Summary
Section 81(5B) of the Maharashtra Co-operative Societies Act imposes duties on an auditor and the Registrar to report suspected financial offences, but does not prevent a shareholder from independently setting the criminal law in motion. The police investigation could therefore proceed on the shareholder’s FIR, and the High Court’s order quashing it was set aside.
Issues
- Whether Section 81(5B) of the Maharashtra Co-operative Societies Act bars a shareholder from independently lodging an FIR based on information in an audit report.
- Whether the statutory duties imposed on an auditor and the Registrar displace the general criminal procedure or curtail the police power and duty to investigate.
Provisions considered
- Section 81(5B), Maharashtra Co-operative Societies Act, 1960The provision requires an auditor to report suspected offences to the Registrar and, after written permission, lodge an FIR; it also empowers the Registrar to cause an FIR to be filed if the auditor defaults. These are positive duties and do not expressly or by necessary implication bar another person from reporting an offence. (¶¶ 10, 11, 12, 14, 20, 24, 26, 27, 28, 29)
- Sections 4(2) and 154, Code of Criminal Procedure, 1973Section 4(2) applies the Code to offences under other laws unless a special enactment regulates the procedure; the special procedure displaces the Code only to the extent of an express or necessarily implied exclusion. Section 154 provides for recording information about a cognizable offence, and Section 81(5B) contains no exclusion of that process for a shareholder’s information. (¶¶ 15, 16, 17, 24, 26, 27)
Held
- Section 81(5B) imposes a positive obligation on the auditor or Registrar to report suspected offences disclosed through an audit. Its text contains no express prohibition on other persons lodging an FIR, and no such prohibition follows by necessary implication. A shareholder who learns of suspected financial irregularities from an audit report may independently set the criminal law in motion. (¶¶ 20, 24, 26)
- The Code of Criminal Procedure applies to offences under other laws unless the special enactment expressly or by necessary implication excludes it. Section 81(5B) does not curtail the police’s independent power and duty under the Code to investigate information indicating an offence; the auditor’s statutory duty to lodge an FIR does not make that duty exclusive. (¶¶ 15, 16, 17, 26, 27, 29)
- The High Court erred in quashing the appellant’s FIR on the basis of Section 81(5B). The ruling concerns whether the FIR and investigation may proceed; it does not determine the truth of the alleged offences or affect the separate High Court proceedings challenging the Minister’s order setting aside the audit report. (¶¶ 27, 28, 29, 30, 31)
Result
The appeal was allowed and the High Court’s order quashing FIR No. 806 of 2019 was set aside. The separate proceedings challenging the Minister’s order were left unaffected. The intervention and impleadment applications were allowed; the connected SLP was disposed of in the same terms.