Bombay High Court
Maharashtra Certified Auditors vs The State Of Maharashtra on 6 October, 2010
Author: B.H. Marlapalle
Bench: B.H. Marlapalle, U.D. Salvi
1 wp1206-97+
agk IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.1206 OF 1997
1. Maharashtra Certified Auditors
Association (Regd.) 34/5 B,
N.P. Peth, Solapur - 413 006.
2. Shri. Dinesh A. Prabhu,
Duvarkanath Bhavan, Katrak
Road, Wadala, Mumbai ..Petitioners.
Versus
1. The State of Maharashtra.
2. The Commissioner for Co-operation
and Registrar of Cooperative Societies,
Maharashtra State, Central Buildings,
Pune - 411 001.
3. The Officer on Special Duty,
Audit Board (ADF), Maharashtra
State, Administrative Building,
2nd Floor, A.G. Khan Road, Mumbai 18
4. The Dairy Development Commissioner,
Worli Seaface, Mumbai - 400 018 ..Respondents.
::: Downloaded on - 09/06/2013 16:30:37 :::
2 wp1206-97+
WRIT PETITION NO.3782 OF 1997
1. Kirloskar Oil Engines Limited Employees
Co-op. Credit Society Ltd., (Regd.)
13, Laxmanrao Kirloskar Road,
Khadki, Pune - 411 003.
through its Secretary
2. Sudarshan Chemical Kamgar Coop.
Credit Society Ltd., Congress Bhavan,
Shivaji Nagar, Pune 411 005 through
its chairman. ..Petitioners.
Versus
1. The State of Maharashtra.
2. The Commissioner for Co-operation
and Registrar of Cooperative Societies,
Maharashtra State, Central Buildings,
Pune - 411 001.
3. The Officer on Special Duty,
Audit Board (ADF), Maharashtra
State, Administrative Building,
2nd Floor, A.G. Khan Road, Mumbai 18
4. The Dairy Development Commissioner,
Worli Seaface, Mumbai - 400 018 ..Respondents.
::: Downloaded on - 09/06/2013 16:30:37 :::
3 wp1206-97+
Mr.R.P. Sabban for the appellant.
Mr.C.R. Sonawane, AGP for respondent Nos.1 to 4.
CORAM : B.H. Marlapalle, &
U.D. Salvi, JJ.
DATE : 6th October 2010.
ORAL JUDGMENT : (Per 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 Cooperation and Textiles in exercise of the powers conferred by Section 81(1)(a) of the Maharashtra Cooperative 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 of the employees from two different companies viz.
Kirloskan 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 ::: Downloaded on - 09/06/2013 16:30:37 ::: 4 wp1206-97+ 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 co-operative 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 co-operative 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 co- operative 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 Cooperative Societies which receives financial ::: Downloaded on - 09/06/2013 16:30:37 ::: 5 wp1206-97+ 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 the Maharashtra Co-operative societies Act, whereas the audit in respect of non aided societies are governed by section 81(1)(b) of the Act. Section 81(1)(a) authorizes the Registrar to audit or cause to be audited by a person authorized by him. As far as the societies which do not receive assistance are concerned, they are governed by section 81(1)(b) which permits such societies to arrange to get their accounts audited by an Auditor of their choice as long as the auditor is one amongst the panel of auditors maintained by the Registrar, or by a Chartered Accountant holding a certificate in Co-operative audit issued by the Institute of Chartered Accountants of India. Proviso to Section 81 of the Act, however, authorises the Registrar for reasons to be recorded in writing, to audit or cause to be audited accounts of any such non aided societies. Orders, which are impugned in the petition, are purported to have been issued under section 81(1)(b) but the same are not supported by reasons as required under the aforesaid proviso."::: Downloaded on - 09/06/2013 16:30:37 :::
6 wp1206-97+
5. We have given our anxious considerations to the rival submissions made before us and the petitions could be disposed off by a simple clarification, so as to uphold the circular issued under Section 81((1)
(a) of the Act. It is also pertinent to note that the operation of the said circular was not stayed by this Court during the pendency of these petitions.
As noted earlier and observed by this Court, the Societies covered by clause (a) of Section 81(1) are the Societies which are receiving financial assistance including guarantee from the State Government, whereas the Societies covered by clause (b) are the Societies which are not receiving financial assistance including guarantee from the State Government. The State Government can expand the classes of Societies covered by clause (a) of Section 81(1) of the Act, provided such added class of the Societies are in receipt of financial assistance including guarantee by the State Government.
The impugned circular cannot be made applicable to the class of Societies which are covered by clause (b) of Section 81(1) of the Act i.e. the Societies which are not aided by the State Government.
6. Hence, we hold that the impugned circular is applicable only to the Societies mentioned therein and which fall under clause (a) of Section 81(1) of the Act and the said circular is not applicable to the Societies which are covered by clause (b) i.e. non-aided Cooperative Societies of any category.
::: Downloaded on - 09/06/2013 16:30:37 :::7 wp1206-97+
7. Rule is made absolute in terms of above clarification, but without any order as to costs.
(U.D. Salvi, J.) (B.H. Marlapalle, J.)
::: Downloaded on - 09/06/2013 16:30:37 :::