- 1 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF JUNE, 2026 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA CRIMINAL PETITION NO. 8213 OF 2024 BETWEEN: M.H.KADEGOWDA S/O LATE HANUMEGOWDA, AGED ABOUT 59 YEARS, OCCUPATION:AGRICULTURIST, RESIDENT OF MAYANNANAKOPPALU VILLAGE, KOTHATHI HOBLI, MANDYA TALUK AND DISTRICT – 571 402. …PETITIONER (BY SRI C.H.JADHAV, SR.ADVOCATE FOR SRI CHETAN JADHAV, ADVOCATE) AND: 1. STATE OF KARNATAKA BY MANDYA WEST POLICE STATION REPRESENTED BY STATE PUBLIC PROSECUTOR HIGH COURT BUILDING BENGALURU – 560 001. 2. SHAMBHUGOWDA S., S/O SHIVALINGEGOWDA, AGED ABOUT 39 YEARS OCCUPATION: PRESIDENT OF Digitally signed by PADMAVATHI B K Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 THE KARNATAKA STATE GOVT. EMPLOYEES ASSOCIATION, MANDYA, RESIDING AT CHANDAGALU VILLAGE, BASARALU HOBLI, MANDYA TALUK AND DISTRICT – 571 416. …RESPONDENTS (BY SMT.RASHMI PATEL, HCGP FOR R-1; SRI HARIPRASAD M.B., ADVOCATE FOR R-2) THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO ALLOW THIS CRIMINAL PETITION BY SETTING ASIDE THE ORDER PASSED BY THE LEARNED II ADDITIONAL DISTRICT AND SESSIONS JUDGE, MANDYA IN CRL.RP.83/2022 DATED 27.07.2024 THEREBY DISMISSING THE RP AND CONFIRMING THE ORDER PASSED BY THE LEARNED PRL. SENIOR CIVIL JUDGE AND CJM AT MANDYA IN C.C.NO.7026/2021 DATED 28.10.2022, THEREBY REJECTING THE APPLICATION FILED BY THE PETITIONER SEEKING INTERIM RELEASE OF THE AMOUNT OF RS.38 LAKHS SEIZED BY THE RESPONDENT-1/POLICE AND DIRECTING TO RELEASE IN FAVOUR OF COMPLAINANT UNDER PF.NO.10/2021 DATED 08.01.2021. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner/accused No.3 is before the Court seeking the following prayer: (a) “Call for the relevant records; (b) Allow this criminal petition by setting aside the order passed by the learned II Additional District & Sessions Judge, Mandya in Criminal Revision Petition No.83 of 2022 dated 27-07-2024 thereby dismissing the revision petition and confirming the order passed by the learned Principal Senior Civil Judge & CJM at Mandya in C.C.No.7026 of 2021 dated 28-10-2022, thereby rejecting the application filed by the petitioner seeking interim release of the amount of ₹38/- lakhs seized by the respondent-1/Police and directing to release in favour of complainant under PF No.10/21 dated 8.01.2021. (c) Pass such other order/orders as this Hon’ble Court deems fit and direct the learned Magistrate to release the amount of ₹38/- lakhs to the petitioner which was seized by the Mandya West Police under PF 10/11 dated 8-01-2021, in the interest of justice. (d) Grant such other relief or reliefs as this Hon’ble Court deems fit in the facts and circumstances of the case, in the interest of justice and equity.” 2. Heard Sri C.H. Jadhav, learned senior counsel appearing for the petitioner; Smt. Rashmi Patel, learned High - 4 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 Court Government Pleader appearing for respondent No.1 and Sri Hariprasad M.B., learned counsel appearing for respondent No.2. 3. Facts, in brief, germane are as follows; - 3.1. On 20-03-2004 accused No.1/T.H. Ramakrishna was elected as President of Mandya District Karnataka State Government Employees Association. After his election as President, in the year 2006 accused No.1 and his associates are said to have decided to form a Gruha Nirmana Samithi (‘the Samithi’ for short) for the purpose of formation and distribution of sites to siteless persons including Government employees and the public. The Gruha Nirmana Samithi remained as a Samithi which was not registered under any law. On 21-08-2006 in furtherance of the aforementioned object, accused No.1 is said to have purchased 18½ acres of land from agriculturists and entered into a development agreement with Right Homes India Private Limited to develop the said property and form a layout by investing funds collected from Members apart from his own funds. - 5 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 3.2. Accused No.1/Ramakrishna retires from the services of Government, but continues to be the President of the Samithi and formed a layout comprising of 300 sites. On 1-10-2015 accused No.1 is said to have completed the layout and allotted 170 sites to the members of the Samithi and executed registered sale deeds. Before construction could take place in the said property, on 23-09-2016 the National Highways Authority acquires a portion of the layout, as a result of which 130 sites out of 170 sites allotted to the Members were acquired for the purpose of formation of National Highway and a total compensation was awarded to the Samathi at ₹11,36,42,375/-. Accused No.1, the President of the Samithi dispersed the amount to the depositors who had invested with the Samathi. The compensation dispersed was ₹1,25,09,832/- to those depositors who had invested. 3.3. The 2nd respondent who had then been elected as the District President of the State Government Employees Association, Mandya files a complaint against accused No.1 and others alleging that the amount received by way of compensation by accused No.1 was misappropriated. This - 6 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 complaint becomes a crime in Crime No.114 of 2020. The Police during investigation freeze the account and seized an amount of ₹1.25 crores from the petitioner and others who had allegedly received the amount of compensation from accused No.1 in different PF numbers. An amount of Rs.38 lakhs was seized from petitioner under PF 10/21. 