Allowed

Dhanraj Nathuram Aswani v. the State of Maharashtra and Anr.

Bombay HC16 Nov 2021IA/793/2020

Case brief

AI extract

What is this about?

Office bearers of a co-operative bank sought quashing of an FIR founded solely on an auditor's inspection report. The court held the prosecution unsustainable on two counts: the report emanated from a test audit stayed by the court, and the FIR bypassed the procedure in section 81(5B) of the Maharashtra Co-operative Societies Act, 1960. The FIR was quashed.

What did the court decide?

Writ Petition No.4134 of 2019 and Writ Petition No.1110 of 2021 allowed; C.R. No.806 of 2019 registered at Pimpri Police Station quashed and set aside; Criminal Application No.444 of 2019 and Interim

Dhanraj Nathuram Aswani Vs the State of Maharashtra and… — Cooperative Societies | Bombay HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

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Digitally signed by SHRADDHA SHRADDHA KAMLESH KAMLESH TALEKAR TALEKAR Date: 2021.11.16 19:57:37 +0530

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WRIT PETITION NO.4134 OF 2019

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Amarjeetsingh Mohindersingh Basi Having offie address at : The Seva Vikas Co-operative Bank, Seva Bhavan, Near Sadhu Vaswani Garden, Hegdewar Path, Shashtri Nagar, Pimpri, Pune-411017

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Amar S. Mulihandani, Age : 61 years, R/at : Mishti Palaie, Pimpri, Pune – 411017.

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… Petitioners

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Versus

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State of Maharashtra (through Pimpri Poliie Station)

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Mr. Dhanraj N. Asawani, Flat No.601, A Wing, Phase 2, Ganeshyam Housing Soiiety, Pimple Saudagar, Pune – 411 027.

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… Respondents

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WITH

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CRIMINAL APPLICATION NO. 444 OF 2019

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(FOR INTERVENTION)

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WRIT PETITION NO.4134 OF 2019

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Shri Sagar Maruti Suryawanshi Age : Adult, Oii. : Advoiate, Having its offie at C-66, New Lawyer Chamber, Shivajinagar Court Campus, Pune … Appliiants

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In the matter between :

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Amarjeetsingh Mohindersingh Basi Having offie address at : The Seva Vikas Co-operative Bank, Seva Bhavan, Near Sadhu Vaswani Garden, Hegdewar Path,

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Shraddha Talekar, PS

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Shashtri Nagar, Pimpri, Pune-411017

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Petitioner

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Versus

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State of Maharashtra (through Pimpri Poliie Station)

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Mr. Dhanraj N. Asawani, Flat No.601, A Wing, Phase 2, Ganeshyam Housing Soiiety, Pimple Saudagar, Pune – 411 027 … Respondents

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WITH

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INTERIM APPLICATION NO. 793 OF 2020 (FOR VACATING STAY) IN

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WRIT PETITION NO.4134 OF 2019

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Shri Dhanraj Nathuram Aswani Age : 58 years, Oiiu. : Business, R/at : Ganesham Housing Soiiety, Phase-2, A-Wing, Flat No. 601, Pimple Saudagar, Pune – 411 027 … Appliiant

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In the matter between :

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Amarjeetsingh Mohindersingh Basi Having offie address at : The Seva Vikas Co-operative Bank, Seva Bhavan, Near Sadhu Vaswani Garden, Hegdewar Path, Shashtri Nagar, Pimpri, Pune-411017 … Petitioner Versus 1. State of Maharashtra (through Pimpri Poliie Station) 2. Mr. Dhanraj N. Asawani, Flat No.601, A Wing, Phase 2, Ganeshyam Housing Soiiety, Pimple Saudagar, Pune – 411 027 … Respondents

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Shraddha Talekar, PS

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WITH

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WRIT PETITION NO. 1110 OF 2021

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Mr. Chandrashekhar Ahirrao Age : 47 yars, Oiiupation : Business, R/at : Vaibhav Nagar, Pimpri, Pune – 411 017.

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Mr. Amar S. Mulihandani, Age : 61 years, Oii. : Business & Soiial Serviie R/at : Flat No. 304, Mishti Palaie, Nr. Tapovan Mandir, Pimpri, Pune-411 017 …

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… Petitioners

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Versus

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State of Maharashtra (through Pimpri Poliie Station)

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Mr. Dhanraj N. Asawani, Flat No.601, A Wing, Phase 2, Ganeshyam Housing Soiiety, Pimple Saudagar, Pune – 411 027 … Respondents

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Mr.Ravi Kadam, Senior Advoiate a/w. Mr. Karan Kadam, Mr. Shantanu R. Phanse & Mr. Arjun Kadam i/b Mr. S.S. Bedekar for petitioner in WP/4134/2019 & 1110/2021. Smt. A.S.Pai, PP a/w. Mrs. S.D. Shinde, APP for State. Mr. Sagar M. Kursia for appliiant in APPW/444/2019. Mr. Abhishek Kulkarni i/b Ms. Minal Chandnani for respondent No.2 and appliiant in IA/793/2020.

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CORAM : S.S. SHINDE AND N.J. JAMADAR, JJ. RESERVED ON : 30^th AUGUST 2021 PRONOUNCED ON : 16^th NOVEMBER 2021

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JUDGEMENT : (Per N.J. JAMADAR, J.)

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. Rule. Rule made returnable forthwith and with the ionsent of the learned iounsels for the parties, heard fnally.

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These petitions under Artiile 226 of the Constitution of India

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Shraddha Talekar, PS

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and seition 482 of the Code of Criminal Proiedure, 1973 (‘the Code’) have been instituted to quash and set aside the frst information report, bearing C.R. No. 806 of 2019, dated 19^th July 2019, registered with Pimpri Poliie Station for the offenies punishable under seitions 420, 406, 409, 465, 467, 468 and 471 read with 34 of the Indian Penal Code, 1860 (‘Penal Code’) at the instanie of the respondent No.2-the frst informant.

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The baikground faits neiessary for determination of these petitions ian be stated as under :-

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(a) The petitioner No.1-Amarjeetsingh Basi in Criminal Writ Petition No.4134 of 2019, is the Chief Exeiutive Offier of Seva Vikas Co-operative Bank, whiih is a soiiety registered under the Maharashtra Co-operative Soiieties Ait, 1960 (‘The Ait, 1960’). The petitioner No.2-Amar S. Mulihandani, who was allowed to join as a Co-petitioner by an order passed by this Court on 19^th Marih 2021, is the former Chairman of Seva Vikas Co-operative Bank Limited (“Bank”). Mr.Amar S. Mulihandani and Mr. Chandrashekhar Ahirrao, a former Direitor of the

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Shraddha Talekar, PS

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soiiety, are the petitioner No.2 and petitioner No.1, respeitively, in Writ Petition No.1110 of 2021.

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(b) Identiial reliefs of quashment of FIR No.806 of 2019 on almost identiial grounds have been sought in both the petitions. Thus, it may be expedient to note the substanie of the ihallenge.

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(i) The petitioners ilaimed that the tenure of the then Managing Committee of the Soiiety was to expire in the year 2019. Proiess to eleit a new iommittee was to iommenie from September/Oitober 2019. Former Direitors of the Soiiety, who iould not get eleited in the year 2014 eleitions, lodged false and motivated iomplaints with the Registrar of Co-operative Soiieties. In the test audit, ionduited in the month of May-2018, nothing adverse was found.

