Case Note & Summary
The writ petition arose from a challenge by a co-operative bank, Mumbai District Central Co-op. Bank Ltd., against two orders passed by the Divisional Joint Registrar, Co-operative Societies, Mumbai Division, under the Maharashtra Co-operative Societies Act, 1960. The petitioner society was registered on 6 August 1974 and engaged in banking. Its affairs had been audited by statutory auditors under Section 81 of the Act, and NABARD had carried out inspections. An inspection under Section 89A was also ordered, though the inspection report was not supplied to the petitioner. By an order dated 16 February 2021, the Divisional Joint Registrar appointed a Special Auditor under Section 81(3)(c) to conduct a test audit of the petitioner's accounts for the period 2015-2016 to 2019-2020. The Special Auditor submitted a Test Audit Report dated 10 August 2021, which was served on the petitioner. On 1 September 2021, the Divisional Joint Registrar called upon the petitioner to submit a rectification report within fifteen days on deficiencies noted in that report. The petitioner received this communication on 3 September 2021 but did not respond until 20 September 2021, when it requested time up to 31 December 2021. On 22 September 2021, the Divisional Joint Registrar passed an order under Section 83 of the Act initiating an inquiry into the petitioner's affairs on ten points, appointing an enquiry officer. That order relied on the Test Audit Report and a Special Report dated 20 August 2021, which the petitioner claimed it saw for the first time in the inquiry order. The petitioner filed the writ petition on 24 September 2021 under Article 226 of the Constitution, seeking to quash both orders and for directions to grant three months under Section 82 to submit explanation and rectification report. Respondents filed a reply affidavit raising a preliminary objection as to maintainability on the ground of alternate remedy of revision, contending the inquiry was fact-finding and recommendatory, that the Registrar had power to direct inquiry under Section 83, that Section 82 benefit was not available after a Special Report, and that no hearing was required before ordering an inquiry. Petitioner's senior counsel argued that the fifteen-day period in the 1 September 2021 order violated Section 82, which provides three months; that the Section 83 inquiry was premature because no opportunity for rectification had been afforded; that compliance with Section 82 was a sine qua non before invoking Section 83; and that the Special Report had not been supplied, violating natural justice. He also cited Section 87 as requiring the Registrar to bring defects to the society's notice. The arguments were heard, but the provided judgment excerpt ends during the petitioner's submissions, and no final holding is available.
Headnote
A) Constitutional Law - Writ Jurisdiction - Maintainability and Alternate Remedy - Constitution of India, 1950, Article 226 - Petitioner filed writ petition under Article 226 challenging orders dated 1 September 2021 and 22 September 2021 passed by Divisional Joint Registrar under Maharashtra Co-operative Societies Act, 1960; respondents raised preliminary objection of alternate remedy of revision. The court was required to consider maintainability before merits; no final decision appears in provided excerpt (Paras 1, 6).
B) Co-operative Law - Audit and Rectification - Rectification Period under Section 82 - Maharashtra Co-operative Societies Act, 1960, Section 82 - Petitioner contended that communication dated 1 September 2021 granting fifteen days to submit rectification report was contrary to Section 82 which provides three months; this formed the primary ground of challenge. No final holding in excerpt (Paras 1, 4, 8).
C) Co-operative Law - Inquiry by Registrar - Conditions Precedent for Section 83 Inquiry - Maharashtra Co-operative Societies Act, 1960, Section 83 - Petitioner argued that Section 83 inquiry cannot be invoked without prior compliance with Section 82; respondents contended that Test Audit Report is distinct from statutory audit and Section 82 benefit not available after Special Report, and that order of inquiry is administrative requiring no hearing. Issue of whether Section 82 is sine qua non for Section 83 remained for adjudication in excerpt (Paras 5-6, 9).
D) Co-operative Law - Registrar's Duties - Notice of Defects - Maharashtra Co-operative Societies Act, 1960, Section 87 - Petitioner relied on Section 87 as obliging Registrar to bring defects disclosed in inquiry or inspection to society's notice and call for rectification before further action. This contention was not adjudicated in provided excerpt (Paras 7, 10).
E) Administrative Law - Natural Justice - Right to Notice - Constitution of India - Petitioner argued that Special Report dated 20 August 2021 was not supplied and was first referred to in the Section 83 order, violating natural justice; not adjudicated in excerpt (Paras 5, 9).
Issue of Consideration
Whether the impugned order dated 1 September 2021 prescribing fifteen days for rectification report is contrary to Section 82 of the Maharashtra Co-operative Societies Act, 1960, which provides three months; and whether the order dated 22 September 2021 initiating inquiry under Section 83 is premature and illegal for non-compliance with Section 82 and reliance on a Special Report not supplied to petitioner.
Law Points
- Petitioner contended that Section 82 of Maharashtra Co-operative Societies Act
- 1960 provides three months for rectification
- that Section 83 inquiry cannot be invoked without prior compliance with Section 82
- that Section 87 obliges Registrar to bring defects to society's notice
- that Special Report dated 20 August 2021 not supplied violates natural justice
- Respondents contended that Section 82 benefit not available after Special Report
- inquiry order is administrative requiring no hearing
- and alternate remedy of revision bars writ jurisdiction.
