The amended proviso to Section 87(1) does not nullify the time schedule for audit and inspection of books, and the date of detection during audit or inspection of books is relevant for initiating surcharge proceedings.

JUDGMENT

(Prayer: Petition filed under Article 226 of the Constitution of India praying for a writ of declaration declaring the Act No.33 of 2022 - Tamil Nadu Co-operative Societies Act 1983 amendment to Section 87(1) of the Tamil Nadu Co-operative Societies Act 1983 on 12.06.2022 by the 1st and 2nd respondents herein are illegal, unlawful, unreasonable and unconstitutional.)

Munishwar Nath Bhandari, CJ.

1. The writ petition has been filed to challenge the Act of 33 of 2022 amending Section 87(1) and the first proviso to Section 87(1) of the Tamil Nadu Co-operative Societies Act, 1983, by issuing Government Order dated 12.06.2022.

2. Learned counsel for the petitioner submitted that the amendment in Section 87(1) of the Tamil Nadu Co-operative Societies Act, 1983 [for short, "the Act of 1983"] has been made along with amendment of the first proviso to Section 87(1) ignoring Sections 82 to 84 of the Act of 1983 and, more specifically, Sections 80 and 83, which provides time limit for audit and inspection of books by financing bank. By virtue of the amendment in the first proviso, now surcharge proceedings can be initiated within seven years from the date of detection of any act or omission referred to in the sub-section. Prior to the amendment, the period of seven years to initiate proceedings was to be determined from the date of act or omission and not from the date of its detection. The prayer is accordingly to set aside the amendment.

3. It is stated that the issue in regard to the period of seven years, whether to be reckoned from the date of act or omission or from the date of detection is pending consideration before the Larger Bench. While the matter is pending, the amendment under challenge was brought and thereby the Larger Bench would be deciding the issue as to whether the first proviso to the amended provision would apply retrospectively or would be prospective in application. In any case, even if it is applied prospectively or retrospectively, the amended proviso deserves to be struck down, as it would offend Sections 80 and 83 of the Act of 1983.

4. The petitioner has given reference to his own case where surcharge proceedings were initiated after the expiry of seven years from the date of act or omission. The writ petition to challenge the surcharge proceedings was allowed. An appeal is pending before the Division Bench and in the light of conflicting judgments, it was referred to the Larger Bench. The amendment may affect the petitioner's right, thus, it has been challenged.

5. We have considered the submissions made by learned counsel for the petitioner and perused the records.

6. The challenge to the amendment in Section 87(1) of the Act of 1983 and the first proviso has been made in reference to Sections 80 to 84 of the Act of 1983 and, therefore, it would be relevant to quote the aforesaid provisions for ready reference:

"80. Audit.- (1) (a) Every registered society shall maintain the accounts and such accounts shall cause to be audited at least once in each financial year by auditors of the Government, or by the auditing firms in respect of such class or classes or category or categories of registered societies as may be prescribed, within the time limit specified in clause(e);

(b) The minimum qualification and the experience of auditors of the Government or auditing firms, that shall be eligible for auditing accounts of the registered society shall be such as may be prescribed;

(c) In case of appointment of auditing firms, the general body of such classes or categories of registered societies shall appoint auditing firms from a panel approved by the Government or an authority authorized by the Government in this behalf;

(d) The registered society shall prepare the financial statements and other details required for the completion of audit within three months from the close of each financial year;

(e) The accounts of every registered society shall be audited within six months from the close of the f