R. Lakshmaiah and Others vs State of Karnataka and Others

Anand Byrareddy, J.—These petitions are disposed of by this common order having regard to the fact that the petitioners are similarly aggrieved in the following circumstances.

It is stated that on the date of the petition, the first petitioner in writ petitions in WP 54409/2003, was working as a District Register and the second petitioner was working on deputation as District Project Co-ordinator at Mangalore and Bagalkot, respectively.

In writ petition in WP 1002/2004, the petitioner was appointed as a Tahsildar in the year 1983 and he was promoted to work as the Commissioner of the City Municipal Council, Bommanahalli.

In writ petition in WP 54643/2003, the petitioner was working as the Project Director of DRDA Cell, Zilla Panchayat, Kolar, as on the date of the petition.

In writ petitions in WP 53654-655/2003, the first petitioner was the Commissioner of the City Municipal Council, Pattanagere (Now called Rajarajeshwari Nagar), Bangalore, and was repatriated to his parent department as Special Land Acquisition Officer, Bangalore Development Authority from 5.8.2001. The second petitioner was the Commissioner of the City Municipal Council, Paatanagere between 22.7.1998 and 18.11.1999 and thereafter he was posted to work as Deputy Secretary, Bangalore Development Authority and thereafter promoted and posted to work as the Executive Director in M/s. Mysore Sales International Limited.

In writ petition in WP 54049/2003, the petitioner was working as Deputy Project Manager, Jal Nirmal Project, at Karwar.

In writ petition in WP 54045/2003, the petitioner was working as Private Secretary to Minister of State for Primary and Secondary Education, as on the date of the petition.

It is stated that the Karnataka Municipalities Act, 1964 (Hereinafter referred to as the ''KM Act, for brevity), provided for constitution of City Municipal Councils, Town Municipal Councils and Notified Area Committees. There were already two Notified Area Committees in the Bangalore District, namely, H.A. Sanitary Notified Area Committee and the Indian Telephone Industries K.R. Pura Notified Area Committee. On 15.12.1993, the Government of Karnataka had constituted the following Notified Area Committees within the Bangalore District.

Krishnarajapura

Mahadevapura

Pattanagere

Kengeri

Bommanahalli

Yelahanka

Byatarayanapura

Dasarahalli

It is contended that prior to formation of the above Notified Area Committees under the KM Act, the Villages comprised within the Notified Area Committees were part of the Taluk Panchayats in Bangalore North and Bangalore South Taluks.

The Karnataka Panchayat Raj Act, 1993 (Hereinafter referred to as the ''KPR Act'', for brevity) provides for collection of additional stamp duty on the instruments relating to transfer of immovable properties situated within the territorial jurisdiction of the Taluk Panchayats at the rate of 3% on the consideration.

The eight Notified Area Committees were converted into Municipalities. Under Section 99 of the KM Act, there is a provision for levy of additional stamp duty on transfer of immovable properties in the form of surcharge on the duty imposed under the Karnataka Stamp Act, 1957, on the instruments of sale, gift, mortgage, exchange, lease in perpetuity of immovable properties, situated within the limits of municipal areas, the rate of additional stamp duty being not exceeding 2% on the market value etc. Thus, it is seen that while under the KPR Act, the rate of surcharge is 3%, but the same is 2% and below under the KM Act.

It is stated that the Government of Karnataka has made the Rules, called the Karnataka Municipalities (Regulation of Duty etc.) Rules, 1966 (Hereinafter referred to as the ''1966 Rules'', for brevity). The additional stamp duty is required to be collected by the Registering Officers and transfer the same to the District Registrar concerned. The relevant provision namely, sub-rule (2) of Rule 4 of the 1966 Rules reads thus:

"The Registering Officer shall consolidate the accounts quarterly and under the orders of the District Registrar concerned prepare bill in respect of each Municipality showing the amount of transfer duty levied in respect of each municipality and forward it to the District Registrar. Thereupon the District Registrar shall issue necessary authorization to the Treasury for payment to each of the municipality amount collected within two months after close of the quarter."