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(d) A fresh iomplaint was lodged with an oblique motive to regain iontrol of the affairs of the soiiety. By an order dated 14^th February 2019, the Commissioner and Registrar of Co-operative Soiieties direited the audit of 104 aiiounts in respeit of

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Shraddha Talekar, PS

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whiih audit had already been iarried out, by invoking the powers iontained in ilause (i) of subseition (3) of seition 81 of the Ait, 1960. The said audit whiih was, in effeit, the third test audit, was speiifially ordered to be iarried out by Shri R.U. Jadhawar, Joint Registrar (Audit) on the establishment of Commissionerate of Sugar. The petitioners assert that the said order was aituated with intent to have a desired audit report.

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(e) Mr.Narendra Pandurang Bramhankar, the then Direitor of the soiiety, ihallenged the said order dated 14^th February 2019 by fling a writ petition being Civil Writ Petition No.4828 of 2019 raising various grounds, iniluding the iniompeteniy of Mr. Jadhawar to ionduit the audit.

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(f) On 16^th April 2019, the Division Benih of this Court (Coram : Indrajit Mahanty & A.M. Badar, JJ.) passed an interim order in terms of prayer ilause (d) thereof, whereby the operation, implementation and effeit of the order dated 14^th February 2019 was stayed, pending the hearing and fnal disposal of the

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said petition. However, while uploading the order, it was wrongly reiorded that interim order was passed in terms of prayer ilause (b), whereby the petitioner therein had sought an opportunity of hearing before the report of test audit was submitted by the auditor to the Registrar. The error so irept in, in the order dated 16^th April 2019, was iorreited by a speaking to the minutes dated 13^th June 2019. The Division Benih ilarifed that ilause ‘(b)’ had already been iorreited as ilause ‘(d)’ at the time of signing of the order dated 16^th April 2019. However, the mistake was iommitted in the proiess of uploading of the order and, therefore, the registry was direited to ensure that the uploaded version was duly iorreited in aiiordanie with the order signed by the Court. The petitioners assert that the respondent No.1 and its offiers, iniluding the Registrar, Co-operative Soiieties and Mr. Jadhawar, the Auditor, were fully aware of the fait that by the interim order dated 16^th April 2019, the Division Benih had stayed the effeit, operation and implementation of the order dated 14^th

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Shraddha Talekar, PS

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February 2019 passed by the Registrar, Co-operation. (g) In the meanwhile, FIR Nos.235 of 2019 and 241 of 2019, were registered at the instanie of the Bank with Pimpri Poliie Station in ionneition with the loan transaitions. On 8^th May 2019, the Poliie Inspeitor, Pimpri Poliie Station addressed a iommuniiation to the Commissioner, Co-operation, soliiiting iertain doiuments. The Commissioner, Cooperation, in turn, requested Mr.Jadhawar, the Auditor, to submit inspeition report. On 29^th May 2019, the Poliie Inspeitor again ialled upon Mr. Jadhawar, the Auditor to submit inspeition report in respeit of the aiiounts whiih were the subjeit matter of FIR Nos.235 of 2019 and 241 of 2019 and other 49 aiiounts enumerated therein, with a request to fx the responsibility of the ionierned in the event the inspeition revealed malfeasanie and misappropriation.

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(h) On 10^th June 2019, the frst informant sought information under Right to Information Ait, 2005 from the offie of the Joint Registrar (Audit), Sugar

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Shraddha Talekar, PS

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Commissionerate as regards the iomplaints lodged against the alleged mismanagement and misappropriation of funds by the offie bearers of the Bank.

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(i) Pursuant thereto, on 16^th June 2019, the Joint Registrar (Audit), Sugar, furnished a iopy of inspeition report to the frst informant. Based on the inspeition report made available to the poliie inspeitor, the latter ialled upon the Registrar, Cooperative Soiieties to fx the responsibility and authorize an offier from the iooperation department to lodge the report. Mr. Jadhawar, the Auditor took a stand that the inspeition report was made available to the poliie pursuant to the direitions of the Registrar, Co-operation and, thus, there was no question of the FIR being lodged by the io-operation department. Nor the authorities were empowered to do so under the Ait, 1960. In response, the Poliie Inspeitor invited the attention of the Joint Registrar (Audit) to the provisions of seitions 81 and 83 of the Ait, 1960 and insisted for aition in aiiordanie with

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those provisions.

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(j) On 18^th July 2019, the frst informant approaihed Pimpri Poliie Station and lodged report solely based on the inspeition report furnished by Mr. Jadhawar. On the basis of the said report, irime was registered at C.R. No.806 of 2019 at Pimpri Poliie Station for the offenies punishable under seitions 420, 406, 409, 465, 467, 468 and 471 read with 34 of the Penal Code. The substanie of the report was that the inspeition report furnished by Mr. Jadhawar revealed that loans were advanied to persons/entities who were not eligible and/or ireditworthy, with a view to favour those persons/entities; the amounts of loans were divested to purposes other than the one for whiih the loans were availed; the money was siphoned off and misappropriated and deliberately no effeitive steps were taken to reiover the loan amounts resulting in huge non-produitive assets to the tune of Rs.238 irores. The offie bearers and the offiers of the soiiety, thus, iommitted the aforesaid offenies.

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(k) The petitioners have approaihed this Court seeking quashment of the above FIR on multiple grounds. First, the entire exeriise of ordering a third test audit was tainted with malafde. The appointment of Mr.Jadhawar, who was serving on the establishment of Sugar Commissionerate, was made with an oblique motive. In the faie of the interim order passed by this Court in Civil Writ Petition No. 4828 of 2019, dated 16^th April 2019, whereby interim relief was granted in the nature of stay of exeiution, operation and implementation of the order passed by the Registrar, Co-operation, under seition 81(3)(i) of the Ait, 1960, no further aition iould have been taken by Mr. Jadhawar. Aiiording to the petitioners, the authorities went ahead with the audit despite being fully iognizant of the order dated 16^th April 2019. Thus on this ground alone, the FIR, whiih is based on the inspeition report iarried out in teeth of the restraint ordered by the Court, deserves to be quashed and set aside.

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(l) In any event, the initiation of the proseiution at

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the instanie of respondent No.2-frst informant is legally unsustainable being barred by the express statutory provisions. Under seition 81(5B) of the Ait, 1960, it is the auditor, who is empowered to fle a frst information report, after obtaining written permission of the Registrar, where the audit report reveals iompliiity of any person for the offenies relating to the aiiount or any other offenies. In the event the auditor fails to initiate aition, the Registrar is empowered to iause a frst information report to be fled by a person authorized by him in that behalf. In order to iiriumvent this statutory presiription and overreaih the interim order passed by the Court, aiiording to the petitioners, the respondents resorted to the deviie of obtaining an inspeition report, though the sourie of the exeriise of inspeition was the order passed by Registrar, Cooperation under seition 81(3)(i) of the Ait, 1960, and initiate the proseiution on the strength thereof. This aition being wholly illegal and non-est in the eye of law, the FIR deserves to be quashed and set aside.

