Keshabhai Parthibhai Gol vs Joint Registrar And Special ...
2023 Latest Caselaw 5669 Guj

                                                                                   NEUTRAL CITATION




    C/SCA/9627/2022                              CAV JUDGMENT DATED: 04/08/2023

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              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 9627 of 2022
                                  With
          CIVIL APPLICATION (FOR INTERIM RELIEF) NO. 1 of 2022
             In R/SPECIAL CIVIL APPLICATION NO. 9627 of 2022
                                  With
              R/SPECIAL CIVIL APPLICATION NO. 9629 of 2022
                                  With
               CIVIL APPLICATION (FOR STAY) NO. 1 of 2022
             In R/SPECIAL CIVIL APPLICATION NO. 9629 of 2022
                                  With
              R/SPECIAL CIVIL APPLICATION NO. 9630 of 2022
                                  With
          CIVIL APPLICATION (FOR INTERIM RELIEF) NO. 1 of 2022
             In R/SPECIAL CIVIL APPLICATION NO. 9630 of 2022

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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1 Whether Reporters of Local Papers may be allowed to see the judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of the judgment ?

4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

=============================================================== KESHABHAI PARTHIBHAI GOL Versus JOINT REGISTRAR AND SPECIAL AUDITOR CO-OPERATIVE SOCIETIES, (VIBHAGIYA), AHMEDABAD =============================================================== Appearance:

MR DIPEN DESAI(2481) for the Petitioner(s) No. 1 MR AAYAN PATEL, AGP for the Respondent(s) No. 1,2,3 ===============================================================

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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Date : 04/08/2023

CAV JUDGMENT

1. Heard learned advocate Mr.Dipen Desai for

the petitioners and learned Assistant

Government Pleader Mr.Aayan Patel for the

respondents.

2. Rule, returnable forthwith. Learned

Assistant Government Pleader Mr.Aayan Patel

waives service of notice of rule for the

respondents.

3. By these petitions, the petitioners have

challenged the notice dated 08.04.2022 as well

as communication/order dated 11.05.2022 passed

by the respondent No.1-Joint Registrar and

Special Auditor whereby the petitioners are

directed to deposit additional audit fees of

Rs.81,000/- in each of the petition with

interest at the rate of 12% and further audit

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work given to the petitioners of the other

Societies was cancelled as the petitioners did

not deposit the amount as directed.

4. As the facts arising in all the three

petitions are similar, the same were heard

analogously and are being disposed of by this

common judgment and order.

4.1. The petitioners are the panel

auditors of Co-operation Department. After

retirement, the petitioners were appointed as

panel auditors by the Registrar, Co-operative

Societies, Gujarat State by notification dated

21.05.2020.

4.2.                 Rule       38A     of           the     Gujarat               Co-

operative           Societies         Rules,          1965       (for         short

'the Rules') provides that scale of audit fees

payable by the society shall be as specified

in Schedule-A appended to the Rules. The

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Schedule-A of the Rules provides for different

audit fees for different kind of societies.

However, the respondents have adopted audit

fees prescribed by the notification dated

06.07.1982.

4.3. On 08.03.2016, the respondent No.1

allotted audit of the co-operative society to

the petitioners for audit of the year 2015-

2016. Petitioner of Special Civil Application

No.9427 of 2022 namely, Keshabhai Parthibhai

Gol carried out the audit of Palanpur Taluka

Prathmik Shikshakoni Dhiran Ane Sahakari

Mandali Limited and proposed to initiate

action under Section 93 of the Gujarat Co-

operative Societies Act, 1961 (for short 'the

Act, 1961') for recovery of the amount

misappropriated and recommended to initiate

action against nine committee members of the

society and one manager namely, Shri Somabhai

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Bhatiya.

4.4. It is the case of the petitioners

that being aggrieved, Shri Somabhai Bhatiya-

Manager of the said Co-operative Society made

a complaint against the petitioners for

recovering the additional audit fees paid by

the Society to the petitioners.

4.5. The respondent-authorities,

pursuant to the complaint of Shri Somabhai

Bhatiya issued show cause notice to the

petitioners to show cause as to why the

additional audit fees should not be recovered

as the petitioners were paid audit fees of

Rs.90,000/- for three years instead of

Rs.9,000/- as per the aforesaid Schedule and

the notification. The petitioners were

therefore called upon to refund the amount of

Rs.81,000/- towards fees received from the Co-

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operative Societies with 12% simple interest

within ten days from the date of issuance of

the notice on 02.11.2020 to the petitioners.

