Case Note & Summary
The order arose from two writ petitions before the Aurangabad Bench of the Bombay High Court. One petition was filed by the Auditors' Council and Welfare Association through its vice president, and the other by an individual auditor, Padmakar Avdhutrao Kulkarni. Both challenged Clause 6(x) of the Circular dated 1st April 2026 issued by the Commissioner for Cooperation, Marketing and Textile Department, Government of Maharashtra. The impugned clause permanently debarred an auditor whose name had been removed from the panel under Rule 69(1)(g) of the Maharashtra Co-operative Societies Rules, 1961 from making any future application for empanelment as an auditor for auditing the accounts of co-operative societies under the Maharashtra Co-operative Societies Act, 1960. The petitioners contended that the condition was unconstitutional and contrary to Section 81 of the Act and the Rules. They relied on an earlier decision of a coordinate bench in Chaitanya Suresh Kambli v. State of Maharashtra, Writ Petition No. 5120 of 2026 dated 29th July 2026, which had held condition (x) of Clause 6 to be violative of Article 19(1)(g) of the Constitution of India and in excess of the power conferred under Rule 69(1)(g). The present division bench heard the senior counsel for the petitioner and the Assistant Government Pleader for the State, perused the coordinate bench decision, and disagreed with its reasoning. The bench observed that prescribing qualifications and disqualifications for empanelment of auditors under the Co-operative Societies Act was only an invitation to offer, and no auditor had a vested right to claim empanelment. It further observed that the authorities were empowered under Section 81(1)(b) read with Explanations I and II, Section 81(5A), Section 81(5B) and provisos thereto, and Rule 69(1)(g) to prescribe such disqualifications. The bench opined that Clause 6(x) only debarred an auditor from empanelment under the Maharashtra Co-operative Societies Act and did not prevent the auditor from conducting audit work under other Acts or from carrying on any other occupation. Therefore, the right to practise any profession or carry on any occupation, trade or business was not affected, and there was no violation of Article 19(1)(g); even if a restriction existed, it would fall within reasonable restrictions under Article 19(2). The bench also noted several Supreme Court and Bombay High Court decisions on eligibility criteria and Article 19(1)(g) that had not been brought to the notice of the coordinate bench. However, the bench recognized that the permanent debarment could be harsh in some cases and that its validity might depend on the gravity of the reasons for removal. Consequently, the bench proposed three questions of law to the Chief Justice for reference to a larger bench: (i) whether the Commissioner has power to prescribe qualifications and disqualifications under the relevant provisions; (ii) whether the permanent debarment under Clause 6(x) is arbitrary and unreasonable under Article 14; and (iii) whether the condition violates Article 19(1)(g) when the debarment is limited to empanelment under the Maharashtra Co-operative Societies Act. The court did not decide the merits and referred the matter to the Chief Justice for constitution of a larger bench.
Headnote
A) Constitutional Law - Right to Practise Profession - Reasonable Restrictions - Constitution of India, Articles 19(1)(g), 19(2) - Condition 6(x) of Circular dated 1 April 2026 permanently debarred an auditor removed from panel from applying for empanelment, but did not prohibit audit work under other laws; thus the right to practise any profession or carry on any occupation, trade or business was not affected; even if considered restriction, it would be reasonable under Article 19(2) - Held that the coordinate bench erred in holding violation of Article 19(1)(g) (Paras 7-8). B) Cooperative Societies - Empanelment of Auditors - Statutory Power - Maharashtra Co-operative Societies Act, 1960, Sections 81(1)(b), 81(5A), 81(5B), Explanations I and II; Maharashtra Co-operative Societies Rules, 1961, Rule 69(1)(g) - Authorities prescribing qualification/disqualification for auditors act in invitation to offer; no vested right; removal for serious reasons or FIR can justify future disqualification; such power exists under the provisions - Held that Commissioner is empowered to prescribe disqualifications (Paras 4-6). C) Constitutional Law - Equality Before Law - Arbitrariness - Constitution of India, Article 14 - Whether permanent debarment for removal is unfair, arbitrary, unreasonable depends on gravity of reasons in each case; if removal on serious allegation and FIR, debarment justified; if not grave, court may find permanent debarment unjustified; hence general proposition cannot be held unconstitutional in all cases - Held that the question of Article 14 violation requires case-specific adjudication and was referred to larger bench (Paras 10-11). D) Judicial Precedent - Reference to Larger Bench - Conflict of Decisions - High Court of Judicature at Bombay - The bench disagreed with coordinate bench decision in Chaitanya Suresh Kambli v. State of Maharashtra, WP No. 5120 of 2026 dated 29 July 2026, which had held condition 6(x) ultra vires and violative of Article 19(1)(g); the present bench referred three questions to Chief Justice for constitution of a larger bench - Held that matters be placed before larger bench (Paras 2-3, 11).
Issue of Consideration
Whether the Commissioner has power to prescribe permanent disqualification for empanelment of auditors under the Maharashtra Co-operative Societies Act, 1960; whether Clause 6(x) of Circular dated 1 April 2026 is arbitrary and unreasonable violating Article 14 of the Constitution of India; and whether it violates Article 19(1)(g) of the Constitution of India.
Final Decision
The division bench disagreed with the coordinate bench decision and referred the following three questions of law to the Hon'ble Chief Justice for constituting a larger bench: (I) whether the Commissioner has power under Section 81(1)(b) read with Explanations I and II, Section 81(5B) and provisos, and Rule 69(1)(g) to prescribe qualifications and disqualifications for empanelment of auditors; (II) whether Clause 6(x) of the Circular dated 1 April 2026 permanently debarring removed auditors is arbitrary, unreasonable and violative of Article 14; and (III) whether Clause 6(x) violates Article 19(1)(g) when the debarment is limited to empanelment under the Maharashtra Co-operative Societies Act, 1960 and not any other law. No final decision on merits was made.
Law Points
- Prescribing qualification/disqualification for empanelment of auditors is an invitation to offer
- no vested right to empanelment
- authorities can prescribe disqualifications under Section 81(1)(b) read with Explanations and Section 81(5B) and Rule 69(1)(g)
- condition debarring auditor from empanelment only under Maharashtra Co-operative Societies Act does not affect right to practice other professions
- hence no violation of Article 19(1)(g)
- restriction is reasonable under Article 19(2)
- constitutionality of permanent debarment depends on facts of each case
- general proposition cannot be held unconstitutional in all cases