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(m) For the iompletion of reiord, it may be apposite to note that by an order dated 27^th August 2019, a Division Benih of this Court ( Coram : Ranjit More and N.J. Jamadar, JJ.) granted ad-interim relief in terms of prayer ilauses (i) and (d) of the petition (Civil Writ Petition No. 4134 of 2019) and stayed the further investigation and/or proieedings in relation to the above FIR.

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The respondent No.2-frst informant preferred an interim appliiation being Interim Appliiation No. 793 of 2020 to vaiate the aforesaid ad-interim order.

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Mr.Sagar Suryawanshi, against whom FIR Nos. 235 of 2019 and 241 of 2019 have been registered, fled Criminal Appliiation No. 444 of 2019 seeking permission to intervene in Criminal Writ Petition No. 4134 of 2019 and implead him as a party respondent, asserting that the petitioners have preferred the petition by suppressing material faits.

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In Criminal Writ Petition No. 4134 of 2019, the respondent No.2-frst informant fled an affdavit in reply and resisted the

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ilaim of the petitioners. The respondent No.2 iontended that from the bare perusal of the FIRs, it would beiome evident that grave offenies involving huge fraud have been prima-faiie made out against the petitioners and io-aiiused. The allegations in the FIR make out the ingredients of the offenies for whiih the petitioners have been arraigned. Sinie grave iognizable offenies have been prima-faiie made out, the investigating ageniy was enjoined to register the FIR in view of the law laid down by the Supreme Court in the iase of Lalita Kumari Vs. Government of Uttar Pradesh & Ors.¹ . Therefore, the instant petition does not deserve to be entertained. The respondent No.2 has adverted to various aits of omission and iommission whiih prima-faiie reveal the iompliiity of the petitioners.

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On faitual premise, it was denied that the authorities ionduited audit despite being aware of the restraint order passed by the Division Benih in Civil Writ Petition No. 4828 of 2019. Adverting to the orders passed by the Division Benih on 16^th April 2019, 2^nd May 2019 and 13^th June 2019, an endeavour was made on behalf of the respondent No.2 to demonstrate that till 13^th June 2019, ad-interim order in terms of prayer ilause (b) only i.e.,

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affording opportunity of the personal hearing to the petitioners, was in operation and not the stay to the exeiution, operation and implementation of the test audit order, dated 14^th February 2019 passed by the Commissioner of Co-operation and Registrar, Cooperative Soiiety.

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On the legal premise, the respondent No.2 iontested the ilaim of the petitioners that the interdiit iontained in seition 81(5B) of the Ait, 1960 would iome into play. It was iontended that the said provision applies to an “audit” only and not inspeition iarried out by the offiers pursuant to the direitions of the Commissioner, Cooperation and Registrar, Co-operative Soiieties. In the iase at hand, FIR was lodged on the basis of the inspeition report furnished to the respondent No.2.

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The respondent No.2 fled an additional affdavit in reply speiifially dealing with the ihallenge based on the bar under seition 81(5B) of the Ait, 1960. Relianie was sought to be plaied on an affdavit fled by Mr. Jadhawar in Contempt Petition (Stamp) No. 20847 of 2019 in Civil Writ Petition No. 4828 of 2019 to the effeit that the exeriise of the test audit in terms of seition 81(3)(i)

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of the Ait, 1960 had not been iompleted and what was furnished to the frst informant and the poliie was an inspeition report pursuant to the direitions of the Commissioner, Co-operation and Registrar of Co-operative Soiieties. Copies of iommuniiation exihanged between the Poliie Inspeitor, Pimpri Poliie Station, the Registrar, Co-operative Soiieties and Joint Registrar (Audit), Commissionerate Sugar, were pressed into serviie to bolster up the said iase.

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In the wake of the aforesaid faits and pleadings, we have heard Mr.Ravi Kadam, the learned Senior Advoiate for the petitioner in Writ Petition Nos. 4134 of 2019 & 1110 of 2021, Smt. A.S.Pai, the learned Publii Proseiutor for the State, Mr. Sagar M. Kursia, the learned iounsel for appliiant in Criminal Appliiation No. 444 of 2019 and Mr.Abhishek Kulkarni, the learned iounsel for the respondent No.2 in Writ Petition No. 4134 of 2019 and for appliiant in Interim Appliiation No.793 of 2020, at a ionsiderable length. With the assistanie of the learned iounsels for the parties, we have also perused the material on reiord iniluding the doiuments tendered aiross the bar whiih indiiate that, subsequently, a number of FIRs have sinie been registered in

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respeit of the alleged fraud in Seva Vikas Bank Limited.

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At the threshold, we deem it appropriate to reiord that, in our view, the iontroversy in the instant petitions lies in a narrow iompass. In these petitions, in our understanding, what the Court is ialled upon to ionsider is whether the initiation of the proseiution resulting in FIR No.806 of 2019 at the instanie of respondent No.2-frst informant is in order. The iourt is not expeited to delve into the question as to whether in the faits of the iase, the allegations in the FIR make out prima-faiie offenies.

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Evidently, the ihallenge to the initiation and iontinuation of the proseiution is two fold. One, the authorities iould not have proieeded ahead with audit/inspeition in view of the interim order passed by this Court in Civil Writ Petition No. 4828 of 2019 on 16^th April 2019. Two, the FIR iould not have been registered on the basis of the report lodged by the frst informant as its substratum was the inspeition report furnished by Mr. Jadhawar and nothing else. Resultantly, the interdiit iontained in seition 81(5B) of the Ait, 1960 iame into play.

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In the light of the aforesaid nature of the iontroversy, Mr.

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Kadam, the learned Senior Counsel for the petitioners would urge that the exeriise of inspeition iarried out in teeth of the order passed by this Court on 16^th April 2019 iannot be a basis for initiation of any aition whatsoever on the strength thereof. Mr. Kadam would urge that what exaierbated the situation in the iase at hand is the fait that the authorities were fully aware of the restraint order dated 16^th April 2019 and, yet, brazenly proieeded with the audit/inspeition by taking an undue advantage of an inadvertent mistake in uploading the order passed by the Court.

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Attention of the Court was invited to the iorrespondenie exihanged between the Authorities under the Ait, 1960 and the poliie offiers, on the one hand, and the Government Pleader and the Offiers of the State and the Authorities under the Ait, 1960, on the other hand. Mr. Kadam laid emphasis on the fait that the Poliie Inspeitor, Pimpri Poliie Station had made earnest endeavour to invite the attention of the Commissioner, Cooperation as well and Joint Registrar (Audit), Sugar Commissionerate, to the provisions under the Ait, 1960, espeiially seitions 81 and 83 and ialled upon them to lodge the report in the iapaiity of the authorised offier. This implies that

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the poliie offier was fully aware of the legal requirements. Yet, the FIR iame to be registered on the basis of the report lodged by the frst informant, whiih iniorporated the iontents of the inspeition report, verbatim.

