Case Note & Summary
The petitioner, The Friends Co-operative Housing Society Ltd., a society registered under the Maharashtra Co-operative Societies Act, 1960, filed a writ petition challenging a Circular dated 4th June 1992 issued by the Commissioner for Co-operation and Registrar of Co-operative Societies, Maharashtra State. The Circular was issued under Rule 74 of the Maharashtra Co-operative Societies Rules, 1961, which empowers the Registrar to levy audit and supervision charges payable annually by all or any class of societies, including societies in liquidation, at rates fixed with the approval of the State Government. The petitioner contended that the Circular was contrary to Section 81(1)(b) of the Act, which provides that if a society arranges to get its accounts audited by an auditor from the Panel of Auditors maintained by the Registrar or by a Chartered Accountant holding a Certificate in Co-operative audit, the Registrar shall not levy any audit fees. The limited question before the court was whether a society can be insisted to pay audit fees as specified in the Circular even when it chooses to arrange its own audit through a qualified auditor. The court heard arguments from Mr. R.L. Khapre for the petitioner and Mr. Mirza, Assistant Government Pleader for the respondents. The court analyzed the provisions of Section 81(1)(b) and Rule 74, and held that the Circular is contrary to the statutory provision. The court reasoned that Rule 74 cannot override the express provision of Section 81(1)(b), which clearly exempts societies that arrange their own audit from paying audit fees. The court quashed the Circular dated 4th June 1992 and all other circulars forming the subject-matter of the petition, to the extent they levy audit fees on societies that opt for private audit. The decision was in favor of the petitioner society.
Headnote
A) Co-operative Law - Audit Fees - Levy of Audit Charges - Section 81(1)(b) of the Maharashtra Co-operative Societies Act, 1960 read with Rule 74 of the Maharashtra Co-operative Societies Rules, 1961 - The petitioner society challenged Circular dated 4th June 1992 which levied audit and supervision charges on all societies including those opting for private audit. The court held that the Circular is contrary to Section 81(1)(b) which provides that if a society arranges its own audit through a qualified auditor, the Registrar shall not levy audit fees. The Rule cannot override the statutory provision. (Paras 5-6)
Issue of Consideration
Whether a Co-operative Society can be compelled to pay audit fees/charges as per Circular dated 4th June 1992 even when it chooses to get its accounts audited by an auditor from the Panel of Auditors maintained by the Registrar or by a Chartered Accountant holding a Certificate in Co-operative audit.
Final Decision
The court quashed the Circular dated 4th June 1992 and all other circulars forming the subject-matter of the petition, to the extent they levy audit fees on societies that opt for private audit.
Law Points
- Rule 74 of Maharashtra Co-operative Societies Rules
- 1961 cannot override Section 81(1)(b) of the Maharashtra Co-operative Societies Act
- 1960
- Audit fees cannot be levied on societies that arrange audit through private auditors
- Circular dated 4th June 1992 is ultra vires the Act
