Case Law Details
The challenge in this petition is to the Circular dated 6th March, 2013 issued by the 1st respondent. The said circular lays down the procedure of preparation of a panel of Auditors and Auditing firms in accordance with the third proviso to sub-section (1) (a) of Section 81 of the Maharashtra Cooperative Societies Act, 1960 (hereinafter referred to as `the said Act’) as amended by Maharashtra Ordinance No. II of 2013.
Clause (21) of Section 2 of the said Act defines the word “prescribed”. Prescribed is defined as “what is prescribed by Rules”. The clause (b) of sub-section (1) of Section 81 provides that the Rules shall prescribe the manner of preparation, declaration and maintenance of the Panel of Auditors and Auditing Firms by the Registrar. Thus, it follows that unless Rule making power is exercised, the Registrar cannot undertake the exercise of preparation, declaration and maintenance of the panel of Auditors. Unless Rules are framed accordingly, the preparation of panel cannot be undertaken by the State Government.
Hence, we dispose of the petition by passing following order:
(i) In view of what we have held earlier and in view of what is stated in the reply of Shri Krishna Ramu Khilari filed by the respondent, now the Circular dated 6th March, 2013 shall not be acted upon;
(ii) As held by us, after exercising Rule making power, the Registrar shall undertake a fresh exercise of preparation, declaration and maintenance of the Panel of Auditors and Auditing Firms in accordance with the Rules, which may be framed in accordance with the said Act.
(iii) Rule is made absolute on the above terms.
HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 7071 OF 2013
Santosh Ganesh Avhad
Versus
The Cooperation Commissioner and the Registrar of Co-operatives & Anr
P.C.
1. Rule. Learned Government Pleader waives service for the respondents. Forthwith taken up for final disposal
2. The challenge in this petition is to the Circular dated 6th March, 2013 issued by the 1st respondent. The said circular lays down the procedure of preparation of a panel of Auditors and Auditing firms in accordance with the third proviso to sub-section (1) (a) of Section 81 of the Maharashtra Cooperative Societies Act, 1960 (hereinafter referred to as `the said Act’) as amended by Maharashtra Ordinance No.II of 2013.
3. The submission of the learned Counsel appearing for the petitioner is that as per clause (b) of sub-section (1) of Section 81 as amended by the said Ordinance, Rules are required to be framed providing for the manner of preparation, declaration and maintenance of Panel of Auditors and the Auditing Firms by the Registrar.
4. The learned Government Pleader invited our attention to the affidavit of Shri Krishna Ramu Khilari, Special Auditor, Class-I, Cooperative Societies, in which it is stated that now there is a further amendment to the qualifications and experience of the Auditors prescribed by the earlier Ordinance and the qualifications have been relaxed as set out in the said affidavit. It further records that it is now necessary to re-initiate the process of empanelment of auditors/auditing firms. In short, the affidavit records that a new exercise will have to be undertaken in view of the subsequent amendment to the said Act.
5. At this stage, we must make reference to clauses (a) and (b) of subsection (1) of Section 81 as amended by the Ordinance No. II of 2013. The said clauses (a) and (b) read thus:-
“(a) The society shall cause to be audited its accounts at least once in each financial year and also cause it to be completed within a period of six months from the close of financial year to which such accounts relate and in any case before issuance of notice of the holding of annual general body meeting, by auditor or auditing firm from a panel prepared by the Registrar and approved by the State Government or any authority authorized by it in this behalf, possessing required qualifications and experience as may be prescribed to be eligible for auditing accounts of societies, appointed by the general body of a society, as provided in sub-section (2A) of section 75 and shall lay such audit report before the annual general body meeting. In case of apex society, the audit report shall also be laid before both Houses of the State Legislature, in such manner, as may be prescribed :
Provided that, if the Registrar is satisfied that the society has failed to intimate and file the return as provided by sub-section (2A) of section 75 and sub-section (1B) of section 79, by order, for the reasons to be recorded in writing, he may cause its accounts to be audited, by an auditor from the panel of the auditors approved by the State Government or an authority authorised by it in this behalf:
Provided further that, no auditor shall accept audit of more than twenty societies for audit in a financial year excluding societies having paid up share capital of less than rupees one lakh:
Provided also that, the Registrar shall maintain a panel of auditors and auditing firms as approved by the State Government or an authority authorized by it in this behalf.
(b) The manner of preparation, declaration and maintenance of the panel of auditors and auditing firms by the Registrar shall be such as may be prescribed.”
6. Clause (21) of Section 2 of the said Act defines the word “prescribed”. Prescribed is defined as “what is prescribed by Rules”. The clause (b) of sub-section (1) of Section 81 provides that the Rules shall prescribe the manner of preparation, declaration and maintenance of the Panel of Auditors and Auditing Firms by the Registrar. Thus, it follows that unless Rule making power is exercised, the Registrar cannot undertake the exercise of preparation, declaration and maintenance of the panel of Auditors. Unless Rules are framed accordingly, the preparation of panel cannot be undertaken by the State Government.
7. In view of this position, we need not go into the other challenges raised by the petitioner as to the exercise of the powers by issuing the Circular dated dated 6th March 2013.
8. Hence, we dispose of the petition by passing following order:
(i) In view of what we have held earlier and in view of what is stated in the reply of Shri Krishna Ramu Khilari filed by the respondent, now the Circular dated 6th March, 2013 shall not be acted upon;
(ii) As held by us, after exercising Rule making power, the Registrar shall undertake a fresh exercise of preparation, declaration and maintenance of the Panel of Auditors and Auditing Firms in accordance with the Rules, which may be framed in accordance with the said Act.
(iii) Rule is made absolute on the above terms.
Respected Sir,
Kindly mail me a copy of HC order/Judgment copy regarding “HC banned audit panel of financial year 2012 – 2013”. I am look after the Air Foce employees society, AF STN Devlali (South) at Nasik (Maharastra). Mob no :-09823350809.
Kindly mail me a subject HC decision copy on my e-mail address pdjad111@gmail.com at the earliest.
Thanking you sir.