3.4. The petitioner files an application seeking interim custody of the amount seized. The complainant also files an application that being the District President, he is also entitled to the amount. The learned Magistrate by order dated 28-10- 2022 rejected the application filed by the petitioner and further directed to release the amount in favour of the complainant. Aggrieved by the said order, the petitioner/accused No.3 files criminal revision petition in Crl.R.P.No.83 of 2022. The Court of Session, by its order dated 27-07-2024, affirms the order passed by the learned Magistrate. The present petition is preferred against the said twin orders. 4.1. The learned senior counsel Sri C.H. Jadhav appearing for the petitioner would vehemently contend that the 2nd - 7 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 respondent in order to knock of the compensation in deposit with the Samithi, files 25 complaints and the Police file a charge sheet in those complaints and the matter is pending trial. At the instance of 2nd respondent several others also approached the District Consumer Forum, Mandya by filing complaints. Accused No.1 then issued a paper publication to the Members of the Samithi to immediately receive the amount. Since the amount of compensation released in favour of accused No.1 is debit frozen by the Police, accused No.1 could not make payments, as a result of which execution petitions were filed against accused No.1 alleging failure of making payments. 4.2. The learned senior counsel would submit that the amount of compensation belongs to the Samithi. The complainant/2nd respondent who was then the District President deliberately initiates proceedings so that compensation amount could not be taken by the Samithi. He is nobody. Even today neither the developer with whom an agreement is entered into nor the complainant has taken responsibility of disbursing the amount of compensation to the Members. The complainant in - 8 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 whose favour the impugned order is passed also has not taken any steps to disperse compensation. He would submit the amount belongs to the Samithi and the person in-charge of the affairs of the Samithi must be the person who is entitled to the amount and disbursement thereof. 5. The learned counsel appearing for the 2nd respondent/complainant would vehemently refute the submissions in contending that the petitioner wants to knock of the compensation amount along with other accused. No member has been given the compensation amount. Therefore, being the President of the District Committee, the complainant had to protect the interest of smaller Samithi. He would admit the fact that he is no longer the President and further admits that no amount is being disbursed to the Members of the Samithi who have lost their land in the acquisition process. He would however, seek dismissal of the petition on the score that the amount should not be permitted to be taken by the Members of the Samithi, as they do not have any right in law. 7. The learned senior counsel would join issue in contending that there was no problem in the Committee from - 9 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 2006 to 2018. All resentment broke loose only when the amount of compensation was deposited into the account of the Samithi. Then began the complaint by the complainant and others. He would submit that the amount of compensation belongs to the Samithi. An amount of Rs.9,65,60,882/- is under debit freeze. 8. The learned counsel for the complainant/2nd respondent would join to contend that there is no qualm if the amount of compensation goes to persons who are entitled to and not to be eaten of by the Members of the Samithi. He would submit that appropriate orders be passed protecting the amount of compensation to the Samithi. 9. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 10. The afore-narrated facts are largely a matter of record. The formation of the Samithi and acquisition of land by the National Highways Authority are all a matter of record. Compensation comes into the account of the Samithi in the - 10 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 year 2018 pursuant to acquisition on 23-09-2016 whereby a portion of the land of the Samithi was acquired by the National Highways Authority. Compensation was not completely disbursed, as the complainant registers the complaint and gets an order of debit freezement of the account. As contended by the learned senior counsel, Members who are entitled to the compensation were all over, which would mean that they are before every fora including the consumer forum. The consumer forum directs the amount to be released in favour of the Samithi so that the Members would get the amount. It is then accused No.1 along with the petitioner prefers an application. A rival application is also preferred by the 2nd respondent/complainant. The concerned Court on the following reasons, rejects the application of the petitioner: “…. …. …. REASONS 6. Points No.1 to 4 : The applicants M.K.Veerappa, M.K. Prachalitha and M.H.Kadegowda have filed separate three applications for the release of amount of Rs.3,00,000/-, Rs. 10,00,000/-and Rs.38,00,000/- subjected in PF No.11/2021, 9/2021 and 10/2021. According to them, the aforesaid amounts were seized from their custody and it is their amounts and they are entitle for its interim custody. As per the case of prosecution, the accused have misappropriated the - 11 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 amount of the complainant association and Gruhanirmana Samithi, Mandya and it is the amount of the complainant association and same cannot be released. 