The actual practice followed for claiming the transfer of additional stamp duty to the Municipalities was that the Municipalities would prepare Payee Receipts, duly signed by the Commissioners of the Municipalities and transmit to the District Registrars for counter signature. The Payee Receipts would thereafter be transmitted to the Treasury for passing the bill and transfer of the amount to the concerned Municipality.

It is stated that the areas which are now comprised in the eight municipalities, namely, Krishnarajapura, Mahadevapura, Pattanagere, Kengeri, Bommanahalli, Yelahanka, Byatarayanapura and Dasarahalli were earlier part of the Town Panchayats and were governed by the KPR Act. Later, they became part of the Notified Area Committees and subsequently they were converted into Municipalities. Since the rates of additional stamp duty were different under the KPR Act and the KM Act, there was confusion with regard to the rate at which the additional stamp duty should be collected. To be on the safer side, the Registering Officers collected the additional stamp duty at 3%.

It is stated that the Inspector General of Registration and Commissioner of Stamps, Bangalore in his letter dated 27.8.1994, addressed to the District Registrar, Bangalore, issued instructions to release only 1% of the additional stamp duty to all the Notified Area Committees out of 3% collected by the Sub-Registrars, retaining the balance 2% under suspense account, till a clarification was received form the Government. The Government, in turn, by its letter dated 14.5.1998, clarified that the rate of additional stamp duty in respect of a Notified Area Committee was at 3% and issued instructions by its letter dated 12.1.1999, to release the balance of 2% additional stamp duty kept in suspense account. In view of the grey area, large sums of money due to the eight Municipalities referred to above had been credited to the accounts of the Municipalities by way of book adjustment.

One other factor which contributed to further compounding of the confusion was addition of villages and short stay of the District Registrars in Bangalore District.

It was in this background that a complaint as to crores of rupees having been illegally transferred from the consolidated fund of the State to the accounts of the eight municipalities referred to above, was made and grave misconduct was alleged against the officers of different departments concerned of having levied, collected and utilized the additional stamp duty.

The Government of Karnataka directed the Divisional Commissioner, Bangalore, to make investigation into allegations relating to transfer of the excess additional duties to the Municipalities. The Divisional Commissioner had submitted his report in March, 2001 to the Government. Thereafter, the matter was investigated by the Accountant General, Karnataka, who also has submitted a report to the Government on 19.2.2002. It is thereafter that the first respondent appears to have addressed a letter to the second respondent dated 16.7.2002, requesting a further investigation into the actions taken by the Government servants involved in the allegations. This letter was purportedly addressed by the Chief Secretary to Government under Section 7(2A) of the Karnataka Lokayukta Act, 1984 (Hereinafter referred to as the ''KL Act'', for brevity).

It is pursuant to the same, that investigation had been taken up on the complaint and it is submitted that investigation into the complaint against public servants received by the Lokayukta or Upalokayukta, as the case may be, is regulated by Section 9 of the KL Act. Sub section (3) of the Section 9 of the KL Act reads thus:

"3. Where the Lokayukta or Upalokayukta proposes, after making such preliminary inquiry as he deemed fit to conduct any investigation under this act, he:--

a. shall forward a copy of the complaint to the public servant and the competent authority concerned;

b. shall afford to such public servant an opportunity to offer his comments on such complaints; and

c. make such order as to the safe custody of the documents relating to the investigation as he deems fit."

It is the grievance of the petitioners that a copy of the complaint was never furnished to the petitioners before commencing the investigation and they were not given an opportunity to submit their comments on the complaint and they were merely asked to appear before the second respondent to clarify some points connected with the complaint. And a report was submitted by the Lokayukta under Section 12(3) of the KL Act to the first respondent. This report would indicate that the evidence of witnesses had been recorded behind the back of the petitioners. They had no opportunity to cross examine the witnesses. A copy of the complaint was not furnished to the petitioners and they were not afforded opportunity to offer any explanation. However, the second respondent has recommended the following action among others against the two petitioners.