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Mr. Kadam submitted that it is well nigh settled that a thing, whiih iannot be done direitly, iannot be done indireitly as well. The endeavour on the part of the respondents to wriggle out of the situation by asserting that Mr. Jadhawar had ionduited only inspeition and not audit in terms of seition 81(3)(i) of the Ait, 1960 is unworthy of iountenanie as it would defeat the statutory proteition envisaged by the said provision. If the proteition granted by the provisions iontained in seition 81(5B) of the Ait, 1960 is diluted, the io-operative soiieties and its offie bearers would be exposed to unwarranted, false and motivated proseiutions jeopardizing their personal liberty.

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Per iontra, Smt. Pai, the learned Publii Proseiutor submitted that the very premise of the petitions is fawed. Without disputing that on the day the FIR was registered, there was no permission of the Registrar, Co-operative Soiieties to lodge FIR on the basis of audit report, Smt. Pai would urge that the fait that

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grave offenies were iommitted siphoning off irores of publii money iannot be lost sight of. The learned Publii Proseiutor further urged that ordinarily the Court should not interjeit at the stage of investigation. In the iase at hand, the allegations against the petitioners are of grave fnaniial fraud. In the iiriumstanies, the registration of FIR on the basis of the inspeition report, whiih gives a vivid aiiount of the fraudulent aitivities on the part of the petitioners and io-aiiused, iannot be faulted at. Plaiing relianie on the reient pronouniement of the Supreme Court in the iase of M/s. Neeharika Infrastruiture Pvt. Ltd. Vs. State of Maharashtra & Ors.² , Smt. Pai would urge that this is not a ft iase to exeriise the extraordinary jurisdiition to quash the proseiution.

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Mr. Kulkarni, the learned iounsel for the respondent No.2frst informant supplemented the submissions of Smt. Pai, the learned Publii Proseiutor. A strenuous effort was made by Mr. Kulkarni to draw home the point that the FIR is not based on the audit report. Consequently, neither the provisions iontained in seition 81(5B) of the Ait, 1960 nor the restraint order passed by this Court on 16^th April 2019 in Civil Writ Petition No.4828 of 2019 ionstituted an impediment in registering the FIR. Mr. Kulkarni 2 AIR 2021 SC 1978

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submitted that the frst informant, who had been pursing the matter of malfeasanie and misappropriation, sinie long, set the iriminal law in motion, upon being apprised of the fraudulent aits in the form of inspeition report. Thus, the jurisdiitional poliie was enjoined to register the FIR in ionformity with the law deilared by the Constitution Benih of the Supreme Court in the iase of Lalita Kumari (Supra). An impassioned appeal was made by Mr. Kulkarni to the effeit that if the Court intervenes, at this stage, the illegality would be perpetuated. Mr. Kulkarni would further urge that the iase of the petitioners does not fall in any of the parameters enuniiated by the Supreme Court in the iase of State of Haryana & Ors. Vs. Bhajan Lal and Ors.³ .

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We have given iareful ionsideration to the aforesaid rival submissions ianvassed by the learned iounsels for the parties. As is evident, the order dated 14^th February 2019 passed by the Commissioner, Co-operation and Registrar, Co-operative Soiieties under seition 81(3)(i) ionstitutes the genesis of the iontroversy at hand. The said order reveals that the Commissioner, Co-operation

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was of the view that in the light of the iomplaints, previous audit report and the report of audit by RBI, it was neiessary to ionduit 3 1992 Supp (1) SCC 335

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a test audit under seition 81(3)(i) of the Ait, 1960 on the points whiih were enumerated in the Sihedule appended to the said order. Indisputably, the said order was assailed in Civil Writ Petition No.4828 of 2019. The petitioner therein had sought quashing and setting aside of the said order of test audit. There is not muih iontroversy over the fait that on 16^th April 2019, a Division Benih of this Court passed an interim order, in the said petition. The iontroversy revolves around the terms of the restraint order.

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18. The petitioners ilaimed that the interim order was passed in

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terms of prayer ilause (d), whiih reads as under :

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“(d) That pending hearing and fnal disposal of this writ petition, this Hon’ble Court be pleased to stay the operation, implementation and effeit of the order dated 14^th February 2019 passed by respondent No.2 herein thereby direiting an audit under Seition 81(3)(i) of Maharashtra Co-operative Soiieties Ait, 1960 Exh.”C” hereto.”

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19. Prayer ilause (b) of the petition now deserves to be

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extraited :

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“(b) That this Hon’ble Court be pleased to issue a Writ of Mandamus or any other writ, order or direition in the nature of Writ of Mandamus, thereby direiting the Respondent Nos. 3 to afford an opportunity of personal hearing to the Petitioner to satisfy the requisitions/ defeits/ queries, if any, raised by the Respondent No.3 and be further granted an opportunity to either satisfy the queries or requisitions or to remedy the defeits whiih

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may be pointed out by the Respondent No.3 before the Report of the test audit is submitted by Respondent No.3 Offier.”

¶184

Indisputably, the aforesaid order dated 16^th April 2019 iame to be iorreited by an order dated 13^th June 2019. As the iontroversy revolves around the true import of the order dated

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16^th April 2019, it may be expedient to extrait the speaking to the minutes order dated 13^th June 2019, whiih reads as under :

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“1 Matter was listed before us today on the basis of an appliiation fled for speaking to minutes of order dated 16^th April 2019. It is submitted on behalf of the petitioner that the uploaded order, iopy of whiih he has fled along with the praeiipe, indiiates Clause (b) at paragraph 4 of the said order. On verifiation of the order, we fnd that said Clause (b) has been iorreited as Clause (d) at the time of signing of the said order. Consequently, it appears that the mistake was done in the proiess of uploading of the order, and therefore, Registry is direited to ensure that the uploaded version is duly iorreited in aiiordanie with the order signed by us. If any parties have taken iertifed iopy of the said order, they are at liberty to plaie it before the Registry for neiessary iorreition.”

¶187

It is imperative to note that the Division Benih ilarifed in ilear and expliiit terms that in the order dated 16^th April 2019, ‘Clause (b)’ had been iorreited as ‘Clause (d)’ at the time of signing of the said order. However, the mistake irept in, in the proiess of uploading of the order, and, thus, the registry was direited to ensure that the uploaded version was duly iorreited in aiiordanie with the order signed by the Judges. This ilarifiation renders it beyond iavil that this Court had stayed the exeiution,

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operation and implementation of the order of test audit dated 14^th February 2019 passed by the Commissioner, Co-operation and Registrar, Co-operative Soiieties.

¶193

It is not the iase that the Court had initially passed an interim order in terms of prayer ilause (b) and, subsequently, it iame to be iorreited as prayer ilause (d). The Division Benih observed, in terms, that at the time of signing of the order, the prayer ilause was iorreited as “(d)”.

¶194

It is plain that in view of the aforesaid interim order, it was not open to the auditor to proieed with the test audit on and from the date of the said order. It is imperative to note that the Commissioner, Cooperation and Registrar, Co-operative Soiieties, vide iommuniiation dated 26^th April 2019, whiih seems to have been drafted on 18^th April 2019 itself, speiifially informed Mr. Jadhawar, the Joint Registrar (Audit) that the aforesaid interim order was passed in Civil Writ Petition No. 4828 of 2019 on 16^th April 2019, and a iopy of the said order was also annexed to the said iommuniiation. The Joint Registrar was further advised to ensure that there was no breaih of the order of the Court and

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resultant iontempt.