4.6. The petitioners filed a reply

contending that there is no illegality

committed by the petitioners and the audit

fees were charged which is permissible under

the notification dated 06.07.1982. It was also

pointed out by the petitioners that other

auditors are also charging similar audit fees

from other societies and therefore the

petitioners should not be targeted as

petitioners did not commit any illegality.

4.7. It is the case of the petitioners

that the concerned Co-operative Societies also

filed their replies before the respondent No.1

and pointed out that the audit fees charged by

the petitioners were in consonance with the

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notification dated 06.07.1982 and the audit

fees were paid by the Account Payee Cheque by

the societies to the petitioners. The

petitioners also submitted the receipts of the

audit fees charged by the other auditors in

other societies before the respondent No.1.

4.8. It is the case of the petitioners

that the respondent No.1 without considering

the reply of the petitioners and without

considering the facts on record, issued the

impugned notice dated 08.04.2022 directing the

petitioners to deposit amount of Rs.81,000/-

with simple interest at the rate of 12% per

annum, total Rs.2,05,000/- by each of the

petitioners with respect to the audit

conducted of five Co-operative Societies.

4.9. It is further the case of the

petitioners that the petitioners were also

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coerced to give an undertaking on 30th April,

2022 that the petitioners would deposit the

said amount, failing which, the name of the

petitioners would be cancelled from the panel

of auditors.

4.10. The petitioners thereafter by letter

dated 03.05.2022 informed the respondent No.1

that the petitioners would like to challenge

the notice dated 08.04.2022 before the

appropriate legal Forum and therefore, would

not deposit additional audit fees as directed

by the respondent No.1.

4.11. The petitioners thereafter preferred

these petitions on 4th May, 2022.

4.12. Thereafter, it appears that as the

petitioners did not deposit the amount

directed by the impugned notice dated

08.04.2022, the respondent No.1 passed an

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order dated 11.05.2022 cancelling the audit

work given to the petitioners for the year

2022-2023 under Section 84(1) of the Act,

1961.

4.13. This Court vide order date 13th June,

2022 issued the notice and granted stay on the

recovery pursuant to the impugned notice dated

08.04.2022 which has continued till final

disposal of these petitions. The petitioners

also amended the petitions by challenging the

order dated 11.05.2022 which was also granted.

5.1. Learned advocate Mr.Dipen Desai

appearing for the petitioners submitted that

the respondent-authorities have initiated

action on the basis of the complaint filed by

Shri Somabhai Bhatiya-Manager of Palanpur

Taluka Prathmik Shikshakoni Dhiran Ane

Sahakari Mandali Limited as the petitioners

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recommended actions against the Directors of

the Co-operative Society under Section 93 of

the Act, 1961 due to the irregularities found

out during the course of the audit of the

society.

5.2. It was submitted that the

petitioners have not charged any additional or

excessive audit fees as per the notification

dated 06.07.1982 of the State Government. It

was submitted that the Co-operative Societies

have paid the audit fees by Account Payee

Cheque to the petitioners and no complaint is

filed by such society for excess audit fees

paid to the petitioners.

5.3. It was further submitted that the

respondent-authorities have passed the

impugned order without considering the reply

of the petitioners.

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5.4. It was submitted by learned

advocate Mr.Dipen Desai that the petitioners

were coerced to give undertaking for refund of

the audit fees as per the impugned order which

was later on cancelled by the petitioners to

file these petitions in order to challenge the

impugned order. It was submitted that after

filing of the petitions, respondent No.1 has

cancelled the audit allotted to the

petitioners by the order dated 11.05.2022

without issuing notice or without providing

any opportunity of hearing to the petitioners.

It was therefore prayed that the impugned

notice as well as the order are liable to be

quashed and set aside.

6.1.                  On    the         other         hand,            learned

Assistant            Government        Pleader         Mr.Aayan             Patel

for the respondents submitted that the present

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petitions are not maintainable in view of the

undertaking dated 30th April, 2022 submitted

by the petitioners wherein the petitioners

admitted having charged excessive audit fees

which was undertaken to be reimbursed to the

Co-operative Societies with interest at the

rate of 12% per annum by 20th May, 2022 but

the same was not repaid under the pretext of

coercion which is not true and correct.

6.2. It was submitted that in view of

the principles of estoppel, the petitioners

are required to be prevented from agitating

these petitions in view of the undertaking

dated 30th April, 2022 and the petitioners

cannot contend that the fees charged by the

petitioners were not excessive in nature.

