The impugned circular under section 81(1)(a) of the Maharashtra Co-operative Societies Act, 1960 is applicable only to societies receiving financial assistance including guarantee from the State Government.

B. H. MARLAPALLE, J. :- Both these petitions have a common challenge namely the validity of the circular dated 11th November 1996 issued by the Government of Maharashtra through the Department of Co-operation and Textiles in exercise of the powers conferred by section 81(1)(a) of the Maharashtra Co-operative Societies Act, 1960 ('the Act' for short), The first petition has been filed by the Association of Certified Auditors and Chartered Accountants. whereas the second petition has been filed by the Credit Cooperative Societies or the employees from two different companies viz, Kirloskar Oil Engines Private Limited and M/s Sudarshan Chemicals Limited.

2. Section 81 (1) of the Act reads as under:

"81. Audit. -- (1)(a) The Registrar shall audit, or cause to be audited, at least once in each co-operative year, by a person authorised by him by general or special order in writing in this behalf the accounts of every society which has been given financial assistance including guarantee by the State Government or Government Undertakings, from time to time, and the accounts of the apex societies, State and District Level Federal Societies, District Central Co-operative Banks, Co-operative Sugar Factories Urban Co-operative Banks, Co-operative Spinning Mills, District and Taluka Co-operative Sale and Purchase Organizations, and any such Society or class of Societies which the State Government may, from time to time, by notification in the Official Gazette, specify.

Provided that, the audit of the District Central Co-operative Bank and the State Co-operative Bank shall be conducted by a Chartered Accountant approved by the National Bank;

(b) The societies other than the societies referred to in clause (a) shall arrange to get their accounts audited, at least once in each co-operative year by an auditor from the panel of auditors maintained by the Registrar, or by a chartered accountant holding a certificate in cooperative audit issued by the institute of Chartered Accountants of India:

Provided that, the Registrar may, for reasons to be recorded in writing, audit or cause to be audited accounts of any such societies of any year and at any time.

Provided further that, the primary agricultural credit co-operative society shall arrange to get their accounts audited at least once in each co-operative year by an auditor from the panel of auditors maintained by the Registrar; or by a Chartered Accountant holding a certificate in cooperative audit issued by the Institute of Chartered Accountants of India. The District Central Co-operative Bank and the State Co-operative Bank shall arrange to get their accounts audited at least once in each cooperative year through a Chartered Accountant from the panel of auditors approved by the National Bank.”

3. The State Government claims to have invoked its powers under section 81 (1)(a) of the Act and issued the impugned circular. Mr. Sabban, the learned counsel for the petitioners submitted that the circular has been issued to give a go-by to the order of this Court passed in Writ Petition No. 4900 of 1995 on 1st February 1996. Section 81 (1) has two parts and the first part in clause (a) deals with the Co-operative Societies which receives financial assistance including guarantee from the State Government and the second part in terms of clause (b) consists of those societies other than the societies covered in clause (a). As per Mr. Sabban, if the impugned circular is allowed to hold the field, clause (b) becomes redundant and the scheme of section 81 (1) of the Act could not be amended by issuing a circular. Legislative powers cannot be exercised by issuing administrative circulars, which proposition cannot be disputed.

4. The State Government has not filed any reply to oppose these petitions. In Writ Petition No. 4900 of 1995, this Court in paragraph-3 observed as under:

"3. As far as Co-operative societies, which received financial assistance, are concerned, audit is governed by section 81 (1)(a) of t