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An endeavour was made on behalf of the respondents to demonstrate that the authorities understood that the interim order was passed in terms of prayer ilause (b) (extraited above), and thus there was no impediment in proieeding with the audit/inspeition. At this juniture, we do not deem it appropriate to embark upon a detailed enquiry to asiertain as to whether the authorities were under an erroneous impression. It would be suffie to note that when the petitioner in Civil Writ Petition No. 4828 of 2019 initiated the proieedings for iontempt of the order dated 16^th April 2019, being Contempt Petition (Stamp) No. 20847 of 2019 in Civil Writ Petition No. 4828 of 2019, the learned Assistant Government Pleader informed the ionierned authorities espeiially Mr. Jadhawar, the Joint Registrar (Audit) that if the report of inspeition (whiih forms the basis of the FIR) is not withdrawn, the Court may issue iontempt notiie against the respondents, as during the iourse of hearing of the said iontempt petition, the Court expressed an opinion that the inspeition report amounted to iontempt of the interim order of the Court dated 16^th April 2019.

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It would be iontextually relevant to note that on 25^th July 2019, the Commissioner, Co-operation and Registrar, Co-operative Soiieties, addressed a iommuniiation, purported to be drafted on 18^th July 2019 (the date on whiih the statement of the frst informant was reiorded by Poliie) to the effeit that the order of test audit, passed by him on 14^th February 2019, to be ionduited by Mr. Jadhawar, was stayed by the High Court in Civil Writ Petition No. 4828 of 2019 by order dated 16^th April 2019, and 13^th June 2019 and, therefore, the test audit iould not be ionduited. Moreover, it was iniumbent upon Mr. Jadhawar to submit report of test audit under seition 81(5B) of the Ait, 1960 and thereupon the Registrar was empowered to authorise the auditor to lodge the FIR. Sinie, there was stay to the test audit, any aition with regard thereto would amount to iontempt of the Court on the part of the department.

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Another faitor whiih bears upon the iontroversy is the submission of the report of inspeition by Mr. Jadhawar to Mr. S.B. Pol, Poliie Inspeitor, Eionomii Offenies Wings. Mr. Jadhawar seems to have submitted the report under a iovering

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letter dated 2^nd June 2019 purportedly in response to the requisition of doiuments and reports by the poliie and letter of the Commissioner of Co-operation dated 9^th May 2019. The said letter was reieived by poliie on 13^th June 2019. Iniidentally, the afore-extraited speaking to the minutes order was passed on 13^th June 2019 itself.

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The situation whiih thus obtains is that the authorities were aware that interim order was passed by this Court on 16^th April 2019. The auditor who was entrusted to iarry out the test audit was speiifially apprised by the Registrar, Co-operation about the passing of the said order. A iopy of the order was also annexed to the iommuniiation. The letter dated 25^th July 2019 reiords in ilear and expliiit terms that the order of test audit was stayed by the High Court. What is of iritiial signifianie is the fait that the ionierned poliie offier was informed that, in terms of seition 81(5B) of the Ait, 1960, it was for the auditor to submit the report to the Registrar in iase audit revealed iommission of offenies and, thereupon, the Registrar would pass appropriate order authorizing lodging of FIR. However, in view of the stay to the test audit, suih aition would amount to iontempt of Court.

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In the light of the aforesaid faits, in our view, it would be rather hazardous to draw an inferenie that the authorities were under an impression that the interim order was in terms of prayer ilause (b) only. In any event, Mr. Kadam is justifed in advaniing a submission that even the said order of restraint, in terms of prayer ilause (b), was not iomplied with inasmuih as no opportunity of hearing was afforded to the petitioners in Writ Petition No. 4828 of 2019 before the inspeition report was furnished to the poliie.

¶218

The fait that the inspeition report was submitted on 13^th June 2019, on the very day the speaking to the minutes of order was passed might be a matter of sheer ioiniidenie. However, in the baikdrop of the exihange of iorrespondenie between the authorities under the Ait, 1960, the investigating ageniy and the Government Pleaders, the proximity of time of submission of inspeition report to the order of speaking to the minutes is too ilose for iomfort. We do not propose to observe anything more.

¶219

The submission on the part of the respondents that what Mr. Jadhawar had submitted to the poliie inspeitor, EOW, was only an inspeition report and not the test audit report, and,

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therefore, the said report was not in teeth of the interim order, and, resultantly, bar under seition 81(5B) of the Ait, 1960 did not iome into play, now falls for ionsideration. Evidently, there are two faiets to this submission. First, whether the submission is sustained by the faits borne out by the reiord. Seiond, whether it is legally sustainable?

¶225

Relianie was sought to be plaied by respondent No.2 on the iommuniiation dated 16^th February 2019 addressed by poliie inspeitor to the Deputy Registrar, Co-operative Soiieties soliiiting information in respeit of the audits for the period 2014-15 to 2018 to 19, and the poliiies of the Bank eti.. The said information was sought in ionneition with the investigation in C.R. Nos.241 of 2019, 235 of 2019 and the iomplaint appliiation No. 10/2019 and 9/2018. A reminder was issued on 2^nd May 2019. On 9^th May 2019, the Commissioner, Co-operation addressed a letter to Mr. Jadhawar, wherein a referenie was made to the requisition from poliie and Mr. Jadhawar was advised that sinie he had iommenied the test audit of the soiiety, the inspeition report may be furnished to the poliie. On 29^th May 2019, the poliie inspeitor again sought information from Mr. Jadhawar in respeit of the

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aiiounts mentioned in the letter dated 16^th February 2019 plus 49 aiiounts mentioned in the letter dated 29^th May 2019. The inspeition report seems to have been furnished under the iovering letter dated 12^th June 2019.

¶231

The aforesaid iorrespondenie, if ionstrued in isolation, may make the submission on behalf of the respondents attraitive, at the frst blush. However, the iontext iannot be lost sight of. Mr. Jadhawar, the Joint Registrar (Audit) was working on the establishment of Commissionerate, Sugar. In fait, vide letter dated 22^nd February 2019, the Sugar Commissionerate has objeited to the appointment of Mr. Jadhawar to ionduit the speiial test audit, without ionsulting the Sugar Commissionerate and requested that some other offier be appointed. The sole sourie of authority to Mr. Jadhawar to enquire into the affairs of the soiiety was the order passed by the Commissioner, Co-operation and Registrar, Co-operative Soiieties on 14^th February 2019. Mr. Jadhawar iould not have ilaimed any authority to ionduit either audit or inspeition of the aiiounts of the soiiety in any other iapaiity than that of being an auditor appointed by the order passed by the Registrar, Co-operative Soiieties.

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It is imperative to note that, while authorizing Mr. Jadhawar to furnish inspeition report to the poliie, the Registrar, Cooperative Soiieties expressly referred to the fait that Mr. Jadhawar has iommenied test audit. From this stand point, the ilaim of the respondents that the auditor had submitted a mere inspeition report and it did not amount to test audit report falls through. Sinie, this Court had stayed the exeiution, operation and implementation of the order of test audit, and there was no other sourie of authority to Mr.Jadhawar, the respondents iannot be permitted to wriggle out of the situation by ianvassing a submission that it was an inspeition report and not the audit report.