Case Details
2021 LawText (BOM) (10) 32
Writ Petition No. 6697 of 2021
Mr. Vineet Naik, Senior Advocate i/b Mr. N.N. Bhadrashete with Ms. Priyanka Bhadrashete for Petitioner; Mr. S. U. Kamdar, Senior Advocate with Mr. P. P. Kakade, GP and Mr. S. H. Kankal, AGP for State/Respondents
Mumbai District Central Co-op. Bank Ltd.
1. The Commissioner and Registrar, Co-op. Societies (Maharashtra State), Pune; 2. The Divisional Joint Registrar, Co-op. Societies; 3. Mr. Pratap Patil, Enquiry Officer
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging orders passed by the Divisional Joint Registrar under the Maharashtra Co-operative Societies Act, 1960.
Remedy Sought
Petitioner sought to set aside order dated 1 September 2021 prescribing fifteen days for rectification and order dated 22 September 2021 ordering inquiry under Section 83; and sought directions to grant three months under Section 82 to submit explanation and rectification report.
Filing Reason
Petitioner alleged that the fifteen-day rectification period was contrary to Section 82's three-month period and that Section 83 inquiry was initiated prematurely without opportunity to rectify defects, relying on a Special Report not earlier supplied.
Previous Decisions
Divisional Joint Registrar passed order dated 16 February 2021 appointing Special Auditor under Section 81(3)(c); order dated 1 September 2021 calling for rectification report in 15 days; order dated 22 September 2021 initiating Section 83 inquiry.
Issues
Whether the impugned order dated 1 September 2021 prescribing fifteen days for rectification report is contrary to Section 82 of the Maharashtra Co-operative Societies Act, 1960, which provides three months.
Whether the order dated 22 September 2021 initiating inquiry under Section 83 is premature and illegal for non-compliance with Section 82.
Whether prior compliance with Section 82 is a sine qua non before invoking Section 83 under Chapter VIII of the Act.
Whether reliance on a Special Report dated 20 August 2021 not supplied to petitioner violates principles of natural justice.
Whether the order of inquiry under Section 83 requires opportunity of hearing or notice under Section 87.
Submissions/Arguments
Petitioner: The impugned communication dated 1 September 2021 prescribing fifteen days for rectification report violates Section 82 which mandates three months.
Petitioner: Section 83 inquiry was prematurely ordered because no opportunity for rectification was given; compliance with Section 82 is a condition precedent for invoking Section 83.
Petitioner: The Special Report dated 20 August 2021 was not supplied to petitioner and was referred for first time in order dated 22 September 2021, violating natural justice.
Petitioner: Registrar has obligation under Section 87 to bring defects to society's notice and call for rectification before further action.
Respondents: Writ petition not maintainable due to alternate remedy of revision.
Respondents: Inquiry under Section 83 is fact-finding and recommendatory; no prejudice caused to petitioner.
Respondents: Registrar has power to order inquiry based on Special Report; benefit of Section 82 not available after Special Report; no hearing required at stage of ordering inquiry as it is an administrative act.
Judgment Excerpts
This is a petition filed under Article 226 of the Constitution of India wherein the petitioner has assailed an order dated 1 September 2021 issued by respondent no.2/Divisional Joint Registrar, Co-operative Societies, Mumbai Division, calling upon the petitioner to submit a rectification report within fifteen days from the said communication in regard to a Test Audit Report dated 10 August 2021 submitted by the auditor appointed as per the provisions of Section 81(3)(c) of the Maharashtra Co-operative Societies Act,1960.
The petitioner is also aggrieved by a subsequent order dated 22 September 2021 also passed by the Divisional Joint Registrar ordering an inquiry exercising powers under Section 83 of the Act by appointing an inquiry officer, for an inquiry to be conducted on ten points as set out in Appendix A to the said order.
The Divisional Joint Registrar by the impugned order dated 1 September 2021 issued to the petitioner, called upon the petitioner to submit a rectification report within a period of fifteen days, on the deficiencies as pointed out in the Test Audit Report.
It is his submission that the impugned communication dated 1 September 2021 prescribing the period of fifteen days for the rectification of the defects is in the teeth of the provisions of Section 82 of the Act, and hence, deserves to be set aside by ordering appropriate compliance of Section 82 of the Act in the present facts.
It is his submission that in any event the provisions of Section 83 under which the Registrar may order an inquiry on the basis of a Special Report under the third proviso to sub-section (5-B) of Section 81, cannot be invoked unless there is compliance of Section 82, namely of an opportunity of rectification of the defects as prescribed by the said provision.
Procedural History
Petitioner registered as co-operative society on 6 August 1974. Statutory audits and NABARD inspections conducted. Divisional Joint Registrar ordered inspection under Section 89A; inspection report not supplied. Order dated 16 February 2021 appointing Special Auditor under Section 81(3)(c) for test audit for period 2015-2020. Test Audit Report dated 10 August 2021 served. Communication dated 1 September 2021 called for rectification report within 15 days; received 3 September 2021. Petitioner requested time on 20 September 2021 up to 31 December 2021. Order dated 22 September 2021 initiated inquiry under Section 83, appointing enquiry officer. Writ petition filed on 24 September 2021. Respondents filed reply affidavit raising preliminary objection of alternate remedy. Arguments heard; judgment reserved 26 October 2021, pronounced 28 October 2021.
Acts & Sections
- Maharashtra Co-operative Societies Act, 1960: Section 81(3)(c), Section 82, Section 83, Section 87, Section 89A
- Constitution of India: Article 226
