( 1 ) THE petitioners, questioning the legality and validity of the order dated 18/5/2005 passed by the first respondent, vide Annexure-A, have presented this writ petition. ( 2 ) THE grievance of the petitioners in this writ petition is that, they are the Ex-Directors of the second respondent-Bank. When they were the Directors of the second respondent-Bank, the first respondent and other authorities have not initiated any proceedings regarding the mismanagement or misadministration of the second respondent-Bank. It appears that, behind the back of the petitioners, a proceeding has been initiated under Section 64 of the Karnataka Co-operative Societies Act, 1959 (hereinafter called as the 'act') and appointed an officer to submit the report. On the basis of the alleged report submitted by the Officer, the matter was referred to the concerned authority, as envisaged under section 68 of the Act. Being aggrieved by the order passed under Section 68 of the Act, petitioners have filed an appeal on the file of the Deputy registrar of Co-operative Societies, Karwar and the same is pending adjudication. Be that as it may, the first respondent herein has issued a show-cause notice vide Annexure-B, dated 18/3/2005 to the petitioners, as to why action should not be taken against them for initiating criminal proceedings on the basis of the office order dated 21/5/2004 and the report submitted by the officer on 31/7/2004. Immediately after the receipt of the said show-cause notice, these petitioners have filed their detailed objections vide Annexure-C, pointing out that the said notice issued by the first respondent is without any jurisdiction and contrary to the mandatory provisions of Section 111 of the Act. They have specifically pointed out in para 8 of the objections that, they have already challenged the order dated 29/11/2004 passed under Section 68 (1) of the Act, before the Deputy Registrar of Co-operative Societies, karwar under Section 106 of the Act and the first respondent is a party to the said proceedings. Therefore, it is totally unwarranted and uncalled for on the part of the first respondent to issue a show-cause notice to the petitioners. Inspite of the said objections filed by the petitioners, the first respondent without reference to the stand taken by the petitioners in their objection, has passed the impugned order annexure-A, dated 18/5/2005, giving sanction under Section 111 (2) of the Act. Inspite of the said objections filed by the petitioners, the first respondent without reference to the stand taken by the petitioners in their objection, has passed the impugned order annexure-A, dated 18/5/2005, giving sanction under Section 111 (2) of the Act. Being aggrieved by the impugned order passed by the first respondent, these petitioners felt necessitated to present this writ petition. ( 3 ) THE principal submission canvassed by learned Counsel for the petitioners is that, the impugned order passed by the first respondent is one without jurisdiction, arbitrary, capricious and not sustainable in the eye of law. Further, he submitted that the order of the first respondent suffers from illegality for non-compliance of mandatory provisions under section 111 (3) of the Act and on that ground alone, the impugned order passed by the first respondent is liable to be quashed. Further, he submitted that, first respondent has committed an error in passing the said order due to lack of application of mind and without considering the stand taken by the petitioners in their objections that, the order passed under Section 68 (1) of the Act, has been assailed by them before the deputy Registrar of Co-operative Societies, Karwar under Section 106 of the Act and the same is pending adjudication. Therefore, he submitted that the show-cause notice issued by the first respondent is unwarranted and uncalled for. The first respondent without application of mind as to whether the allegations in the show-cause notice and the reply on consideration would prima facie constitute an offence under sections 109 (12) and (14) of the Act, has passed the order. When the ingredients of these offences are totally lacking, the order passed by the first respondent according sanction to prosecute the petitioners is illegal and the same is liable to be quashed. Further, he has vehemently submitted that the impugned order has been passed by the first respondent without conducting proper enquiry and without affording an opportunity to the petitioners and therefore, the same is liable to vitiate for non-compliance of principles of natural justice. To substantiate his submission, he placed heavy reliance on Head Note C of the judgment of the Supreme Court in Mangilal v State of Madhya Pradesh and submitted that, the Apex Court has held that: "statutory silence implies requirement of compliance with the principles of natural justice where substantial rights of parties are considerably affected. To substantiate his submission, he placed heavy reliance on Head Note C of the judgment of the Supreme Court in Mangilal v State of Madhya Pradesh and submitted that, the Apex Court has held that: "statutory silence implies requirement of compliance with the principles of natural justice where substantial rights of parties are considerably affected. Application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment". Further, he pointed out that, sub-clause (i) of sub-section (3) of section 111 stipulates that: "without giving to the person concerned an opportunity to represent his case". Therefore, he submitted that the impugned order passed by the first respondent is liable to vitiate. ( 4 ) PER contra, learned Additional Government Advocate for first respondent, inter alia contended and substantiated the impugned order passed by the first respondent. Further he submitted that, the order passed by the first respondent is in strict compliance of the Co-operative societies Act and the Karnataka Co-operative Societies Rules, 1960 and no error or illegality as such has been committed by the first respondent while passing the said order. Further, he submitted that the said order is within the jurisdiction and having regard to the power delegated to the first respondent to give sanction under Section 111 of the Karnataka co-operative Societies Act, 1959 by a Notification dated 21/11/2001 in no. CMW 69 CLM 01. However, he is unable to state regarding no reference made by the first respondent with regard to the stand taken by the petitioners in para 8 of the statement of objections filed by them on 26-3-2005 in pursuance of the show-cause notice issued by the first respondent. Further, he substantiated the said order stating that these petitioners and other directors are functioning contrary to the mandatory provisions of the bye-law, in violation of subsidiary rules and advanced loans without obtaining proper security of properties and in violation of RBI directives. Each and every item of loan sanctioned so far, have been specifically pointed out with reference to their account number, name of the borrower, date of sanction, and amount sanctioned. Therefore, in view of non-functioning of these petitioners as per the bye-law, there is no other option for the first