Yuva Shakti Industrial ... vs State Of Maharashtra And Ors
2017 Latest Caselaw 7075 Bom

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             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                    CIVIL APPELLATE JURISDICTION

                       WRIT PETITION NO. 7909 OF 2017

        Tirupati Magasvargiya Industrial
        Cooperative Societies Ltd. Shivnakwadi             ..Petitioner
              vs.
        State of Maharashtra & Ors.                        ..Respondents

                                       WITH
                       WRIT PETITION NO. 7910 OF 2017

        Shri Addhikarta Magasvargiya Industrial
        Cooperative Society Ltd. Mangao                    ..Petitioner
              vs.
        State of Maharashtra & Ors.                        ..Respondents

                                       WITH
                       WRIT PETITION NO. 7912 OF 2017

        Nav Maharashtra Magasvargiya
        Kamgar Yantramag Audyogik
        Sahakari Sanstha Maryadit                          ..Petitioner
              vs.
        State of Maharashtra & Ors.                        ..Respondents

                                       WITH
                       WRIT PETITION NO. 7913     OF 2017

        Manav Jivan Magasvargiya
        Audyogik Sahakari Sanstha Maryadit                 ..Petitioner
              vs.
        State of Maharashtra & Ors.                        ..Respondents

                                       WITH
                       WRIT PETITION NO. 8003     OF 2017

        Jayvantravji Awaleso Magasvargiya
        Audyogik Sahakari Sanstha Maryadit                 ..Petitioner
              vs.
        State of Maharashtra & Ors.                        ..Respondents




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                                      WITH
                      WRIT PETITION NO. 8004    OF 2017

        Yuva Shakti Industrial Cooperative
        Society Ltd. Tasgaon, through
        its Secretary                                    ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents

                                      WITH
                      WRIT PETITION NO. 8005    OF 2017

        Pratik Industrial Cooperative
        Society Ltd. Ogalewadi, through
        its Secretary                                    ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents

                                       WITH
                       WRIT PETITION NO. 8161   OF 2017

        Kalikamata Magasvargiya
        Audyogik Sahakari Sanstha Maryadit,
        Sindhudurg, through its Secretary                ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents

                                       WITH
                      WRIT PETITION NO. 8163    OF 2017

        Shardul Pharmaceuticals Industrial Cooperative
        Society Ltd. Usmanabad, through
        its Secretary                                  ..Petitioner
              vs.
        State of Maharashtra & Ors.                    ..Respondents


                                       WITH
                       WRIT PETITION NO. 8164   OF 2017

        Rajiv Magasvargiya
        Audyogik Utpadak Sahakari Sanstha
        Maryadit, Mhaswad                                ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents



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                                       WITH
                       WRIT PETITION NO. 8165   OF 2017

        Harshawardhan Industrial Cooperative
        Society Limited, Islampur                        ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents

                                       WITH
                       WRIT PETITION NO. 8174   OF 2017

        Laxmi Magasvargiya
        Industrial Co-op. Industries Ltd.,
        Minache, through its Chairman                    ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents


                                       WITH
                       WRIT PETITION NO. 8175   OF 2017

        Sarthak Magasvargiya
        Audyogik Sahakari Sanstha Maryadit,
        Kolhapur, through its Secretary                  ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents


                                       WITH
                       WRIT PETITION NO. 8176   OF 2017

        Bhimratna Magasvargiya
        Audyogik Sahakari Sanstha Maryadit,
        Sindhudurg, through its Secretary                ..Petitioner
              vs.
        State of Maharashtra & Ors.                      ..Respondents



        Mr. A. Y. Sakhare - Senior Advocate i/b. Mr. P. P. Kulkarni             for
        Petitioners in all Writ Petitions.
        Mr. S. H. Kankal - AGP for State in all Writ Petitions.




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                                         CORAM : M. S. SONAK, J.

DATE: 13 SEPTEMBER 2017

COMMON JUDGMENT :

1] Not on board. In view of urgency, taken on production board.

2] Heard Mr. Sakhare, learned Senior Advocate for the

petitioners in all these petitions and Mr. Kankal, learned AGP for the

Respondents.

3] Mr. Sakhare, learned Senior Advocate for the petitioners

submits that the issues raised in all these petitions are one and

the same and therefore, writ petition no. 7909 of 2017 may be

treated as a lead petition.