6.3. It was further submitted by

learned Assistant Government Pleader Mr.Patel

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that the audit fees would be chargeable as per

the notification dated 06.07.1982 of the State

Government wherein it is specified that in

case of Service (PACS) i.e. Primary

Agricultural Credit Societies and Credit

Societies in general, a maximum amount of

Rs.3,000/- would be chargeable as fees. It was

therefore submitted that the petitioners could

not have charged the excess audit fees.

6.4. Learned Assistant Government

Pleader Mr.Aayan Patel thereafter referred to

and relied upon the Rule 38A of the Rules

which provides for scale of audit fees payable

in terms of Schedule-A to the Rules and

submitted that the petitioners could not have

paid the fees of more than Rs.3,000/- as audit

fees even as per the said Schedule.

6.5.                It     was        submitted                that             the






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 C/SCA/9627/2022                                    CAV JUDGMENT DATED: 04/08/2023

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petitions           are     therefore              required             to         be

dismissed with cost.

7. Having heard the learned advocates for the

respective parties and having considered the

submissions made on behalf of the petitioners

and the respondent-authorities, it appears

that the respondent authorities initiated

action against the petitioners for recovery of

the alleged excessive audit fees upon the

complaint made by the disgruntled person

namely, Shri Somabhai Bhatiya-Manager of the

Co-operative Societies, as the petitioners

recommended action under Section 93 of the

Act, 1961 for the irregularities found during

the course of the audit of the Society.

8. It is also not in dispute that the

petitioners have been asked to give an

undertaking to reimburse the amount as per the

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impugned order with 12% interest per annum to

the respective Society and thereby prevented

the petitioners from challenging the impugned

order which appears to be contrary to the

notification dated 06.07.1982 read with Rule

38 of the Rules, as the said notification and

the Rules provide maximum audit fees of

Rs.3,000/- for only those societies which have

undertaken distribution activities. The audit

fees charged by the petitioners was for the

audit of the societies which do not undertake

distribution activities and therefore, the

impugned order of recovery of the excess audit

fees is contrary to the notification dated

06.07.1982 as well as Schedule appended to

Rule 38A of the Rules.

9. The appointment order dated 21.05.2020

also clearly shows that the petitioners are

entitled to charge the audit fees in

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accordance with the notification dated

06.07.1982 and there is no stipulation that

maximum audit fees of Rs.3,000/- shall be

charged in the said order of appointment. Even

earlier also in the appointment orders dated

29.11.2016 and 12.11.2007 issued by the

respondent No.1 in the years 2016 and 2017,

there is no such stipulation that maximum

audit fees of Rs.3,000/- would be charged by

the petitioners.

10. It appears that the respective Co-

operative Societies have never complained of

charging excess audit fees by the petitioners

more than the alleged maximum amount of

Rs.3,000/- towards the audit fees. The

Societies have paid Rs.30,000/- towards audit

fees for each year by Accout Payee Cheque and

no grievance is raised for payment of such

audit fees.

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11. The notification dated 06.07.1982

prescribes for charging the audit fees by the

different types of Co-operative Societies

under the Rule 38A of the Rules, 1965 read

with Section 84(7) of the Act, 1961. As per

the Non-agricultural Credit Co-operative

Societies and Service Employees Credit Co-

operative Societies, the audit fees is

prescribed as on the working capital and not

as maximum Rs.3,000/- which is prescribed only

for the societies engaged in distribution

activities. The respondent-authorities without

considering the nature of the activities of

the respective Co-operative Societies have

applied the maximum audit fees of Rs.3,000/-

applicable to the societies which are engaged

in distribution activities which is not as per

the notification dated 06.07.1982.

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12. Further, when the petitioners have

informed the respondent-authorities that they

are intending to challenge the impugned order

and cancelled the undertaking which was

alleged to have been taken under alleged

coercion, the respondent authorities could not

have issued the order dated 11.05.2022

recalling/cancelling the audit of the Co-

operative Societies already allotted to the

petitioners. The petitioners were never given

any opportunity of hearing before passing the

order dated 11.05.2022 and merely because the

petitioners did not deposit the amount as per

the impugned notice dated 08.04.2022, the

respondent authorities could not have

unilaterally passed the order dated 11.05.2022

cancelling the allotment of audit to the

petitioners.

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13. In view of the foregoing reasons,

petitions succeed and are accordingly allowed.

The impugned notice dated 08.04.2022 and order

dated 11.05.2022 are hereby quashed and set

aside. Civil Applications also stand disposed

of as the Special Civil Applications are

allowed. Rule is made absolute to the

aforesaid extent. No orders as to cost.

(BHARGAV D. KARIA, J) PALAK