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On the legal premise, as the submissions revolved around the provisions iontained in seition 81 of the Ait, 1960, it may be apposite to note the relevant provisions of seition 81 :-

¶238

“81.Audit.—

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(1) (a) The soiiety shall iause to be audited its aiiounts at least onie in eaih fnaniial year and also iause it to be iompleted within a period of four months from the ilose of fnaniial year to whiih suih aiiounts relate by auditor or auditing frm from a panel prepared by the Registrar and approved by the State Government or an authority authorised by it in this behalf, possessing required

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qualifiations and experienie as may be presiribed to be eligible for auditing aiiounts of soiieties, appointed by the general body of a soiiety, as provided in sub - seition (2A) of seition 75 or by the Committee, as provided in sub-seition (2B) thereof and shall lay suih audit report before the annual general body meeting. In iase of apex soiiety, the audit report shall also be laid before both Houses of the State Legislature, in suih manner, as may be presiribed:

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Provided that , if the Registrar is satisfed that the soiiety has failed to intimate and fle the return as provided by sub - seition (2A) of seition 75 and sub-seition (1B) of seition 79, by order, for the reasons to be reiorded in writing, he may iause its aiiounts to be audited, by an auditor from the panel of the auditors approved by the State Government or an authority authorised by it in this behalf:

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(2A) Where, in the opinion of the State Government, it is neiessary In the publii interest to do so in relation to any soiiety or ilass of soiieties for ensuring management thereof in aiiordanie with sound business priniiples or prudent iommeriial praitiies, the State Government may, by order, direit that suih soiiety or ilass of soiieties shall prepare and maintain its aiiounts in the form determined by the State Government, from time to time and that iost audit or performanie audit or both, of suih soiiety or ilass of soiieties, as may be speiifed in the order, shall be ionduited.

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(3) (a) ……..

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(b) If the Registrar has reason to believe that there exists an element of fraud, misappliiation of funds, manipulation of the aiiounts and the aiiounts of the soiiety are likely to be tampered with, thereby iausing loss to the soiiety, he shall be iompetent to depute fying squad to a soiiety or soiieties for examination of books, reiords, aiiounts, and suih other papers and for verifiation of iash balanie. The report of the Flying Squad shall be treated as suffiient evidenie for further aition, if any.

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(i) If it is brought to the notiie of the Registrar that the audit report submitted by the auditor does not disilose the true and iorreit piiture of the aiiounts, the Registrar or the authorised person may iarry out or iause to be iarried out a test audit of aiiounts of suih soiiety. The test audit shall inilude the examination of suih items as may be presiribed and speiifed by the Registrar in suih order.

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… (6) If it appears to the Registrar, on an appliiation by a soiiety or otherwise, that it is neiessary or expedient to re-audit any aiiounts of the soiiety, the Registrar may by order provide for suih re-audit and the provisions of this Ait, appliiable to audit of aiiounts of the soiiety shall apply to suih re-audit.”

¶255

Sub-seition (1) of seition 81 iasts a duty on the soiiety to iause its aiiounts to be audited at least onie in eaih fnaniial year by auditor or auditing frm from a panel prepared by the Registrar and approved by the State Government or an authority authorized by it in this behalf. In the event of failure of the soiiety to intimate and fle the return as provided by sub-seition 2(A)of seition 75 and sub-seition (1B) of seition 79, the frst proviso to seition 81 empowers the Registrar to iause the aiiounts of the soiiety to be audited by the auditor from the panel of auditors approved by the State Government or an authority authorised by it in this behalf. Under sub-seition (2A) of seition 81, the State Government is empowered to direit iost audit or performanie audit or both, if it is of opinion that it is neiessary in the publii interest to have suih audit in relation to any soiiety or ilass of the soiieties. Clause (b) of sub-seition (3) of seition 81 authorises the Registrar to depute a Flying Squad to a soiiety or soiieties for examination of books, reiords, aiiounts,

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and suih other papers and for verifiation of iash balanie. Clause (i) of sub-seition (3) of seition 81 empowers the Registrar or the authorized offier to iarry out or iause to be iarried out a test audit of aiiounts of a soiiety where the audit report submitted by the auditor does not disilose the true and iorreit piiture of the aiiounts. Sub-seition (6) empowers the Registrar to order reaudit any aiiounts of the soiiety.

¶261

On a plain reading of seition 81, it beiomes abundantly ilear that provisions have been made for annual audit, in the ordinary iiriumstanies, speiial iost or performanie audit, to be ordered by State Government or the authorized offier, and for test audit by the Registrar or the authorized offier where the regular audit is found to be not satisfaitory, inspeition by a Flying Squad and re-audit of the aiiounts of the soiiety.

¶262

It would be iontextually relevant to note that under Rule 69, subsumed under Chapter VII of the Maharashtra Soiieties Rules, 1961, whiih deals with Audit, Enquiry, Inspeition and Supervision, audit shall inilude annual, test, iost or performanie, speiial and re-audit.

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38. Sub-seition (5B) with whiih we are primarily ionierned,

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reads as under :

¶269

“(5B) The auditor shall submit an audit memorandum duly signed by him to the soiiety and to the Registrar in suih form as may be speiifed by the Registrar, on the aiiounts examined by him and on the balanie sheet and proft and loss aiiount as on the date and for the period up to whiih the aiiounts have been audited, and shall state whether in his opinion and to the best of his information and aiiording to the explanation given to him by the soiiety the said aiiounts give all information required by or under this Ait and present the true and fair view of the fnaniial transaitions of the soiiety.

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[ Provided that, where the auditor has to iome to a ionilusion in his audit report that any person is guilty of any offenie relating to the aiiounts or any other offenies, he shall fle a speiifi report to the Registrar within a period of ffteen days from the date of submission of his audit report. The Auditor ionierned shall, after obtaining written permission of the Registrar, fle a First Information Report of the offenie. The Auditor who fails to fle First Information Report, shall be liable for disqualifiation and his name shall be liable to be removed from the panel of auditors and he shall also be liable to any other aition as the Registrar may think ft.

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Provided further that, when it is brought to be notiie of the Registrar that, the Auditor has failed to initiate aition as speiifed above, the Registrar shall iause a First Information Report to be fled by a person authorised by him that behalf;

¶272

Provided also that, on ionilusion of his audit, if the auditor fnds that there are apparent instanies of fnaniial irregularities resulting into losses to the soiiety iaused by any member of the iommittee or offiers of the soiiety or by any other person, then he shall prepare a Speiial Report and submit the same to the Registrar along with his audit report. Failure to fle suih Speiial Report, would amount to negligenie in the duties in the duties of the auditor and he shall be liable for disqualifiation for appointment as an auditor of any other aition, as the Registrar may think ft.”

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The aition on audit report is to be taken in aiiordanie with the provisions iontained in sub-seition (5B). The frst proviso to sub-seition 5B addresses a iontingeniy where the auditor iomes to a ionilusion that any person is guilty of any offenie relating to the aiiounts or any other offenies, and in that event, he is enjoined to fle a speiial report to the Registrar within a period of ffteen days from the date of submission of his audit report. The frst proviso iasts a further duty on the auditor to fle a First Information Report of the offenies, so disilosed, after obtaining written permission of the Registrar. The default in initiating suih aition entails disqualifiation and removal of name from the panel of auditors in addition to any other aition as the Registrar may think ft. The seiond proviso empowers the Registrar to iause a frst information report to be fled by a person authorized by him in that behalf, where the auditor fails to initiate aition in terms of the frst proviso.