"30.3. Since the District Registrars Sri K.M. Ramachandra, Sri. H.B. Anantharamaiah and Sri. R. Lakshmaiah are guilty of offences under the criminal breach of trust, falsification of accounts, cheating and causing wrongful loss to the Government to the tune of Rs. 65,71,435/-, Rs. 1,26,17,26,048 and Rs. 40,07,75,613 respectively in all amounting to Rs. 231,67,36,342 not only disciplinary action is required to be initiated against them, apart from making them to vacate the office/post held by each of them but also prosecution is called to be initiated against them for the alleged offences under Section 14 of the Lokayukta Act. Hence, I Lokayukta recommend to the Government (Competent Authority) accordingly as provided for under Sections 12(3) and Section 13(1) of the Karnataka Lokayukta Act 1984 at the first instance."

The second respondent had recommended disciplinary action against the petitioners as provided under section 12(3) and 13(1) of the KL Act. It is the above recommendation which is questioned in the present petitions.

In the first instance, this court had granted an order of stay which had continued in operation till date. In the meanwhile, all the petitioners have attained superannuation and have retired from service.

The learned Senior Advocate, Shri Shashikiran Shetty appearing for the Counsel for the petitioners would point out that the entire exercise is vitiated on account of the fact that the very genesis of the investigation by the Lokayukta is flawed and would vitiate the entire proceedings. In that, it is not in dispute that the Chief Secretary, by his letter dated 6.7.2002 has sought to recommend action being initiated under the provisions of the KL Act. This, it is pointed out, would go to the root of the matter, in that, the question that would arise for consideration is whether the impugned order is bad in law in view of sub-section 2(a) of Section 7 of the KL Act, which requires that a reference to be made by the State in the Lokayukta Continuing investigation against a public servant and whether a Demi-Official Letter issued by the Chief Secretary, Government of Karnataka, can be construed as a reference made by the State Government to the Lokayukta.

The learned Senior Advocate would point out that this question is no longer res integra and has been addressed in the case of B.M. Muniappa Vs. State of Karnataka and Others, and the order of the learned single judge has been affirmed by a division bench and the same would apply squarely to the facts of the present case on hand.

It is indeed to be noticed that the Supreme Court has addressed the question with reference to Article 166(1) and (2) of the Constitution of India, in the case of Gulabrao Keshavrao Patil and Others Vs. State of Gujarat and Others, as well as the case in J.P. Bansal Vs. State of Rajasthan and Another, and a slew of other cases, in The State of Punjab Vs. Sodhi Sukhdev Singh, and Bachhittar Singh Vs. The State of Punjab, .

Article 166 of the Constitution of India read with Rules 18 and 19 of the Karnataka Government (Transaction of Business) Rules, 1977 would indicate that an order of reference required under section 7(2-A) of the Karnataka Lokayukta Act, 1984 could not be made in the form and in terms of a Demi-Official Letter. The Rule requires a Secretary of the department to submit a case for orders to the Minister in-charge and subject to which directions, routine cases and cases of minor importance such as cases covered by a Rule, policy, precedent are disposed of by the Secretary. This obviously relates to disposal of business within the department and certainly does not enable the Secretary of the Department to make a reference on behalf of the State Government for purposes of Section 7(2-A) of the KL Act.

The Constitution requires that action must be taken by the authority concerned in the name of the Governor. It is not till this formality is observed that the action can be regarded as that of the State. Constitutionally speaking, the Council of Ministers are advisors and as the Head of the State, the Governor is to act with the aid or advice of the Council of Ministers. Therefore, till the advice is accepted by the Governor, views of the Council of Ministers did not crystalise into action of the State.

This being the law laid down and the KL Act requiring the State Government to make a reference, any such reference made by the Chief Secretary or the Secretary of a department would not take on the character of a reference by the State Government. Consequently, on this sole ground, the entire action initiated against the petitioners stands vitiated.

The writ petitions are allowed and the impugned reports are quashed.