4] In writ petition no. 7909 of 2017, the petitioners have applied

for the following reliefs :

"a) That this Hon'ble Court may be pleased to issue appropriate Writ and/or direction and/or order under Article 226 of the Constitution of India, to quash & set aside an order dated 12th May 2017 passed by the Respondent No. 5 & consequential order passed therein;

b) That this Hon'ble Court may be pleased to issue appropriate Writ and/or direction and/or order under Article 226 of the Constitution of India to quash and set aside order passed by the Respondent No. 5 & 6 under section 81 of the M.C.S. Act which is not made available to the petitioner;

B(1) That this Hon'ble Court may be pleased to issue

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appropriate Writ and/or direction and/or order under Article 226 of the Constitution of India directing the Respondent No. 5 & 6 to provide the petitioner society Test Audit Report and also further direct the Respondent No. 5 to provide order passed on Test Audit Report submitted by the Respondent No. 6;

B(2) By order of this Hon'ble Court the Respondent Nos. 5 & 6 and their agents be restrained from taking any actions or coercive steps pursuant to the Order passed on test audit the copy of which is not furnished till date to the Petitioner Society and its Directors."

c) That this Hon'ble Court may be pleased to issue appropriate Writ and/or direction and/or order under Article 226 of the Constitution of India, to direct the Respondents to give opportunity of hearing in respect of Audit Report submitted by the Auditor and further direct Respondent to take action as per Section 82 of the Maharashtra Cooperative Societies Act;

d) That this Hon'ble Court may be pleased to issue appropriate Writ and/or direction and/or order under Article 226 of the Constitution of India directing the Respondents to follow procedure prescribed under Section 82 of the Maharashtra Cooperative Societies Act and permit petitioner society to rectify defects if any disclosed in the Test Audit report;

e) That pending hearing and final disposal of the petition the respondents be restrained from taking any action in pursuance to the Audit Report submitted by the Respondent No. 6.

f) That the Respondents be ordered to pay the petitioners cost of the petition;

g) For such further and other reliefs as the nature and circumstances of the case may require."

5] Since, the first order in point of time is the order dated 12 th

May 2017, it is necessary to appreciate challenge in respect

thereof. The order dated 12th May 2017 made by the District Deputy

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Registrar is in exercise of powers conferred upon him by Section

81 of the Maharashtra Co-operative Societies Act, 1960 (MCS Act).

By the impugned order dated 12th May 2017, the District Deputy

Registrar has appointed a Test Auditor to audit the accounts of the

petitioner society.

6] Mr. Sakhare, learned Senior Advocate for the petitioners

submits that the impugned order dated 12 th May 2017 is vitiated by

malafides. He submits that in this case necessary audit was

conducted by the petitioner society and there was nothing illegal or

irregular detected. In these circumstances, Mr. Sakhare submits

that the District Deputy Registrar had no jurisdiction to make the

impugned order and appoint Test Auditor.

7] Learned AGP submits that the impugned order dated 12th May

2017 has already worked out itself. He submits that the Test Auditor

has not only audited the accounts of the petitioner society but has

further submitted his report to the Registrar in terms of the

provisions of Section 81 of the MCS Act. Learned AGP further

submits that from perusal of the impugned order it is quite clear that

the petitioner society had failed to appoint any Auditor or audited

its accounts right from its inception and in these circumstances, the

District Deputy Registrar was justified in making the impugned

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order.

8] The recitals in the impugned order make reference to certain

financial aid provided by the State Government to the society. The

recitals also makes reference to Gazette Notifications as well as

notices in the matter of appointment of Auditors by the society and

the submission of timely audit reports at the intervals prescribed.

The operative portion of the impugned order dated 12th May 2017

states that the petitioner society, right from the date of inception,

failed to appoint any auditor. The impugned order states that there

has been no compliance on the part of the petitioner society of the

directions for audit scheme of audit reports. There are also prima

facie observations with regard to account of the aid / finances

provided by the State Government to the society.

9] Section 81 of the MCS Act in the first instance, requires the

societies shall cause to audit its accounts and submit such audit

reports to the authorities prescribed. The proviso to section 81(1)

(a) provides that if the Registrar is satisfied that the society has

failed to intimate and file returns as provided by sub section (2A) of

section 75 and sub section (1B) of section 79, the Registrar may by

order, for reasons to be recorded in writing, cause the accounts of

the society to be audited by a auditor from the panel of auditors

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approved by the State Government or an Authority authorized by it,

in this behalf.

10] There is really no material on record to accept the

contentions of Mr. Sakhare as regards malafides or as regards

compliance by the society of its legal obligation in the matter of

audit of its accounts. A charge of malafides is easier made than

made out. There is no allegation against any particular person or

authority. No particular person or authority have been impleaded as

parties in this petition. In the absence of all this, it is not possible to

interfere with the impugned order on the grounds of legal malice or

mala fides.

11] There is also no reason to dispute the statements in the

recitals of the impugned orders. No material has been placed on

record in support of the contention that auditors were appointed and

timely audit reports were submitted. The provisions of Section 81

confer ample powers upon the District Deputy Registrar to appoint

test auditors in a situation of this nature. Accordingly, it cannot be

said that the impugned order was in excess of jurisdiction. Further,

the impugned order has already been worked out, in the sense, that

the test auditors appointed in pursuance of the impugned order

have already submitted their audit reports. Accordingly, there is no

case made out to interfere with the impugned order.