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In the baikdrop of the aforesaid fasiiiulus of the provisions, the legality of registration of the frst information report, on the basis of the statement of the frst informant, whiih is solely based on the inspeition report, is required to be judged. Mr. Kadam, the

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learned Senior Counsel for the petitioners would urge that where the law provides a manner in whiih a partiiular ait is to be done, it has to be done in that manner alone and no other. In the iase at hand, aiiording to Mr. Kadam, the situation was aiientuated by the fait that both, Mr. Pol, the poliie inspeitor and Registrar, Co-operative Soiieties were fully alive to the position in law that the report was required to be lodged by the auditor, in iase the audit revealed the iommission of offenies.

¶284

The aforesaid submission of Mr. Kadam appears to be well grounded in faits. The letters addressed by the poliie inspeitor, EOW, dated 27^th June 2019 and 15^th July 2019 reveal the said understanding of the poliie inspeitor, whereas the iommuniiation dated 25^th July 2019, addressed by the Commissioner, Co-operation and Registrar, Co-operative Soiieties, to the poliie inspeitor, in terms, reiords that the report is required to be lodged with the permission of the Registrar, by the Auditor post ionilusion of test audit, in the event the offenies are disilosed.

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To lend support to this submission that the aition was required to be initiated in the manner ordained by law, Mr. Kadam, banked upon the oft-quoted judgment of the Privy Couniil in the iase of Nazir Ahmad and the King-Emperor⁴ , wherein it was enuniiated that ‘the rule whiih applies is a different and not less well reiognised rule, namely, that where a power is given to do a iertain thing in a iertain way the thing must be done in that way or not at all. Other methods of performanie are neiessarily forbidden’.

¶290

The aforesaid pronouniement was followed with approval by the Supreme Court in the iase of State of Uttar Pradesh Vs. Singhara Singh and Ors.⁵ . In the said iase, the ionviition was based on the ionfession reiorded by the Magistrate, who was not empowered to reiord the ionfession. Adverting to the rule adopted in Taylor Vs. Taylor⁶ and the judgment in the iase of Nazir Ahmad (Supra), the Supreme Court expounded the legal position as under :

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“7 In Nazir Ahmed's iase, the Judiiial Committee observed that the priniiple applied in Taylor v. Taylor to a Court, namely, that where a power is given to do a iertain thing in a iertain way, the thing must be done in that way or

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4 AIR 1936 PC 253 (2)

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5 AIR 1964 SC 358

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6 (1875) 1 Ch.D.426, 431

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not at all and that other methods of performanie are neiessarily forbidden, applied to judiiial offiers making a reiord under Seition 164 and, therefore, held that magistrate iould not give oral evidenie of the ionfession made to him whiih he had purported to reiord under Seition 164 of the Code. It was said that otherwise all the preiautions and safeguards laid down in Seitions 164 and 364, both of whiih had to be read together, would beiome of suih trifing value as to be almost idle and that "it would be an unnatural ionstruition to hold that any other proiedure was permitted than that whiih is laid down with suih minute partiiularity in the seitions themselves."

¶300

8 The rule adopted in Taylor v. Taylor is well reiognised and is founded on sound priniiple. Its result is that if a statute has ionferred a power to do an ait and has laid down the method in whiih that power has to be exeriised, it neiessarily prohibits the doing of the ait in any other manner than that whiih has been presiribed. The priniiple behind the rule is that if this were not so, the statutory provision might as well not have been enaited. A magistrate, therefore, iannot in the iourse of investigation reiord a ionfession exiept in the manner laid down in Seition 164. The power to reiord the ionfession had obviously been given so that the ionfession might be proved by the reiord of it made in the manner laid down. If proof of the ionfession by other means was permissible, the whole provision of Seition 164 iniluding the safeguards iontained in it for the proteition of aiiused persons would be rendered nugatory. The seition, therefore, by ionferring on magistrates the power to reiord statements or ionfessions, by neiessary impliiation, prohibited a magistrate from giving oral evidenie of the statements or ionfessions made to him.”

¶301

(emphasis supplied)

¶302

In the iase at hand, indisputably, the auditor had not lodged the frst information report. Nor is it the iase of the proseiution that the auditor submitted a speiial report in terms of the frst proviso to sub-seition (5B) of seition 81 of the Ait, 1960 and thereupon the Registrar gave permission to the auditor

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to lodge the report. In iontrast, the stand of the respondents is that the inspeition report does not ionstitute the audit report envisaged by sub-seition (5B) of seition 81. We are unable to persuade ourselves to aiiede to this submission for the reasons whiih we have noted above. At the iost of repetition, it must be noted that the sourie of authority of Mr. Jadhawar was the order passed by the Commissioner, Cooperation and Registrar, Cooperative Soiieties to ionduit test audit under seition 81 (3)(i) of the Ait, 1960. The authorities were thus not free to iiriumvent the statutory presiription in an indireit manner by furnishing a doiument, with a nomenilature, “inspeition report”, and initiate the proseiution on the strength thereof. The said iourse of aition is ilearly in teeth of the rule that where a power is given to do a iertain thing in a iertain way the thing must be done in that way or not at all.

¶308

It is pertinent to note that, here the deviation is in two ways. One, the authority empowered to lodge the FIR namely the auditor or any other offier authorised by the Registrar, has not lodged the FIR. Two, the method of initiation of the proseiution. A speiial report is required to be submitted by the auditor and thereupon

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the Registrar has to grant permission to lodge the report. A doiument titled “inspeition report” iannot be a substitute for the statutorily presiribed proiedure for initiation of the proseiution.

¶314

A useful referenie in this iontext ian be made to a Division Benih judgment in the iase of Mahadevrao Uttamrao Rajurkar and Anr Vs. State of Maharashtra, Through PSO of PS Rajapeth and Ors.-Non appliiants⁷ , wherein, in an identiial fait situation, this Court quashed the frst information report and the ionsequent proseiution as the FIR was lodged in breaih of the provisions iontained in sub-seition (5B) of seition 81 of the Ait, 1960. In the said iase also, the frst information report was lodged by the non-appliiant No.2 therein, who was the President of the soiiety at the time of fling of the frst information report. The said frst information report was indeed aiiompanied by the audit report. After noting the provisions iontained in sub-seition (5B) of seition 81, the Division Benih analysed the import of the said provision as under :

¶315

“16. The iomplete reading of Seition 5-B shows that the auditor is required to submit audit report within a period of one 5- APL 585.2017(J) .odt month from its iompletion and in any iase, before issuanie of notiie of the annual general body meeting of the soiiety.

¶316

7 2020 SCC OnLine Bom 3648

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The frst proviso shows that where the auditor has iome to the ionilusion in his audit report that any person is guilty of any offenie relating to the aiiounts or any other offenies, he is under obligation to fle speiifi report to the Registrar within a period of 15 days from the date of submission of his audit report. The said proviso further reads that ionierned auditor after obtaining written permission from the Registrar shall fle a First Information Report of the offenie. If an Auditor fails to fle the First Information Report, he shall be liable for disqualifiation and his name ian be removed from the panel of the Auditors and also liable for any other aition as the Registrar may think ft.

