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TMI Blog2021 (11) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in sub-section (5B) of section 81 is required to be scrupulously followed. Since the FIR in question is based on the report of the auditor appointed under section 81(3)(c) of the Act, 1960, it is not open for the respondents to fall back on the general proposition that anybody can set the criminal law in motion and the police are duty-bound to register the FIR de-hors the statutory prescription. The conspectus of the aforesaid consideration is that the initiation of the prosecution is legally unsustainable on both the counts. One, the inspection report being an outcome of the audit, which was stayed by this Court by order dated 16th April 2019. Two, the first information report is registered in contravention of the provisions contained in sub-section (5B) of section 81 of the Act, 1960. In the event, the authorities have initiated the prosecution after following the procedure prescribed in section 81(5B) of the Act, 1960, those prosecutions must proceed in accordance with law. We have not at all delved into the merits of the allegations. Nor the observations hereinabove shall be construed as an expression of opinion on the merits of the allegations in the subsequently lodged fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018, nothing adverse was found. (d) A fresh complaint was lodged with an oblique motive to regain control of the affairs of the society. By an order dated 14th February 2019, the Commissioner and Registrar of Co-operative Societies directed the audit of 104 accounts in respect of which audit had already been carried out, by invoking the powers contained in clause (c) of sub-section (3) of section 81 of the Act, 1960. The said audit which was, in effect, the third test audit, was specifically ordered to be carried out by Shri R.U. Jadhawar, Joint Registrar (Audit) on the establishment of Commissionerate of Sugar. The petitioners assert that the said order was actuated with intent to have a desired audit report. (e) Mr. Narendra Pandurang Bramhankar, the then Director of the society, challenged the said order dated 14th February 2019 by filing a writ petition being Civil Writ Petition No. 4828 of 2019 raising various grounds, including the incompetency of Mr. Jadhawar to conduct the audit. (f) On 16th April 2019, the Division Bench of this Court (Coram: Indrajit Mahanty A.M. Badar, JJ.) passed an interim order in terms of prayer clause (d) thereof, whereby the operation, implementati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto, on 16th June 2019, the Joint Registrar (Audit), Sugar, furnished a copy of inspection report to the first informant. Based on the inspection report made available to the police inspector, the latter called upon the Registrar, Cooperative Societies to fix the responsibility and authorize an officer from the cooperation department to lodge the report. Mr. Jadhawar, the Auditor took a stand that the inspection report was made available to the police pursuant to the directions of the Registrar, Co-operation and, thus, there was no question of the FIR being lodged by the co-operation department. Nor the authorities were empowered to do so under the Act, 1960. In response, the Police Inspector invited the attention of the Joint Registrar (Audit) to the provisions of sections 81 and 83 of the Act, 1960 and insisted for action in accordance with those provisions. (j) On 18th July 2019, the first informant approached Pimpri Police Station and lodged report solely based on the inspection report furnished by Mr. Jadhawar. On the basis of the said report, crime was registered at C.R. No. 806 of 2019 at Pimpri Police Station for the offences punishable under sections 420, 406, 409, 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , according to the petitioners, the respondents resorted to the device of obtaining an inspection report, though the source of the exercise of inspection was the order passed by Registrar, Cooperation under section 81(3)(c) of the Act, 1960, and initiate the prosecution on the strength thereof. This action being wholly illegal and non-est in the eye of law, the FIR deserves to be quashed and set aside. (m) For the completion of record, it may be apposite to note that by an order dated 27th August 2019, a Division Bench of this Court (Coram: Ranjit More and N.J. Jamadar, JJ.) granted ad-interim relief in terms of prayer clauses (c) and (d) of the petition (Civil Writ Petition No. 4134 of 2019) and stayed the further investigation and/or proceedings in relation to the above FIR. 3. The respondent No. 2-first informant preferred an interim application being Interim Application No. 793 of 2020 to vacate the aforesaid ad-interim order. 