Karnataka High Court Issues Directions For Financial Management Of Hindu Temples; Mandates Real-Time Monitoring, Tamper-Proof Receipts

Calling for an overhaul of finance management of Hindu temples, the Karnataka High Court has upheld the dismissal of an employee held for misappropriation of temple funds, while simultaneously issuing a comprehensive set of directions applicable to all Hindu religious institutions in the State. [2026 LiveLaw (Kar) 343]

The single judge bench of Justice Suraj Govindaraj while hearing the plea against the dismissal of a 2^nd Division Assistant at Sri Durga Parameshwari Temple, Udupi concluded that the employee was guilty of issuing duplicate receipts and misappropriating temple collections.

Calling such practises 'a systemic concern' affecting the utilisation of temple finances prone to fraud and misappropriation, the court noted as below:

“The system, in short, neither prevented the fraud nor preserved the trail needed to prove it …What this case shows is how easily temple collections can be siphoned off, and how difficult such wrongdoing can be both to detect and to prove…Temple funds are not ordinary funds. They are trust property, gathered from the faith of devotees and held for the deity and for the institution. A system of financial control that depends on chance discovery and manual reconciliation, and that can be defeated by one employee with exclusive access to a counter and a password, does not answer to that duty in the present age…”, the court noted in the order.

Su Motu Guidelines Issued

The guidelines issued by the High Court would be applicable to all Hindu religious institutions governed by the Karnataka Hindu Religious and Charitable Endowments Act, 1997.

“…This Court would ordinarily close the matter with the dismissal of the petition. It is, however, unable to overlook a larger concern that the facts of this case have brought to the surface... What this case shows is how easily temple collections can be siphoned off, and how difficult such wrongdoing can be both to detect and to prove…”, the court noted at the outset, pointing out how even the current instance of fraud came into light by chance.

To elaborate it further, the court has proposed a centralized, secure electronic financial management system for all institutions which could capture all revenue and expenditure streams. The court has also stipulated a unique, sequential, non-repeating machine-generated serial numbers; "DUPLICATE, REPRINT" prominently displayed; requires independent authorization and QR codes for real-time verification by devotees. The court also adds that the audit logs should be Write-once, append-only audit logs, capable of revealing any tampering by hash-chaining.

On another note, the court has stipulated Unique login credentials, multi-factor/biometric authentication, role-based permissions along with staff rotation. The court also bats for segregation of duties so that no single employee can modify or reprint receipts without independent authorisation of another officer.

The court also mandates ensuring biometric attendance norms for all employees including daily wage workers, along with mandatory guarantee bond for staff handling valuables and cash.

Moreover, all amounts received should be recorded in the integrated digital system and avenues must be there to make payments through Cash, UPI, QR code, debit/credit cards, net banking, wallets, tap-and-pay, NFC-enabled devices. Facilities must be made to to automatically compute Counter-wise, cashier-wise, shift-wise accounts and their opening and closing balance, the court says further. All the UPI /QR Codes must be prominently displayed and hundi counting protocol in terms of tamper evident seals, CCTV Surveillance and body worn cameras for counting personnel should be implemented, the court added.

There should be automated alerts for any duplicate/out-of-sequence serial numbers, cancellations beyond threshold, cash variances, unusual transaction patterns and tampering attempts. The Central dashboard must be visible in real time for the Commissioner and Deputy Commissioners, the court added.

Periodic security audits and surprise inspections to verify valuable and store items must be done, the court says.

Other guidelines by the court mention that there must be a complete , item-wise inventorywith photographs, videography, unique tags. It should be made sure that the strong room follows biometric authentication, and is under continuous CCTV coverage. The court also adds that X-ray fluorescence or equivalent testing before and after repair/cleaning/replating of gold and valuables. Every removal and return of valuables should be recorded with weight verification. Every donation of gold and silver should be individually receipted, the court has said.

All collection counters, hundi/counting areas, strong room, stores, entry/exit points etc. must be under tamper proof CCTV Surveillance as per the court.

There must also be a comprehensive digital inventory for all saleable articles and prasada with unique batch numbers, the court has added. Excessive wastage, repeated shortages, abnormal sales must be flagged, the court says further.

There should be transparent e-procurement norms and tender committees, along with three-way matching on purchase order, goods received record and invoices, the court said. With regards to immovable property and endowment lands, there must be digitised property register with extent, boundaries, title documents and geo tagging.

On audit, vigilance, and accountability, the Court directed monthly automated audit reports, concurrent and internal audits for institutions above a prescribed revenue threshold, annual statutory audits, a dedicated vigilance and internal-audit cell, a confidential whistle-blower mechanism with protection against victimisation, and a devotee grievance channel through online or toll-free facilities.

For data security, the Court has asked to secure hosting with the National Informatics Centre or similarly empanelled agency, immutable and geographically redundant backups, source-code custody secured to the Department with independence from any single vendor, and compliance with applicable information-technology security and data-protection standards.

The Court has constituted a steering committee comprising the Commissioner and Principal Secretary, e-Governance Department, and directed the establishment of a standing IT directorate within the Department.

The court has proposed a phased roll-out of the directions with higher-revenue institutions, along with standard operating procedures, user manuals, staff training, and a helpdesk.

Context & Further Observations

To recap, the employee had allegedly misappropriated Rs 8,750 between 23.08.2018 to 25.08.2018, as a result of which he was dismissed on 08.10.2020. According to the chargesheet, this was allegedly done by using the username and password of the IT Administrator, and then deleting data from the server and backup, relating to the printing of duplicate receipts.

The Court held that the punishment of dismissal was not disproportionate.

“…. The misconduct found proved is not a mere lapse or a careless error. It is dishonesty, the issuing of duplicate receipts and the pocketing of amounts collected from devotees, which is a breach of trust and a misappropriation of what belonged to the temple. A modest amount does not make dishonesty a small matter. Courts have long recognised that for an employee in a position of financial trust, proven misappropriation, even of a small sum, can properly attract dismissal…”, it was held.

“…The general directions issued in the preceding section of this order shall be complied with by the Commissioner of the Department and the Secretary to Government, Department…”, the court noted in the order while also mandating that the e governance department functionaries should jointly file a status report before this Court within three months from the date of receipt of order.

"Every rupee received on behalf of the institution shall form part of the official accounting system. No collection shall be retained outside the official accounts of the institution…."The choice of technology and the details of design are left to the expertise of the authorities; what this Court lays down are the objects to be achieved and the safeguards that must be built in …Transparency is, in itself, a safeguard against theft”, the court said further.

The matter has been listed for reporting compliance on 02.11.2026.

Case Title: Rajesh Nayak v. The Commissioner & Ors.

Case No: WRIT PETITION NO. 6653 OF 2025

Citation: 2026 LiveLaw (Kar) 343

Click Here To Read/Download Order