Registrar Of Co-Operative Societies Can Order Inquiry Into Functioning Of Society Pending Re-Audit: Karnataka High Court

The Karnataka High Court has said that the Registrar of Cooperative Societies can order an inquiry into the functioning of a cooperative society, which cannot be interdicted by a pending re-audit under the provisions of the state Cooperative Societies Act.Justice Suraj Govindaraj held thus while dismissing the petition filed by Bherya Primary Agriculture Credit Cooperative Society Ltd. The society had approached the high court after the Registrar of Co-operative Societies issued a notice of inquiry under Section 64 of the Karnataka Cooperative Societies Act, on September 26, 2024, when a re-audit had already been ordered on October 25,2023. The petitioners contended that both re-audit under section 63(10) and inquiry under Section 64 of the Act cannot be carried out simultaneously.For context, Section 63(1) states that every Cooperative society shall get its accounts audited at least once in a year before the first of September following the close of the cooperative year by an auditor or an auditing firm appointed by the general body of the cooperative society from a panel of auditors or auditing firms approved by the Director of cooperative audit. Section 63(2) state that the general body of every cooperative society shall at its general meeting appoint an auditor or an auditing firm to audit the accounts of the society for the cooperative year in which the general meeting is held. Section 63(10) states that if the result of the audit held under subsection(1) discloses any defects in the working of the society, the board shall take steps to rectify the defects and remedy the irregularities pointed out in the audit report and place the audit report along with the action taken report before the general meeting to be held before the twenty fifth day of the September every year and explain the defects or the irregularities. Perusing this provision the high court said that indicates that defects having been pointed out in the audit carried, an order can be passed for correcting the said defects. It thereafter referred to Section 64 (Inquiry by Registrar) of the Act and said: “Section 64 relates to an enquiry to be conducted by the Registrar on his own motion by himself or by a person authorized by him as regards the matters touching the Constitution, working and financial condition of the Cooperative Society. The enquiry under Section 64 is a larger enquiry as regards the constitution, working and financial condition of the Cooperative Society, whereas a re-audit under Subsection (10) of Section 63 of the Act is only for correcting the defects and or rectifying the defects in the audit report already filed.”Then it held “I am the considered opinion that pending the re-audit under Subsection (10) of Section 63 of the Act, the enquiry under Section 64 cannot be interdicted. In that view of the matter, no grounds being made out, the petition stands dismissed at the stage of admission itself.” Appearance: Advocate Sandesh.T.B for Petitioner.AGA Yogesh D Naik for Respondents. Citation No: 2025 LiveLaw (Kar) 110Case Title: Bherya Primary Agriculture Credit Coopearative Society Ltd AND State of Karnataka Case No: WRIT PETITION NO. 6459 OF 2025Click Here To Read/Download Order

Registrar Of Co-Operative Societies Can Order Inquiry Into Functioning Of Society Pending Re-Audit: Karnataka High Court

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