4. Mr. Sagar Suryawanshi, against whom FIR Nos. 235 of 2019 and 241 of 2019 have been registered, filed Criminal Application No. 444 of 2019 seeking permission to intervene in Criminal Writ Petition No. 4134 of 2019 and implead him as a party respondent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reliance was sought to be placed on an affidavit filed by Mr. Jadhawar in Contempt Petition (Stamp) No. 20847 of 2019 in Civil Writ Petition No. 4828 of 2019 to the effect that the exercise of the test audit in terms of section 81(3)(c) of the Act, 1960 had not been completed and what was furnished to the first informant and the police was an inspection report pursuant to the directions of the Commissioner, Co-operation and Registrar of Co-operative Societies. Copies of communication exchanged between the Police Inspector, Pimpri Police Station, the Registrar, Co-operative Societies and Joint Registrar (Audit), Commissionerate Sugar, were pressed into service to bolster up the said case. 9. In the wake of the aforesaid facts and pleadings, we have heard Mr. Ravi Kadam, the learned Senior Advocate for the petitioner in Writ Petition Nos. 4134 of 2019 1110 of 2021, Smt. A.S. Pai, the learned Public Prosecutor for the State, Mr. Sagar M. Kursija, the learned counsel for applicant in Criminal Application No. 444 of 2019 and Mr. Abhishek Kulkarni, the learned counsel for the respondent No. 2 in Writ Petition No. 4134 of 2019 and for applicant in Interim Application No. 793 of 2020, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made earnest endeavour to invite the attention of the Commissioner, Cooperation as well and Joint Registrar (Audit), Sugar Commissionerate, to the provisions under the Act, 1960, especially sections 81 and 83 and called upon them to lodge the report in the capacity of the authorised officer. This implies that the police officer was fully aware of the legal requirements. Yet, the FIR came to be registered on the basis of the report lodged by the first informant, which incorporated the contents of the inspection report, verbatim. 14. Mr. Kadam submitted that it is well nigh settled that a thing, which cannot be done directly, cannot be done indirectly as well. The endeavour on the part of the respondents to wriggle out of the situation by asserting that Mr. Jadhawar had conducted only inspection and not audit in terms of section 81(3)(c) of the Act, 1960 is unworthy of countenance as it would defeat the statutory protection envisaged by the said provision. If the protection granted by the provisions contained in section 81(5B) of the Act, 1960 is diluted, the co-operative societies and its office bearers would be exposed to unwarranted, false and motivated prosecutions jeopardizing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lal and Ors. 1992 Supp (1) SCC 335. 17. We have given careful consideration to the aforesaid rival submissions canvassed by the learned counsels for the parties. As is evident, the order dated 14th February 2019 passed by the Commissioner, Co-operation and Registrar, Co-operative Societies under section 81(3)(c) constitutes the genesis of the controversy at hand. The said order reveals that the Commissioner, Co-operation was of the view that in the light of the complaints, previous audit report and the report of audit by RBI, it was necessary to conducta test audit under section 81(3)(c) of the Act, 1960 on the points which were enumerated in the Schedule 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 much controversy over the fact that on 16th April 2019, a Division Bench of this Court passed an interim order, in the said petition. The controversy revolves around the terms of the restraint order. 18. The petitioners claimed that the interim order was passed in terms of prayer clause (d), which reads as under: (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, the registry was directed to ensure that the uploaded version was duly corrected in accordance with the order signed by the Judges. This clarification renders it beyond cavil that this Court had stayed the execution, operation and implementation of the order of test audit dated 14th February 2019 passed by the Commissioner, Co-operation and Registrar, Co-operative Societies. 22. It is not the case that the Court had initially passed an interim order in terms of prayer clause (b) and, subsequently, it came to be corrected as prayer clause (d). The Division Bench observed, in terms, that at the time of signing of the order, the prayer clause was corrected as (d) . 23. It is plain that in view of the aforesaid interim order, it was not open to the auditor to proceed 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 Societies, vide communication dated 26th April 2019, which seems to have been drafted on 18th April 2019 itself, specifically informed Mr. Jadhawar, the Joint Registrar (Audit) that the aforesaid interim order was passed in Civil Writ Petition No. 4828 of 2019 on 16th April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .B. Pol, Police Inspector, Economic Offences Wings. Mr. Jadhawar seems to have submitted the report under a covering letter dated 2nd June 2019 purportedly in response to the requisition of documents and reports by the police and letter of the Commissioner of Co-operation dated 9th May 2019. The said letter was received by police on 13th June 2019. Incidentally, the afore-extracted speaking to the minutes order was passed on 13th June 2019 itself. 