KSCAS petition challenging cost accountants appointment as auditor of co-operative societies dismissed by Karnataka HC

The Karnataka State Chartered Accountant Society (KSCAS) has lost its case against inclusion of Cost Accountants as auditor of State Cooperative Societies by Karanataka State Government.

Case Details:
Writ Petition No. : 2026-2031 of 2015
Karnataka State Chartered Accountant Society  and Ors vs. State of Karnataka, Department of Co-operation and Ors
Date of Judgment: 29/03/2016

Brief Facts of the Case:

97th Constitutional amendment introduced Article 243ZH to 243ZT requiring every State to make Law making audit of every cooperative society mandatory. Consequently, section 63 of KCS Act was amended making audit of the accounts of the co-operative society compulsory. Initially, the audit was to be assigned to departmental auditors or to chartered accountants.

KSCAS had filed a WP challenging the amendments made in section 63 of the Karnataka  Co-operative Socieites Act, 1959 (KCS Act) which allowed auditing of the accounts of state cooperative accounts of by cost accountants/firm of cost accountants. It was prayed to declare such amendment as null and void and ultra-virus the Constitution.

KSCAS had alleged that due to political pressure and lobbying by the members of the Cost Accountant fraternity, the State Legislature sought to bring a further amendment in said Section 63 to enlarge the scope of auditor to include a Cost Accountant within the meaning of Cost and Works Accountants Act, 1959.

KSCAS had contended that the State had overlooked the distinction between the two professional classes and depicted the distinction as under:

However the Court held as under:

“On a careful consideration of the rival contentions, it is not evident that by virtue of impugned amendment, a Cost Accountant has been enabled to carry out functions which can only be performed by a Chartered Accountant. This statutorily governed and there can be no entrenchment on such functions. It is not the case of the petitioners that auditing the accounts of a cooperative society is the exclusive domain of Chartered Accountants , If that be so, there is no ground for challenge made out.”

Copy of Judgment: