(1) The Permanent Statutory endowment fund shall be pledged in the name of Director, Collegiate Education, Karnataka, who shall also be the custodian for all documents and instruments related to the permanent statutory endowment fund and its investment in a Nationalized Bank in accordance with the provisions of the Act.
(2) In case the University or the sponsoring body contravenes any of the provisions of the Act, Statutes, Ordinance, regulations or rules made there under, a part or whole of the endowment fund may be forfeited by the Government but before such Forfeiture, a show cause notice shall be served by the Government on the sponsoring body or the University, as the case may be;
(3) the Government shall, among other things, duly consider the reply submitted by the sponsoring body or the University.
(4) In case the reply to show cause notice issued under sub-rule (2) is not submitted by the sponsoring body or the University within 45 days of the notice, the government may decide the case without waiting for such reply.
(5) the forfeited amount of permanent endowment fund shall vest in the government and it shall be used in the manner to be specified by the Government at the time of forfeiture.
(6) All other funds called General Fund under section 49 and Development Fund under section 50 shall be maintained in double entry Book keeping method, and shall be kept in a nationalized or Scheduled Bank.
(7) Permanent statutory Fund, General Fund and Development Fund shall be audited by the Chartered Accountant and annual Statement of accounts along -4 -4- with Audit report and its compliance shall be annually submitted to the State Government through the Director of Collegiate Education.
9. Suspension or Dissolution of the University-1) On receipt of the reply from University to the Show Cause Notice referred to in proviso of sub-section (4) of section 58 of the Act, if the Government is satisfied that there is a prima-facie case of contravention of all or any of the provisions of the Act or the Rules, Statutes and Ordinances made there under or of contravention of the directions issued by it under the Act or of financial mismanagement or mal administration or indiscipline, it shall make an order of such enquiry, as it may consider necessary.
(2) The Government shall, for the purpose any inquiry under sub-section(1) institute a Commission of inquiry headed by retired Supreme Court or High Court Judge to enquire into any of the allegations and to make report thereon.
(3) On receipt of the enquiry report from the officer appointed under sub-section (2), if the Government is satisfied that the University has contravened all or any of the provisions of this Act or the rules, statutes, or ordinances made thereunder or has violated any of the directions issued by it under this Act or has ceased to carry out the powers and functions by it as laid down in section 8 of this Act, or, a situation of financial mis-management and mal-administration has arisen in the University which threatens the academic standard of thee University, it shall issue a preliminary order for the liquidation of the University and appoint an administrator.
(4) The administrator appointed under sub-section (3), shall have all the powers and be subject to all the duties of the Governing Body and the Board of Management under the Act and shall administer the affairs of the University until the last batch of the students of the regular courses have completed their courses and they have been awarded degrees, diplomas or awards, as the case may be.
(5) After having corrected the mis-management or awarded the degrees, diplomas or awards, as the case may be, to the last batches of students of the regular courses, the administrator shall make a report to the Government.
(6) On receipt of the report under sub-section (5), the Government shall, by notification in the official Gazette, issue a final order dissolving the University and from the date of publication of such notification, the University shall stand dissolved and all the assets and liabilities of the University shall vest in the Sponsoring Body from such date.
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(7) It shall be competent for the Government to take action as per the provisions of the Act on such dissolution and run the university in the public interest and in the interest of the students till the students are provided all facilities to complete their courses and get their degrees or diplomas.
By Order and in the name of Governor of Karnataka (MAHESH R) Under Secretary to Government Higher Education Department (Universities-2)