L Tki HIGH CURT Ji ARiiATAt(A AT BALGAIR Dated : This the 16th day of Ju’ie, 1996 BPQh TH H0N’Bi 4R.JUTlC KUMAR NMARATNAM WRIT PiiTL0N NO. 520 OF 1993 1. Adeane Gopalaiah s/s late Mariyappa, aged about 65 years, agriculturist, r/o Mutuguppe village, Sorab Taluk, hiuoga ist. 2. S.V.iaranappa sb late Venkappa, age major, agriculturist, rio ili village, Sagar £alu, himoga )ist. 3. A.ñ.Ganapathi s/s late am bat, age major, agriculturist, r/o Sasara— valli village, agar Taluk, Shimoga Dist. 4. H.S.handrasheJcarappa s/s iae han.arapa wauay Gowda, age major, agriculturist, no K,Hunasavalli village, Hosanagar Taluk, Shimoga ist. PTill0AiRS (.ay Sri S.i.i-iegde Hulamane, Advocate) AND 1’ CT I • State of tarnataka dep. by Director of Co-operative Audit, Shankarath Road, Baaavanagadi, Bangalore. 2. R.d.Annegeri Deputy Director of &o—operative Audit, at present 441 Auditor of dalaprabba Co operative Sugar Factory Ltd., K.LHubli, Belgaim Dist. 3. The Areoanut Processing and Sale Co—operative Society btd., bagar, represented by its Secretary. 4 • Joint stegiatrar of Co—opera tive Society, Paafl Kahavi itad, Chauaraj pet, Bangalore. RES.1IDbNT8 (Sy bri bjeerappa, SOUP for R—I and 1—4; Sri OaCrishna I4urtby, Advocate for R—3; — served) This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the audit report vide Annezure—E issued by the 2nd respondent dated 13.8.1992, to declare that the entire proceedings persuant to the Annezure—k are illegal, null and void and also to direct the respondents not to take any action pursuant to the alleged impugned aidit report vide Annexure—h. The petition coming on for hearing this day, this Court made the folloving :— ORDER h w S 3e ORDEd The 1st petitioner was the President of the 3rd respondent—society during the year 1989—90. the other petitioners are directors. As per the direction of the 3rd respondent— society the Government of Karnataka appointed a senior editor to edit the accounts of the society. The editor audited the accounts for the period of 1989—90 in accordance with the directions of the Government. The Audit Report was issued under Section 63(5) of the Karnataka Go—operative Societies Act (hereinafter referred to as the Act) to the 3rd respondent—society. The Audit Report for the sake of convenience may be referred to as the First Audit sleport. According to the First Audit Report there were certain acts of alleged misconduct and mis appropriation by the petitioners. Notwithstanding the First *udit deport, tae Uovernaent passed an order dated 16.5.1991 at Annezure—D. By the order at Annezure—D the Government forfeited the first audit and directed a second edit 4, S — S - - — — —4— to be conducted. The second audit report also found the petitioners guilty of the alleged misappropriation. The Second Audit Report at Annexure—D dated 16.5.1991 also fixed the liability of each of the petitioners individually. This audit report is now challenged in this writ petition, 2. She main contention of the learned counsel for the petitioners is that the First Audit eport which was approved by the general body and which is more or less in the same tee of the Second Audit Report is binding on the respondents and there was no need to have a second audit on the same subject. There is also no provision in law to direct a second audit when the first audit report itself inducts the petitioners. Aggrieved by the second audit report at Annexure—D the petitioners have filed this petition seeking to quash the second audit r e p0 rt. . it is common ground that the subsequent audits for the subsequent years by the Director -5— of Co—operation and Audit has beft taken note k only of the first audit report and the audit reports are prepared on the basis of the first audit report with respect to the subsequent years. This has been going on since 1991. t was also submitted that the second audit report at the instance of the Government was never placed before the general body. The general body of the 3rd respondent—society was also of the apinin that the first audit ‘fClA b report which ieue4e the petitioners would be the correct basis for proceeding against the petitioners in accordance with law. 4. Apart from this, the Registrar has also initiated proceedings against the peti tioners under Section 64 of the Act on the basis of an independent enquiry relying on both the audit reports. 5. The learned counsel for the 3rd res pondent—society submits that the ends of justice will be met if reliance can be placed on any one of the audit either the first audit A 1 -6-’ or the second audit. However, it was azaitted that it would be better and legally sound to place reliance on the first audit report. This is aorese, becauss the audit reports of the succeeding years have been based on the first audit report and the second audit report has has been stayed by this Court durir€ the pendency of this writ petition. Since the subsequent audits have been conducted on the basis of the first audit report which also inaicts the petitioners it would not be necessary to place aq reliance on the second audit report as two audit reports parallel to each other would only coaplicate the future audit of the society. 6. The learned ccmnal for the peti tioners also submits that he is prepared to face the susie on the basis of the first audit report and it is also submitted by the learned counsef for the society that proceediEws are also initiated under Sections 64 and 68 of the Larnataka Co—opa’ative Societies Act. in that view of the matter, the second audit report dated 16.5.1991 is liable to be quashed. I, a a e - a 4 I —7— 7. In the result, the first audit report dated 7.11.1990 at Annexure—A stands revived. consequently the second auait report dated 16,5.1991 at Annezure—D stands quashed. The matter may be proceeded in accordance with L as per the first audit report dated 7.11.1990 without any reference to the second audit report at Annexure—D. This order will not in any way affect the action taicen by the 3rd respondent—society and Authorities under Sections 64 and 68 of the arnataa Co—operative Societies Act. with these observations the writ peti tion is disposed of. No order as to costs. SJ