminal liability. 5. The arguments of the learned counsel for the parties have been duly considered. 6. The Assistant Registrar of Societies had submitted a report under Section 64 of the Act, alleging that the petitioners, during their tenure as office bearers of the Society, misappropriated funds belonging to the Society. The report also recommended criminal action against the petitioners. Based on this recommendation, respondent No. 2 lodged the FIR. 7. It is an admitted fact that the enquiry report under Section 64 of the Act has been set aside by the appellate authority and remanded to the competent authority for reconsideration afresh. Since the enquiry report forms the very basis for the lodging of the FIR, its setting aside undermines the legal foundation for the criminal proceedings. Therefore, continuation of the criminal proceedings against the petitioners would lack legal authority and amount to an abuse of the process of law. Accordingly, I pass the following: ORDER a) The petition is allowed. - 5 - NC: 2025:KHC-D:270 CRL.P No. 101660 of 2021 b) The impugned proceedings in CC No.405/2021 pending on the file of learned II Addl. Civil Judge and JMFC, Chikodi, against the petitioners, are hereby quashed. c) Liberty is reserved to respondent No.2 to initiate appropriate action against the petitioners in accordance with law. Sd/- (HEMANT CHANDANGOUDAR) JUDGE JTR Ct:vh List No.: 1 Sl No.: 67