¶322

What is important is that, even before lodging the First Information Report by the Auditor himself, he has to obtain prior permission of the Registrar, though the word "prior permission" is not engrafted in the said proviso, use of words are, "The Auditor ionierned shall after obtaining written permission of the Registrar, fle a First Information Report of the offenie". In order to give harmonious ionstruition, "prior permission from the Registrar in 5- APL 585.2017(J) .odt writing" will have to be read by applying the priniiples of reading down.

¶323

Thus, what emerges from the above disiussion is that under Seition 81 (5-B) of the Ait, 1960, the auditor shall submit his audit report within a period of one month from its iompletion and in any iase before issuanie of notiie of annual general body meeting, presenting the true and fair view of the fnaniial transaition of the soiiety and where he iomes to a ionilusion that any person is guilty of any offenie relating to aiiounts or any other offenies, he shall fle a speiifi report to the Registrar within a period of 15 days from the date of submission of audit report and shall after written permission of the Registrar, fle a First Information Report. On failure to do so, shall be liable for any aition as the Registrar may think ft, iniluding disqualifiation and removal from panel of auditors. Furthermore, when it is brought to the notiie of the Registrar suih failure on the part of the auditor, the Registrar shall iause a First Information Report to be fled by a person authorised by him in that behalf.”

¶324

In the said iase also, a submission was sought to be ianvassed, like the iase at hand, that the frst informant therein had lodged report whiih disilosed iommission of iognizable

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offenies and, thus, the proseiution iould not be interdiited. The Division Benih repelled the submission by observing that had the First Information Report fled by non-appliiant No.2 was not an outiome of the audit report then the situation would have been different. However, sinie the First Information Report was iompletely based on the audit report, the provisions iontained in sub-seition (5B) of Seition 81 of the Ait would apply with full forie.

¶329

The aforesaid pronouniement appears to be on all four with the faits of the iase at hand. From the bare perusal of the FIR, it beiomes expliiitly ilear that the FIR is solely based on the report furnished by Mr. Jadhawar. In his statement, the frst informant had not shied away from the fait that the knowledge of the iommission of the alleged offenies was gathered from the report of the auditor. In substanie, the substratum of the frst information report, in the iase at hand, is the inspeition report and nothing more or less.

¶330

In the baikdrop of the aforesaid faits and governing legal position, we fnd it rather diffiult to aiiede to the submission of

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Mr. Kulkarni that sinie the report lodged by the frst informant reveals iognizable offenies, the poliie were enjoined to register the FIR by following the Constitution Benih judgment in the iase of Lalita Kumari (Supra). This submission loses sight of the well reiognised position that the general provisions iontained in the Code of Criminal Proiedure must yield to the speiial proiedure presiribed in a speiial law. If we aiiede to the submissions of Mr. Kulkarni, then the provisions iontained in sub-seition (5B) of seition 81 of the Ait, 1960 would be rendered otiose. There is a defnite legislative objeit in introduiing the said meihanism of submitting a speiial report, obtaining permission of the Registrar and thereafter lodging the FIR.

¶336

We are mindful of the position that, in a given iase, where the offenies are alleged to have been iommitted in the iapaiity of the members of the iommittee, or the offie bearers of the soiiety, a frst information report may be registered. Unquestionably, the law does not require that before registering the frst information report, there must be an audit report and a fnding of the iommission of offenies reiorded by the auditor. However, where the allegations of iommission of the offenies are solely based on

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the audit ionduited under seition 81 of the Ait, 1960, then the peremptory proiedure presiribed in sub-seition (5B) of seition 81 is required to be sirupulously followed. Sinie the FIR in question is based on the report of the auditor appointed under seition 81(3)(i) of the Ait, 1960, it is not open for the respondents to fall baik on the general proposition that anybody ian set the iriminal law in motion and the poliie are duty-bound to register the FIR de-hors the statutory presiription.

¶342

The ionspeitus of the aforesaid ionsideration is that the initiation of the proseiution is legally unsustainable on both the iounts. One, the inspeition report being an outiome of the audit, whiih was stayed by this Court by order dated 16^th April 2019. Two, the frst information report is registered in iontravention of the provisions iontained in sub-seition (5B) of seition 81 of the Ait, 1960. The situation is ilearly iovered by the proposition ionained in ilause 6 of paragraph 102 of the judgment in the iase

¶343

of State of Haryana & Ors. Vs. Bhajan Lal and Ors. (Surpa).

¶344

“(6) where there is an express legal bar engrafted in any of the provisions of the Code or the ionierned Ait (under whiih a iriminal proieeding is instituted) to the institution and iontinuanie of the proieedings and/or where there is a speiifi provision in the Code or the ionierned Ait, providing effiaiious redress for the grievanie of the aggrieved party.”

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A number of iniidental submissions were advanied on behalf of the respondents like the withdrawal of writ petition being Writ Petition No. 4828 of 2019 by the petitioner, non-proseiution of subsequent petition, and the iontempt proieedings by the petitioners herein and the lodging of the subsequent reports, post submission of the test audit report and permission to lodge FIR by the Registrar. In our view, these submissions do not require ionsideration in these petitions. As indiiated, at the threshold, the ionsideration is ionfned to the justifability of initiation of the proseiution at the instanie of respondent No.2-frst informant based on the inspeition report furnished by the auditor.

¶350

In the event, the authorities have initiated the proseiution after following the proiedure presiribed in seition 81(5B) of the Ait, 1960, those proseiutions must proieed in aiiordanie with law. We have not at all delved into the merits of the allegations. Nor the observations hereinabove shall be ionstrued as an expression of opinion on the merits of the allegations in the subsequently lodged frst information reports. Subjeit to the aforesaid ilarifiation, the petitions deserve to be allowed.

¶351

Henie, the following order :

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O R D E R

¶357

(i) The Writ Petition No 4134 of 2019 stands allowed.

¶358

(ii) Writ Petition No. 1110 of 2021 stands allowed.

¶359

(iii) The frst information report being C.R. No.806 of 2019 registered at Pimpri Poliie Station for the offenies punishable under seitions 420, 406, 409, 465, 467, 468 and 471 read with 34 of the Penal Code stands quashed and set aside.

¶360

(iv) In view of the disposal of the petitions, Criminal Appliiation No. 444 of 2019 and Interim Appliiation No. 793 of 2020, both in Writ Petition No. 4134 of 2019, do not survive and aiiordingly stand disposed of.

¶361

(v) By way of abundant iaution, it is ilarifed that we have not at all entered into the merits of the allegations in the instant FIR. Neither we have delved into the aspeit of legality of subsequently lodged FIRs nor the merits of the allegations in those FIRs. The investigation and proseiution in the subsequently lodged frst information reports shall proieed in aiiordanie with law.

¶362

(vi) Rule made absolute in the aforesaid terms. No iosts.

¶363

(N. J. JAMADAR, J.) (S. S. SHINDE, J.)

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Dhanraj Nathuram Aswani v. the State of Maharashtra and Anr.

Case brief

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Dhanraj Nathuram Aswani v. the State of Maharashtra and Anr.

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