7. I have carefully examined the entire materials on record. As per the prosecution, the investigation revealed that accused No.1 herein transferred the amount of the complainant association to his account and thereafter, issued cheques in favour of these applicants and therefore, the source of the amounts seized from the possession of these applicants are the amount belonging to the complainant association/Samithi amount, collected by it from its members. It is well settled law that while releasing the property, the statements, mahazar & documents collected during the course of investigation can be considered for the purpose of release of the property. These applicants have given statements before the I.O to the above effect. In their statements also they have specifically stated that those amounts are given by the accused No.1 Ramakrishna. The account particulars produced by the prosecution shows that various amounts have been transferred to the personal accounts of accused No.1 and the amounts given to these applicants are the amounts so transferred by the accused No.1. Under these circumstances, while deciding the question of release of amount, the court is required to consider the source of amount. If there is strong material before the court to show that the amount seized from the accused are illgotten amount or if it was found to be misappropriated amount, such amount cannot be released in favour of the applicants even if they are innocent. If it is proved that the amount of complainant association/samithi is diverted illegally by the accused, the same is required to the restored. Under these circumstances, the applications filed by the applicants M.K.Veerappa, M.K.Prachalitha and M.H.Kadegowda cannot be allowed. 8. In the application filed by the M/s Wright Homes India Pvt Ltd., they have relied upon the mutual agreements entered between them and the complainant association/Samithi, wherein they are the developers of the sites and according to them, they are entitle for the seized amounts as they have spent amounts for the development of sites. They have further contended that - 12 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 the property developed by them were acquired by the National Highway authority and therefore, they are entitle to receive the amount. It is pertinent to note that even if this applicant is the developer, the sites were owned by the complainant Samithi. Therefore, the compensation amount if any from the National Highway authority shall be paid to the complainant Samithi and it can only disburse the amount to the applicant on the basis of their mutual agreement. The applicant herein cannot directly claim the amount either by National Highway authority or the other amounts seized in the present case. Admittedly, it is a contractual obligation of complainant Samithi to pay the amount. If the Samithi fails to pay the amount legally entitle by the applicant, this applicant is entitled to recover the amount. due to it from the complainant Samithi. Therefore, the amount seized in the present case cannot be released in favour of this applicant. Added to this, as per the outcome to investigation, the accused herein paid 1 crore excess to the applicant developer and thereby, there is misappropriation of an amount of Rs.1 crore. In view of these allegations, no amount can be released in favour of this applicant. It is made clear that if this applicant is legally entitle for the amount from the complainant Samithi, it can recover the same from the Samithi in accordance with law without being influenced by any of the observations made herein above. 9. Regarding the application filed by the applicant V.Babu, he is stated to be member who sought allotment of site. According to him, since the site could not be allotted to him, the part amount of Rs.2,21,728/- was returned to him and the same is seized by the I.O. Now he claims for its release. But as per case of prosecution, the release of amount to the applicant was also unauthorized. Therefore, when there is serious allegation about the authority to the accused to release the amount, at this stage, the amount released to the applicant cannot be said to be released from the complainant Samithi. Therefore, it is not proper to release the amount as sought by the applicant Babu. 10. The Defacto complainant, the Karnataka State Employees, Association and Gruhanirmana Samithi, Mandya by its president, Shambugowda has filed application for release the entire amount seized in PF - 13 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 No.1/2021, 2/2021, 3/2021, 9/2021, 10/2021, 11/2021, 37/2021, 43/2021, 42/2021, 103/2021, 104/2021, 105/2021 and 107/2021. Basically, the complainant is a registered association constituted for the purpose of development and encouraging its members in all fields. The complainant Samithi/association is a legal entity and the entire transactions are relating to it. The complainant association/Samithi is entitled to collect the amount from its members and allot the sites. During the course of investigation, reveals that the accused have acted illegally and misappropriated the amount by disbursing the various amounts to the various persons. In the previous paragraphs, this court has observed that the other applicants are not entitle for the release of the amount. Similarly, in the present case, the amount is recovered from various other persons. The conclusion derived from the investigation and materials shows at this stage, that the entire amount illegally disbursed by the accused which requires to be restored. Therefore, the defacto complainant the Karnataka State Government Employees Association and Gruhanirmana Samithi, Mandya, by its president Shambhugowda is entitle for the release of seized amounts. But it is made clear that the release of amount is subject to the condition and this order is only for the purpose of deciding the interim applications filed for the release of the amount. 