Case Note & Summary
The Bombay High Court dealt with two writ petitions arising from a dispute concerning the re-audit of a cooperative society registered under the Maharashtra Co-operative Societies Act, 1960. The Pargaon Vividh Karyakari Seva Sanstha Ltd. (the Society) had a previous managing committee that functioned from 2016 to 2021. Complaints of financial discrepancies led to an initial audit for 2020-21, which pointed to irregularities by two employees. The new managing committee, elected in April 2022, sought a re-audit for the period 2019-2022, suspecting involvement of the previous managing committee members. The Deputy Registrar ordered a re-audit under Section 81(6) of the Act, appointing a Special Auditor. The re-audit report dated 15 September 2023 found a loss of Rs. 37,10,739.61 and held the previous managing committee members jointly and severally liable. Based on this report, the Assistant Registrar initiated an enquiry under Section 88 and appointed an Enquiry Officer. The previous managing committee members filed a revision application under Section 154 before the Divisional Joint Registrar challenging the re-audit report. The Divisional Joint Registrar allowed the revision, set aside the re-audit report, and directed a fresh re-audit. The Society challenged this order in Writ Petition No. 12451 of 2024, arguing that revision was not maintainable against a re-audit report. Meanwhile, the Enquiry Officer passed an order on 27 September 2024 apportioning liability among the previous managing committee members, which they appealed. The appeal was dismissed due to the pendency of the Society's writ petition, leading to Writ Petition No. 544 of 2025 by one of the members. The court framed the core issue: whether a revision under Section 154 lies against a re-audit report under Section 81(6). The court analyzed the scheme of Chapter VIII of the Act, distinguishing between audit reports, re-audit reports, and decisions or orders that affect rights. It held that a re-audit report is merely an expression of opinion by the auditor and does not constitute a decision or order under Section 152 or 154. The court noted that the Registrar's order directing re-audit is administrative, and the report itself is not subject to revision. The court relied on previous judgments, including the Full Bench decision in Shriram Sahakari Sakhar Karkhana Ltd. v. State of Maharashtra, which held that revision lies only against decisions or orders that determine rights. The court also distinguished the judgment in Shankar Mahadev Jadhav v. State of Maharashtra, which had been cited by the respondents, clarifying that it pertained to a different context. Consequently, the court allowed Writ Petition No. 12451 of 2024, quashing the Divisional Joint Registrar's order dated 2 August 2024 as without jurisdiction. It also allowed Writ Petition No. 544 of 2025, setting aside the dismissal of the appeal and directing the Divisional Joint Registrar to decide the appeal on merits, as the enquiry officer's order was a decision appealable under Section 152.
Headnote
A) Co-operative Law - Revision - Maintainability - Section 154 of Maharashtra Co-operative Societies Act, 1960 - Re-audit Report under Section 81(6) - The court considered whether a revision lies against a re-audit report which is a mere opinion of the auditor. Held that a re-audit report under Section 81(6) is not a decision or order affecting rights and liabilities, and therefore revision under Section 154 is not maintainable. The Divisional Joint Registrar lacked jurisdiction to entertain revision against the re-audit report. (Paras 1-3, 12-30) B) Co-operative Law - Audit - Re-audit - Section 81(6) of Maharashtra Co-operative Societies Act, 1960 - Nature of Re-audit Report - The court examined the scheme of Chapter VIII and held that the re-audit report is a mere expression of opinion by the auditor and does not constitute a decision or order. It is only a step in the process leading to further action by the Registrar. (Paras 12-20) C) Co-operative Law - Enquiry - Section 88 of Maharashtra Co-operative Societies Act, 1960 - Initiation of Enquiry Based on Re-audit Report - The court held that the Registrar can initiate enquiry under Section 88 based on the findings in the re-audit report, and the enquiry officer's order apportioning liability is a decision appealable under Section 152. (Paras 21-25)
Issue of Consideration
Whether a revision application under Section 154 of the Maharashtra Co-operative Societies Act, 1960 is maintainable against a re-audit report submitted under Section 81(6) of the Act.
Final Decision
Writ Petition No. 12451 of 2024 is allowed. The order dated 2 August 2024 passed by the Divisional Joint Registrar, Co-operative Societies, Pune Division, Pune in Revision Application No. 418 of 2023 is quashed and set aside as without jurisdiction. Writ Petition No. 544 of 2025 is allowed. The order dated 27 September 2024 passed by the Divisional Joint Registrar dismissing Appeal No. 109 of 2024 is set aside. The Divisional Joint Registrar is directed to decide Appeal No. 109 of 2024 on merits in accordance with law, preferably within three months from the date of this judgment.
Law Points
- Revision under Section 154 of MCS Act is not maintainable against a re-audit report under Section 81(6) as it is a mere opinion
- not a decision or order
- Re-audit report does not determine rights or liabilities
- Registrar's order directing re-audit is an administrative order
- Enquiry under Section 88 can be initiated based on re-audit report
- Revision lies only against decisions or orders that affect rights.