27. The situation which thus obtains is that the authorities were aware that interim order was passed by this Court on 16th April 2019. The auditor who was entrusted to carry out the test audit was specifically apprised by the Registrar, Co-operation about the passing of the said order. A copy of the order was also annexed to the communication. The letter dated 25th July 2019 records in clear and explicit terms that the order of test audit was stayed by the High Court. What is of critical significance is the fact that the concerned police officer was informed that, in terms of section 81(5B) of the Act, 1960, it was for the auditor to submit the report to the Registrar in case audit revealed commission of offences and, thereupon, the Regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that since he had commenced the test audit of the society, the inspection report may be furnished to the police. On 29th May 2019, the police inspector again sought information from Mr. Jadhawar in respect of the accounts mentioned in the letter dated 16th February 2019 plus 49 accounts mentioned in the letter dated 29th May 2019. The inspection report seems to have been furnished under the covering letter dated 12th June 2019. 32. The aforesaid correspondence, if construed in isolation, may make the submission on behalf of the respondents attractive, at the first blush. However, the context cannot be lost sight of. Mr. Jadhawar, the Joint Registrar (Audit) was working on the establishment of Commissionerate, Sugar. In fact, vide letter dated 22nd February 2019, the Sugar Commissionerate has objected to the appointment of Mr. Jadhawar to conduct the special test audit, without consulting the Sugar Commissionerate and requested that some other officer be appointed. The sole source of authority to Mr. Jadhawar to enquire into the affairs of the society was the order passed by the Commissioner, Co-operation and Registrar, Co-operative Societies on 14th February 2019. Mr. Jadhawar c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .... (2A) Where, in the opinion of the State Government, it is necessary In the public interest to do so in relation to any society or class of societies for ensuring management thereof in accordance with sound business principles or prudent commercial practices, the State Government may, by order, direct that such society or class of societies shall prepare and maintain its accounts in the form determined by the State Government, from time to time and that cost audit or performance audit or both, of such society or class of societies, as may be specified in the order, shall be conducted. ....... (3) (a)........ (b) If the Registrar has reason to believe that there exists an element of fraud, misapplication of funds, manipulation of the accounts and the accounts of the society are likely to be tampered with, thereby causing loss to the society, he shall be competent to depute flying squad to a society or societies for examination of books, records, accounts, and such other papers and for verification of cash balance. The report of the Flying Squad shall be treated as sufficient evidence for further action, if any. (c) If it is brought to the notice of the Registrar that the audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment or the authorized officer, and for test audit by the Registrar or the authorized officer where the regular audit is found to be not satisfactory, inspection by a Flying Squad and re-audit of the accounts of the society. 37. It would be contextually relevant to note that under Rule 69, subsumed under Chapter VII of the Maharashtra Societies Rules, 1961, which deals with Audit, Enquiry, Inspection and Supervision, audit shall include annual, test, cost or performance, special and re-audit. 38. Sub-section (5B) with which we are primarily concerned, reads as under: (5B) The auditor shall submit an audit memorandum duly signed by him to the society and to the Registrar in such form as may be specified by the Registrar, on the accounts examined by him and on the balance sheet and profit and loss account as on the date and for the period up to which the accounts have been audited, and shall state whether in his opinion and to the best of his information and according to the explanation given to him by the society the said accounts give all information required by or under this Act and present the true and fair view of the financial transactions of the society. [Provided that, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son authorized by him in that behalf, where the auditor fails to initiate action in terms of the first proviso. 40. In the backdrop of the aforesaid fasciculus of the provisions, the legality of registration of the first information report, on the basis of the statement of the first informant, which is solely based on the inspection report, is required to be judged. Mr. Kadam, the learned Senior Counsel for the petitioners would urge that where the law provides a manner in which a particular act is to be done, it has to be done in that manner alone and no other. In the case at hand, according to Mr. Kadam, the situation was accentuated by the fact that both, Mr. Pol, the police inspector and Registrar, Co-operative Societies were fully alive to the position in law that the report was required to be lodged by the auditor, in case the audit revealed the commission of offences. 