respondent, except to give sanction for initiating a criminal proceedings against them. Therefore, in view of non-functioning of these petitioners as per the bye-law, there is no other option for the first respondent, except to give sanction for initiating a criminal proceedings against them. Further regarding the specific submission made by the learned Counsel for the petitioners that the appeal filed by them is pending adjudication before the Competent Authority, the learned Additional Government Advocate submitted that, no interim order has been granted by the Deputy registrar of Co-operative Societies being the Appellate Authority and therefore there is no prohibition for the first respondent to take necessary steps, as envisaged under the Act. Therefore, he submitted that the impugned order passed by the first respondent is in accordance with law and the interference by this Court may not be justifiable. Nor the petitioners have made out any good grounds to interfere with the same. ( 5 ) I have heard the learned Counsel for the petitioners and the learned Additional Government Advocate for first respondent at considerable length of time. After careful perusal of the impugned order passed by the first respondent, show-cause notice issued to the petitioners vide Annexure-B; objections filed by the petitioners to the show-cause notice vide Annexure-C and the stand taken by the first respondent in the statement of objections, it emerges on the face of the materials available on records that, first respondent has committed an error much less material irregularity while passing the impugned order, without conducting proper enquiry and without affording an opportunity to the petitioners. It is pertinent to note that, in pursuance of the show-cause notice issued by the first respondent on 18/3/2005 vide annexure-B, these petitioners have filed their detailed objections which runs about 14 pages on 26/3/2005 (Annexure-C) specifically pointing out in para 8 that, already they have assailed the order passed under section 68 (1) of the Act, before the Competent Authority under Section 106 of the Act, and the same is pending adjudication and issuing a show-cause notice by the first respondent for initiating criminal proceedings is one without jurisdiction. After careful perusal of the impugned order, it is clear that, there is no whisper regarding this aspect of the matter is concerned. However, the learned Additional government Advocate tried to substantiate that no interim order has been granted and as such, there is no impediment for the first respondent to proceed with the matter. After careful perusal of the impugned order, it is clear that, there is no whisper regarding this aspect of the matter is concerned. However, the learned Additional government Advocate tried to substantiate that no interim order has been granted and as such, there is no impediment for the first respondent to proceed with the matter. But the said submission made by the learned Additional Government Advocate has no substance and the same cannot be accepted, in view of the specific stand taken by the petitioners in their objections. Further as rightly pointed out by the learned Counsel for the petitioners. Sub-clause (i) of sub-section (3) of Section 111 of the Act, clearly stipulates that: " (i) without giving to the person concerned an opportunity to represent his case". In the instant case, the first respondent has not given any opportunity to the petitioners to substantiate their case. If an opportunity has been given to them, they might have substantiated their case that they have not committed any error and whatever loan they have released in favour of the account holders is the decision of the entire committee and not individually by these two directors and also pointing out the relevant provisions of the Act and the law laid down by this Court and the Apex Court and they might have also pointed out that already they have assailed the order passed under Section 68 (1) of the Act and the matter is seized before the Competent Authority and when the matter is seized before the Competent Authority, the first respondent cannot proceed and complete the proceedings that too, he being a party to the proceedings before the Competent Authority. In the instant case, after perusal of the order, it shows beyond reasonable doubt that, the first respondent has proceeded to pass the order with lack of application of mind and contrary to the mandatory provisions of the Act. Further, as rightly pointed out by the learned Counsel for the petitioners, the Apex Court in the judgment in Mangilal's case, has held that: "where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice where substantial rights of the parties are considerably affected. The application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment". The application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment". In the instant case, the impugned order passed by the first respondent is of civil consequences and it will be a permanent stigma for the persons against whom sanction has been accorded to prosecute a criminal proceedings, that too, without affording an opportunity to the concerned persons. Sub-clause (i) of sub-section (3) of Section 111 specifically states that: "without giving to the person concerned an opportunity to represent his case". In the instant case, in pursuance of the show-cause notice, these petitioners have filed their detailed objections and there is no whisper regarding the stand taken by them in the impugned order passed by the first respondent nor it is the case of the respondent that an opportunity has been provided to the petitioners. Learned Additional Government Advocate after going through the impugned order has rightly submitted that no opportunity as such has been given and after considering their objections and materials available on file, the first respondent has passed the impugned order. Therefore, I am of the considered view that the impugned order passed by the first respondent is liable to be set aside, in view of non-compliance of principles of natural justice and not conducting the proper enquiry and non-affording an opportunity to the petitioners. ( 6 ) HAVING regard to the facts and circumstances of the case as stated above, the writ petition filed by the petitioners is disposed of with the following directions: (i) The writ petition filed by the petitioners is allowed. (ii) The impugned order dated 18-5-2005 passed by the first respondent in No. Sa:ni:19:e:enq:cr:2004-05 vide Annexure-A, is hereby set aside, insofar as it relates to the petitioners are concerned. (iii) The matter stands remitted back to the first respondent for reconsideration afresh in accordance with law, and to take appropriate decision after affording an opportunity to the petitioners and after conducting enquiry in strict compliance of the mandatory provisions of the Co-operative Societies Act and rules, as expeditiously as possible, within an outer limit of four months from the date of receipt of the copy of this order. (iv) All the contentions of both the parties are left open. With these observations, the writ petition filed by the petitionera stands disposed of. --- *** --- .