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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G. S. Kulkarni, J.
Mumbai District Central Co-op. Bank Ltd - Appellant
Versus
Commissioner And Registrar, Co-op & Ors. - Respondents
Writ Petition No. 6697 of 2021
Decided On : 28-10-2021
Test Audit Report - Maharashtra Co-operative Societies Act,1960 - Section 81(3)(c), Section 82, Section 83 - The court considered a petition filed under Article 226 of the Constitution of India, challenging an order calling for a rectification report and subsequent order initiating an inquiry under the Maharashtra Co-operative Societies Act,1960. The court examined the provisions of Section 81(3)(c), Section 82, and Section 83 of the Act. It found that the impugned order granting 15 days to submit rectification of defects was not violative of Section 82. The court also held that an opportunity of rectification under Section 82 is not a condition precedent for ordering an inquiry under Section 83. The court concluded that the Registrar had the power to order an inquiry under Section 83 based on the Special Report, and the petitioner would have an opportunity to comply with any deficiencies revealed in the inquiry.
Fact of the Case:
The petitioner, a co-operative society engaged in banking, challenged an order calling for a rectification report and subsequent order initiating an inquiry under the Maharashtra Co-operative Societies Act,1960. The petitioner contended that the time given to submit the rectification report was contrary to Section 82, which provides for a period of three months for rectification of defects. The Divisional Joint Registrar had ordered a Test Audit of the petitioner's accounts for the period 2015-2016 to 2019-2020, and subsequently called for a rectification report within 15 days. The petitioner sought directions to grant a reasonable period of three months to submit the rectification report.
Finding of the Court:
The court found that the impugned order granting 15 days to submit rectification of defects was not violative of Section 82. It also held that an opportunity of rectification under Section 82 is not a condition precedent for ordering an inquiry under Section 83. The court concluded that the Registrar had the power to order an inquiry under Section 83 based on the Special Report, and the petitioner would have an opportunity to comply with any deficiencies revealed in the inquiry.
Issues: The issues before the court were whether the impugned order granting 15 days to submit rectification of defects was violative of Section 82, and whether an opportunity of rectification under Section 82 is a condition precedent for ordering an inquiry under Section 83.
Ratio Decidendi: The court held that the impugned order granting 15 days to submit rectification of defects was not violative of Section 82. It also concluded that an opportunity of rectification under Section 82 is not a condition precedent for ordering an inquiry under Section 83. The court found that the Registrar had the power to order an inquiry under Section 83 based on the Special Report, and the petitioner would have an opportunity to comply with any deficiencies revealed in the inquiry.
Final Decision: The petition was dismissed, and no costs were awarded.
JUDGMENT
G. S. Kulkarni, J. - This is a petition filed under Article 226 of the Constitution of India wherein the petitioner has assailed an order dated 1 September 2021 issued by respondent no.2/Divisional Joint Registrar, Co-operative Societies, Mumbai Division, calling upon the petitioner to submit a rectification report within fifteen days from the said communication in regard to a Test Audit Report dated 10 August 2021 submitted by the auditor appointed as per the provisions of Section 81(3)(c) of the Maharashtra Co-operative Societies Act,1960 (for short the Act). The petitioner is also aggrieved by a subsequent order dated 22 September 2021 also passed by the Divisional Joint Registrar ordering an inquiry exercising powers under Section 83 of the Act by appointing an inquiry officer, for an inquiry to be conducted on ten points as set out in Appendix A to the said order. The petitioner has also prayed for directions to the Divisional Joint Registrar to grant a reasonable period of three months under Section 82 of the Act to submit its explanation in respect of observations, defects, irregularities referred to in the test audit report for the period 2015-2020 and for an opportunity to make submission with reference to such observations, defects, irregularities, and to submit a rectification report with reference to that regard.
2. The factual antecedents are required to be noted:
The petitioner is a co-operative society which was registered under the Act on 6 August 1974. It is engaged in the business of banking. The petitioner has contended that in the past the affairs, accounts and transactions of the petitioner have been audited by the statutory auditors appointed under Section 81 of the Act and the defects, if any, pointed out in such audits have been explained by filing rectification reports. It addition, NABARD had also regularly carried out inspection of the affairs of the petitioner. It is contended by the petitioner that the Divisional Joint Registrar had ordered an inspection of the petitioner under Section 89A of the Act and had appointed an Inspecting Officer, however, a copy of such inspection report was not made available to the petitioner.
3. The petitioner has contended that by an order dated 16 February 2021, the Divisional Joint Registrar invoking powers under Section 81(3)(c) of the Act appointed Mr.Nilesh B.Naik as a Special Auditor to carry out a Test Audit of the accounts of the petitioner. The Special Auditor carried out a Test Audit of the accounts of the petitioner for the period 2015-2016 to 2019-2020. A Test Audit report dated 10 August 2021 was also served on the petitioner.
4. After furnishing of a copy of the Test Audit Report to the petitioner, the Divisional Joint Registrar by the impugned order dated 1 September 2021 issued to the petitioner, called upon the petitioner to submit a rectification report within a period of fifteen days, on the deficiencies as pointed out in the Test Audit Report. This letter of the Divisional Joint Registrar was received by the petitioner on 3 September 2021, however, it appears that almost for about seventeen days the petitioner did not respond to the said letter, as for the first time the petitioner on 20 September 2021, addressed a letter to the Divisional Joint Registrar, requesting for time to be granted to the petitioner upto 31 December 2021 to submit a rectification report.
5. The Divisional Joint Registrar thereafter passed an order dated 22 September 2021 initiating an enquiry against the petitioner under Section 83 of the Act on the basis of the Test Audit Report and a Special report of the Auditor dated 20 August 2021 by appointing Mr.Pratap Patil, Deputy Registrar, Co-operative Societies, as an enquiry Officer. This order directs that the affairs of the petitioner and the loss which has been caused to the petitioner be inquired into by the enquiry officer and the report be submitted within three months from the date of such order. The order also recor
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