High Court refrained to interfere with direction of Assistant Registrar to appoint a new Chartered Accountant to audit alleged financial irregularities of the society
In a recent judgment, Allahabad High Court refrained to interfere with direction of Assistant Registrar to appoint a new Chartered Accountant to audit alleged financial irregularities of the Society.
ABCAUS Case Law Citation:
4668 (2025) (07) abcaus.in HC
In the instant case, a complaint was made to the Assistant Registrar, Firms, Societies and Chits of the financial irregularities of a Society. It was alleged that the Society concluded the election of the members without sending agenda and notice of the meeting to all the members as mandated by the regulations of the trust.
The Assistant Registrar observed that there were cuttings, and tempering in the original records of the Society. Further the Registrar was of the view that the functioning of Ex-Manager and Ex-Treasures were doubtful in view of that no agenda was issued to the members for the business to be transacted as recorded in register, members were not elected as per rules, the cash book was incomplete, holding elections contrary to timeline of membership, lack of transparency in financial transactions of the trust and attempt to control the property of the trust.
The Assistant Registrar declared the election of the members as illegal and dissolved the managing committee. The Assistant Registrar directed for the fresh election of the managing committee of the society by excluding the Ex-Manager and Ex-Treasures.
Further, in view of the financial irregularities, the Assistant Registrar nominated an independent Chartered Accountant for audit of the functioning and income and expenditure of the society under section 24 of the Societies Registration Act 1860 (the Act). The nominated CA was directed to submit his report within 40 days.
It was stated that if alleged irregularities are confirmed in the audit, then the final decision shall be taken against the guilty members as per the provisions of the Act. It was also ordered that if any member/office bearer have any cash belonging to the society, he shall immediately deposit it in the bank account of the society. Also, till the election of the new managing committee, the Registrar directed that all activities of the society shall remain suspended.
Aggrieved, the managing committee of the Society approached the Hon’ble High Court inter alia praying quashing the order of the Assistant Registrar.
It was submitted that the impugned order was perverse, illegal and non-est in the eyes of law, inasmuch as the impugned order itself was contradictory in nature and based on presumption. It was further submitted that the membership list was never examined by the authority concerned to hold valid election.
It was submitted that the Assistant Registrar had failed to look into the audit report submitted by the Chartered Accountant of the Society and discarded the same by appointing the new Chartered Accountant for audit of the account of the society afresh holding that the earlier audit reports submitted were incomplete. It was submitted that the Assistant Registrar while passing the impugned order had totally ignored the complaint of the petitioners.
It was further submitted that the process of election fixed by the Assistant Registrar was also illegal, inasmuch as, the Assistant Registrar in a very mala fide manner exceeded his jurisdiction debarring one of the petitioners against the provisions of bye laws and now going to hold fresh election in a very short span of time due to mala fide intention. It was submitted that in view of the above facts and circumstances, the impugned order was bad in law contrary to the statutory provisions and materials on record and also passed without application of mind arbitrarily and with mala fide intent deserved to be set aside while allowing the instant writ petition.
On the other hand the respondent Registrar submitted that he has all the power to look into the financial irregularities, if any, complaint received by him and, therefore, there are no mala fide or arbitrariness, as argued by the Petitioner for appointing another Chartered Accountant and calling for audit report.
It was further submitted that argument of the petitioners that since on earlier occasion the agenda was fixed and, therefore, the meeting was held thereafter no requirement of fixing the agenda, had also no force.
It was submitted that no ground is made out for exercising the power of this Court under Article 226 of the Constitution of India for issuance of a writ of certiorari for setting aside the impugned order.
It was stated that the order, which had been passed by the Assistant Registrar only for reasons in two folds, firstly to conduct the election in fair manner and secondly that whatever complaint has received by the Assistant Registrar had to be properly adjudicated. Since the complaint regarding the financial irregularities had already been received by the Assistant Registrar, therefore, he was on the view that the same might be adjudicated by an independent Chartered Accountant and directed to the Chartered Accountant to file audit report after looking into the complaint.
The Hon’ble High Court opined that the purpose of certiorari, is only to confine the inferior tribunals within their jurisdiction, so as to avoid the irregular exercise, or the non exercise or the illegal assumption of it and not to correct errors of finding of fact or interpretation of law committed by them in the exercise of powers vested in them under the statute. The accepted rule is that where a Court has jurisdiction it has a right to decide every question which crops up in the case and whether its decision is correct or otherwise, it is bound to stand until reversed by a competent Court.
The Hon’ble High Court held that in the case in hand while passing the impugned order, the Assistant Registrar had taken all relevant aspects, law and materials on the record, therefore, taking into consideration of aforesaid discussions on the law and the reasons assigned while passing the impugned order, there was no gross illegality or error in the impugned order for inviting to exercise the power of this Court under Article 226 of the Constitution of India for issuance of a writ of certorari for quashing the impugned order.
The Hon’ble High Court already taken into consideration the fact that the one of the petitioners had already given an opportunity to participate in the scheduled election but he had not chosen to contest the election.
The writ petition was dismissed accordingly.
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