The 1960 Act does not preclude any person, including a shareholder, from setting the criminal law in motion based on an inspection report of a co-operative bank, and the duty of the police to investigate the alleged offence cannot be interdicted by the provisions of Section 81(5B).

JUDGMENT

Dr. Dhananjaya Y Chandrachud, CJI.

Leave granted.

2. This appeal arises from a judgment dated 16 November 2021 of a Division Bench of the High Court of Judicature at Bombay by which it has quashed FIR No 806 of 2019 lodged by the appellant for offences punishable under Sections 420, 406, 409, 465, 467, 468 and 471 read with Section 34 of the Indian Penal Code["IPC"] at Police Station Pimpri, Chinchwad.

3. The first respondent was the Chief Executive Officer of Seva Vikas Co-operative Bank, registered under the provisions of the Maharashtra Co-operative Societies Act 1960["1960 Act"]. The second respondent is the former Chairperson of the bank. Several complaints were lodged by individuals, members, shareholders, and depositors of the bank against the management alleging acts of cheating and misappropriation of funds. On the basis of the complaints, the Economic Offences Wing["EOW"] at Pimpri-Chinchwad registered an FIR and conducted investigations in January 2019 and thereafter. FIR Nos. 235 and 241 of 2019 were registered at the behest of the bank for offences punishable under Sections 406 and 420 read with Section 34 of the IPC. During the course of the investigation, the EOW issued a communication on 16 February 2019 to the District Sub Registrar, Co-operative Societies, Pune, inter alia, seeking details and information regarding the forensic audit, credit policy, collateral policy and loan policies, and the RBI guidelines pertaining to the affairs of the bank.

4. On 2 May 2019, a letter was addressed by the Police Inspector of the EOW, Pimpri-Chinchwad to the Commissioner of Co-operation and Registrar of Co-operative Societies Maharashtra seeking a copy of the forensic audit report of the bank. By a letter dated 9 May 2019, the Commissioner of Co-operation and Registrar of Co-operative Societies requested the Joint Registrar (Audit) to conduct an investigation and to provide the documents which were sought by the EOW. It appears that thereafter an investigation was conducted and an inspection report dated 12 June 2019 was submitted.

5. Based on an application under the Right to Information Act 2005, the appellant sought a copy of the inspection report. On 16 June 2019, the Joint Registrar submitted a copy of the inspection report to the appellant. According to the appellant, the report indicated that loans were advanced to persons and entities who were not eligible or creditworthy and they were diverted for purposes other than those for which they were availed; and monies were siphoned off and misappropriated. It has been alleged that the bank did not take steps to recover the loans and a large number of accounts were declared as non-performing assets.

6. On 19 July 2019, the appellant lodged FIR No. 806 of 2019 at PS Pimpri, Pimpri-Chinchwad against the first and second respondents alleging the commission of offences under Sections 420, 406, 409, 465, 467, 468 and 471 read with Section 34 of the IPC. The substance of the FIR was based on the inspection report prepared by the Joint Registrar (Audit) which allegedly indicated financial irregularities by the office bearers of the bank.

7. The High Court was moved by the first and second respondents in a writ petition under Article 226 of the Constitution for quashing the FIR. The High Court allowed the petition by its impugned judgment dated 16 November 2021. The High Court held that Section 81(5B) contains special provisions for the submission of a special report and the obtaining of the permission of the Registrar before the lodging of an FIR. It held that these provisions would be rendered otiose if the general provisions in the Code of Criminal Procedure 1973["CrPC"] were to apply and hence the latter must yield to the special procedure which has been prescribed under the 1960 Act. The High Court held that where the allegations in regard to the commission of offences are solely based on an audit which has been conducted under Section 81, the peremptory procedure prescri