41. The aforesaid submission of Mr. Kadam appears to be well grounded in facts. The letters addressed by the police inspector, EOW, dated 27th June 2019 and 15th July 2019 reveal the said understanding of the police inspector, whereas the communication dated 25th July 2019, addressed by the Commissioner, Co-ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted. A magistrate, therefore, cannot in the course of investigation record a confession except in the manner laid down in Section 164. The power to record the confession had obviously been given so that the confession might be proved by the record of it made in the manner laid down. If proof of the confession by other means was permissible, the whole provision of Section 164 including the safeguards contained in it for the protection of accused persons would be rendered nugatory. The section, therefore, by conferring on magistrates the power to record statements or confessions, by necessary implication, prohibited a magistrate from giving oral evidence of the statements or confessions made to him. (emphasis supplied) 44. In the case at hand, indisputably, the auditor had not lodged the first information report. Nor is it the case of the prosecution that the auditor submitted a special report in terms of the first proviso to sub-section (5B) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete reading of Section 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 completion and in any case, before issuance of notice of the annual general body meeting of the society. 17. The first proviso shows that where the auditor has come to the conclusion in his audit report that any person is guilty of any offence relating to the accounts or any other offences, he is under obligation to file specific 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 concerned auditor after obtaining written permission from the Registrar shall file a First Information Report of the offence. If an Auditor fails to file the First Information Report, he shall be liable for disqualification and his name can be removed from the panel of the Auditors and also liable for any other action as the Registrar may think fit. 18. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the substratum of the first information report, in the case at hand, is the inspection report and nothing more or less. 49. In the backdrop of the aforesaid facts and governing legal position, we find it rather difficult to accede to the submission of Mr. Kulkarni that since the report lodged by the first informant reveals cognizable offences, the police were enjoined to register the FIR by following the Constitution Bench judgment in the case of Lalita Kumari (Supra). This submission loses sight of the well recognised position that the general provisions contained in the Code of Criminal Procedure must yield to the special procedure prescribed in a special law. If we accede to the submissions of Mr. Kulkarni, then the provisions contained in sub-section (5B) of section 81 of the Act, 1960 would be rendered otiose. There is a definite legislative object in introducing the said mechanism of submitting a special report, obtaining permission of the Registrar and thereafter lodging the FIR. 50. We are mindful of the position that, in a given case, where the offences are alleged to have been committed in the capacity of the members of the committee, or the office bearers of the soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t informant based on the inspection report furnished by the auditor. 53. In the event, the authorities have initiated the prosecution after following the procedure prescribed in section 81(5B) of the Act, 1960, those prosecutions must proceed in accordance with law. We have not at all delved into the merits of the allegations. Nor the observations hereinabove shall be construed as an expression of opinion on the merits of the allegations in the subsequently lodged first information reports. Subject to the aforesaid clarification, the petitions deserve to be allowed. 54. Hence, the following order: ORDER (i) The Writ Petition No 4134 of 2019 stands allowed. (ii) Writ Petition No. 1110 of 2021 stands allowed. (iii) The first information report being C.R. No. 806 of 2019 registered at Pimpri Police Station for the offences punishable under sections 420, 406, 409, 465, 467, 468 and 471 read with 34 of the Penal Code stands quashed and set aside. (iv) In view of the disposal of the petitions, Criminal Application No. 444 of 2019 and Interim Application No. 793 of 2020, both in Writ Petition No. 4134 of 2019, do not survive and accordingly stand disposed of. (v) By way of abundant cautio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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