11. The complainant being the association/Samithi consisting of various members, it has got its responsibility to manage the funds efficiently and distribute the site in accordance with law. If the amount relating to the complainant is not released, the Samithi/ association find it difficult to manage its affairs and release the benefits to the eligible beneficiaries. Therefore, if the amount is not released, it will cause hardship and inconvenience to the members of the association. On the other hand, if after the conclusion of trial, if court concludes that the complainant is required to refund it to any of the applicants, the same can be ordered and recovered from the complainant. Therefore, the defecto complainant i.e., the Karnataka State Government Employees Association, and Gruhanirmana Samithi, Mandya, by its president Shambhugowda is entitled for the release of the amount seized in PF No.1/2021, 2/2021, 3/2021, 9/2021, - 14 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 10/2021, 11/2021, 37/2021, 43/2021, 42/2021, 103/2021, 104/2021, 105/2021 and 107/2021. Accordingly, I answer points No.1 to 3 in the negative and point No.4 in the affirmative. 12. Point No.5: In view of answer given to the above points, , I pass the following:- ORDER The application filed by the complainant applicant- defecto complainant i.e., the Karnataka State Government Employees Association and Gruhanirmana Samithi, Mandya, by its president Shambhugowda, for the release of amount subjected in PF No.1/2021, 2/2021, 3/2021, 9/2021, 10/2021, 11/2021, 37/2021, 43/2021, 42/2021, 103/2021, 104/2021, 105/2021 and 107/2021 is allowed subject to following conditions:- The complainant shall execute the indemnity bond for the amount equivalent to seized amount i.e., Rs.1,25,09,832/- with an undertaking to deposit the same before the court if after the conclusion of trial, if the court finds that it is not entitle for it. On such execution of indemnity bond, the office shall release the seized amount to applicant the Karnataka State Government Employees Association and Gruhanirmana Samithi, Mandya, by its president Shambhugowda on proper verification. The applications filed by the applicants M.K.Veerappa, M.K.Prachalitha, M.H.Kadegowda, M/s Wright Homes India Pvt Ltd, and V.Babu are rejected.” This is affirmed by the Court of Sessions in Criminal Revision Petition No.83 of 2022. - 15 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 11. The issue now would be, the Members who have lost their lands about 8 years ago, are still to get compensation for the lands that they have lost. This Court cannot lose sight of the fact that the money belongs to the Members of the Samithi. The money/compensation is lying in the account of the Samithi. Therefore, the money must be distributed to those persons who are entitled to get the said compensation, for which the debit freezement ought to have been done by the concerned Court. It is due to vehement opposition of the complainant the amount is now handed over to the complainant, though on paper, but not in effect. Therefore, to resolve this conundrum, I deem it appropriate to direct debit freezement of the account of the Samithi and immediate disbursement of compensation to all those persons who are entitled to such amount, as they are the land losers. 12. Now in the dispute between the petitioner, other accused and the complainant, the President of the District Samithi is no longer interested in prosecuting the complaint. It is the submission of the learned counsel for the 2nd - 16 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 respondent/complainant that if the amount goes to the persons who are entitled to receive, he would have no objection. The concern of the Court is also the same viz., that the amount of compensation deposited by the National Highways Authority must be disbursed, without brooking any delay to the entitled, for which an order of debit freezement of the account is imperative. 13. Therefore, I proceed to pass the following: ORDER (i) Criminal Petition is allowed. (ii) Orders dated 27-07-2024 passed in Crl.R.P.83 of 2022 by the II Additional District and Sessions Judge, Mandya, affirming the order dated 28-10-2022 passed in C.C.No.7026 of 2021 by the Principal Senior Civil Judge and CJM, Mandya are set aside. (iii) A direction is issued to debit freeze the account of the Samithi and the Officers of the Samithi who are presently holding office shall secure the said amount of compensation and distribute it to - 17 - HC-KAR NC: 2026:KHC:31536 CRL.P No. 8213 of 2024 the persons entitled to get compensation, without driving those entitled persons again to knock at the doors of any judicial fora. Consequently, pending application if any, also stands disposed. Sd/- (M.NAGAPRASANNA) JUDGE BGN List No.: 2 Sl No.: 37