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        12]     The relief in terms of prayer clause B(1) proceeds on the

basis that the audit by the Test Auditor in terms of the impugned

order dated 12th May 2017 is already complete. This relief is in the

context of making available to the petitioner society the copy of the

test audit report as well as further orders that may have been made

on the test audit report.

13] A writ petition under Articles 226 and 227 of the Constitution of

India to merely seek a copy of the test audit report is not required

to be entertained. The petitioners, have several alternate and

efficacious remedy available to them. It is for the petitioners to avail

of such remedies and in pursuance of such remedies to obtain the

copies, if permissible under the law.

14] The relief in terms of prayer clause B(2) is also entirely

premature. In this regard, however, Mr. Sakhare submits that the

provisions contained in Section 81(5B) of the MCS Act inter alia

provide that where the auditor has come to a conclusion in his audit

report that any person is guilty of any offence relating to the

accounts or any other offences, he shall file a specific report to the

Registrar within a period of 15 days from the date of submission of

his audit report. The auditor concerned shall, after obtaining written

permission of the Registrar, file a first information report of the

offence. The auditor who fails to file first information report shall be

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liable for disqualification and his name should be liable to be

removed from the panel of auditors and he shall also be liable to

any other action as the Registrar may think fit.

15] Mr. Sakhare submits that before the auditor proceeds to file

any FIR against the society or its board of directors, principles of

natural justice would require that society and its board of directors

are furnished the copy of his report. Mr. Sakhare submits that in

terms of section 82 of the MCS Act, the society has opportunity to

rectify the defects which are pointed out. Mr. Sakhare submits that

if any FIR is filed before grant of opportunity to the society or its

board of directors to rectify the defects pointed out in the audit

report or before the society and its board of directors are provided

with the test auditors report and any consequential orders made

thereon by the Registrar or any other authority, initiation of any

coercive action like institutions of FIR will violate the principles of

natural justice.

16] Mr. Sakhare has been unable to point out any provision or

authority which requires compliance with principles of natural justice

before lodging of FIR. In fact, in V. C. Shukla vs. State (Delhi

Administration)1, the Supreme Court has held that the question of

an accused being heard prior to the commencement of prosecution

does not arise. In cases where the law requires sanction to be

1 1980 Supp. SCC 249

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given by the appointing authority before a prosecution can be

launched against a government servant, it has never been

suggested that the accused must be heard before the sanction is

accorded or before any FIR is lodged. The question of sanction

arises at a point of time when there is no danger to the liberty of the

subject and the accused at that stage is not in the picture at all. It is

only after sanction is accorded that an accused is brought to trial or

proceedings are started against him when he is to bee heard and

can challenge the validity of the sanction. Similarly, when a first

information report is filed before a police officer, the law does not

require that the officer must hear the accused before recording it or

submitting a charge-sheet to the court.

17] Similarly, in Anju Chaudhary vs. State of Uttar Pradesh &

Anr.2, the Hon'ble Court after digesting several previous decisions

has ruled that an accused is not entitled to a hearing pre-

registration of an FIR ruled audi alteram partem is subject to

exceptions. Such exceptions may be provided by law or by

necessary implications where no other interpretation is possible.

The principles of natural justice have application, both in civil and

criminal jurisprudence. The purpose of the Criminal Procedure Code

and the Penal Code is to effectively execute administration of

criminal justice system and protect society from perpetrators of

2 (2013) 6 SCC 384

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crime. It has a twin purpose; firstly to adequately punish the

offender in accordance with law and secondly, to ensure prevention

of crime. On examination, the scheme of the Criminal Procedure

Code does not provide for any right of hearing at the time of

registration of the first information report. The very purpose of fair

and just investigation shall stand frustrated if pre-registration

hearing is required to be granted to a suspect. It is not that the

liberty of an individual is being taken away or is being adversely

affected, except by the due process of law. The entire scheme of

the Cr.P.C. is unambiguously supports the theory of execution of

audi alteram partem pre-registration of an FIR.

18] In any case, since the main challenge in the petition to the

order dated 12th May 2017 fails, there is no necessity to go to other

reliefs, which are, in the nature of ancillary reliefs in the petition.

The petition, in a sense, is premature, because it proceeds on the

basis that there will be no compliance on the part of the authorities

with the provisions of MCS Act including, the provisions contained in

section 82 of MCS Act.

19] There is accordingly no case made out for grant of any reliefs

in this petition. This petition is dismissed. There shall however be no

order as to costs.

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20] Since, issue involved in the remaining petitions is the same,

for the reasons as aforesaid, the remaining petitions are also

hereby dismissed with no order as to costs.

21] All these petitions are dismissed. However, there shall be no

order as to costs.

(M. S. SONAK, J.) Chandka