The Registrar has the discretion to order an inquiry into the affairs of a society based on a complaint by a non-member, as per the provisions of the Maharashtra Cooperative Societies Act 1960.

JUDGMENT:

1. Rule. Rule made returnable forthwith. With the consent of the learned counsel appearing for the parties, Petition is taken up for hearing.

2. The Petition raises an issue as to weather an inquiry into working or financial affairs of a Society can be ordered by the Registrar on the basis of an application made by a non-member. The issue arises in the light of challenge set up by Petitioner - Society to the decision of the Deputy Registrar dated 02 July 2019 appointing Special Auditor to conduct inquiry into the allegations levelled in the complaint filed by individuals who are not the members of the society. Petitioner-Society unsuccessfully challenged the decision of the Deputy Registrar dated 02 July 2019 before the Divisional Joint Registrar, who has rejected Petitioner’s Revision Application by Order dated 26 November 2019, which is also the subject matter of the challenge in the present petition.

3. Petitioner is a Cooperative Credit Society registered under the provisions of the Maharashtra Cooperative Societies Act 1960 (MCS Act). Petitioner claims to have been graded ‘A’ in various financial years and has 4986 members. One Shri. Sudhir Ramchandra Alhat, who is not a member of the Petitioner-Society addressed letter dated 06 June 2019 to various authorities including the District Deputy Registrar, Pune City levelling various allegations against the Directors of the Petitioner-Society and demanding inquiry into its administrative and financial affair. The complaint was also signed by 04 ex-employees viz. Shri. Choudhari Sandesh Popatrao, Bhosale Sachin Limbraj, Sachin Shravan Londhe and Barin Malhari Carillul. It is Petitioner’s case that the said 04 ex-employees were forced to resign from services of the Society after being caught of committing illegal theft of Society’s data and intellectual property.

4. By the communication dated 02 July 2019, the Deputy Registrar appointed Shri. Rajkumar Kharat as Special Auditor to conduct inquiry into the complaint submitted by Shri. Sudhir Alhat and others. Aggrieved by the decision of the Deputy Registrar dated 02 July 2019, Petitioner-Society preferred Revision No.301 of 2019 before the Divisional Joint Registrar, Cooperative Societies, Pune. By Order dated 26 November 2019, the Divisional Joint Registrar has proceeded to reject Revision Application No. 301 of 2019. Petitioner-Society is aggrieved by the decision of Deputy Registrar dated 02 July 2019 and the Order of the Divisional Joint Registrar dated 26 November 2019 and has filed present petition.

5. Mr. Panchpor the learned counsel appearing for Petitioner would submit that impugned Orders passed by the Deputy Registrar and Divisional Joint Registrar suffers from jurisdictional error. He would submit that the statutory framework under the MCS Act does not permit institution of inquiry into the affairs of the society by entertaining application of a non-member. That neither Shri. Alhat nor the 4 ex-employees are/were members of Petitioner-Society and therefore did not have locus to file complaint or seek and inquiry into the affairs of the Society. He would submit that there are essentially three provisions under the MCS Act under which the Registrar can institute inquiry into the affairs of the Society. The first provision is in the form of clause (b) of sub-section 3 of section 81, under which the Registrar can depute a flying squad for examination of books, records of accounts and other papers of the Society if he has reason to believe that there exists an element of fraud, misappropriation of funds, manipulation of accounts or possibility tampering of accounts of the Society. According to Mr. Panchpor the second provision is in sub-section 1 of section 83, under which the Registrar can either suo moto or an application of 1/5th members of the Society or on the basis of special report under 3rd Proviso to Section 81 (5B) can hold inquiry. The third provision, according to Mr. Panchpor, is traceable to section 84 o