Friends Co-Operative Housing ... vs State Of Maharashtra And Anr.
2006 Latest Caselaw 89 Bom

JUDGMENT

Patel J.N., J.

1. Heard learned Counsel for the parties.

2. The petitioner is a Co-operative Housing Society, registered under the Maharashtra Co-operative Societies Act, and has challenged the Circular issued under Rule 74 of the Maharashtra Co-operative Societies Rules, 1961, which vests in the Registrar powers to levy audit charges and supervision charges payable annually, on or before a specified date by all or any class of societies, including the Societies in liquidation, at such rates as may be fixed by the Registrar with the approval of the State Government.

3. The specific challenge is in respect of the Circular, dated 4th June, 1992, issued by Respondent No. 2 in exercise of his power under Rule 74 of the said Rules, which is annexed as Annexure-I, which, according to the petitioner, is contrary to provision of Section 81(1)(b) of the Maharashtra Co-operative Societies Act, 1960.

4. The petitioner has also sought quashing of various Circulars, which form the subject-matter of the petition.

5. The limited question, which arises for determination, is as to whether a Society can be insisted to pay audit fees/charges as specified in the Circular even in case where the Society chooses to arrange to get their accounts audited by an auditor from the Panel of Auditors maintained by the Registrar, or by a Chartered Accountant holding a Certificate in Cooperative audit, issued by the Institute of Chartered Accountants of India, as contemplated under Section 81(1)(b) of the Maharashtra Co-operative Societies Act, 1960.

6. The issue has already been covered by the decision of this Court in the case of Maharashtra Certified Auditors Association [Regd.], Solapur and etc. v. State of Maharashtra and Anr. , wherein this Court has held as under:

Levy by Registrar from Chartered Accountants of 20% of audit fees charged by them for audit of Co-operative Societies, is unsustainable in law, arbitrary and unconstitutional. Registrar has no power to levy audit charges or supervision charges under Rule 74 on the Chartered Accountant or Co-operative Auditor for work of auditing carried out by them. Rule 74 contemplates levy of audit charges and supervision charges only if the audit is conducted by the authorities through their own departmental Chartered Accountants or Chartered Accountants appointed specially by them for carrying out the audit of any particular society. The Rule does not take into account either audit carried out by the Societies independently or through Chartered Accountant or Co-operative Auditor named in the panel. In any view of the matter, Rule 74 does not at all contemplate recovery of such 20% of fees from the audit fees of the auditors. Firstly, that would be plainly arbitrary as there is no provision of law to recover such 20% from the charges or fee which is paid by the Society to the Chartered Accountant or Auditors. Secondly, there is no service rendered by the Registrar to the Chartered Accountants in cases where the audit is conducted under Section 81(1)(b) by the Chartered Accountant directly under a contract with the Society. Merely preparing a list of names of the panel does not entitle the authorities to levy of 20% of fees from everybody's audit fees which are received by the Chartered Accountant from various Societies for rendering their services. Further, it is not necessary in light of Section 81(1)(b) to prepare and maintain any panel of Chartered Accountants. Assuming that by virtue of the provision of Rule 69 the Registrar is entitled to prepare a panel then in that event the same is prepared with a view to provide guidance to the various Societies of competent Chartered Accountants available and thus levy of any fees has to be from the Societies and not from the Chartered Accountant or Certified Auditors.

and, therefore, the impugned Circular issued by respondent No. 2 under Rule 74 ceased to exist, it having been quashed and set aside in the aforesaid decision of this Court, and, therefore, it is quashed and set aside qua the petitioner-Society.

7. Rule is made absolute in the aforesaid term with no order as to costs.