Patna High Court
M/s A.K. Mishra and Associates,versusThe State of Bihar
- Decided
- Disposal
- PARTLY ALLOWED (DISPOSAL)
Holding
The order dated 07.03.2025 is set aside to the extent of blacklisting as the Registrar lacks authority to impose such a sanction.
Summary
The petitioner, a chartered accountancy firm, challenged a memo dated 07.03.2025 that blacklisted and delisted it for five years without a valid show‑cause notice or hearing. The firm argued that the Registrar of Cooperative Societies, Bihar, lacks statutory authority under the Bihar Cooperative Societies Act, 1935 to impose such blacklisting, which is a matter within the jurisdiction of the Institute of Chartered Accountants of India under the Chartered Accountants Act, 1949. The court examined the provisions of the 1935 Act, particularly Section 33, and found no power for the Registrar to blacklist a CA firm, only to delist it from the audit panel. It also noted that the earlier orders of blacklisting were set aside in prior writ proceedings and that the present order violated principles of natural justice. Consequently, the court set aside the blacklisting portion of the 2025 memo and allowed the writ application in part, directing the respondents not to enforce the blacklisting.
Issues considered
- Whether the Registrar of Cooperative Societies, Bihar, has statutory power under the Bihar Cooperative Societies Act, 1935 to blacklist a chartered accountancy firm.
- Whether the blacklisting order dated 07.03.2025 complied with the principles of natural justice and the requirement of a valid show‑cause notice.
- Whether the jurisdiction to determine professional misconduct of a chartered accountant lies with the Registrar or with the Institute of Chartered Accountants of India.
Legislation cited
- Bihar Cooperative Societies Act, 1935 — s. 33
- Chartered Accountants Act, 1949
- Indian Partnership Act, 1932 — s. 26
Subjects
- blacklisting
- delisting
- professional misconduct
- natural justice
- show cause notice
- jurisdiction
- cooperative societies
- chartered accountants
- writ petition
- certiorari
- mandamus
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.8101 of 2025
======================================================
M/s A.K. Mishra and Associates, a firm of Chartered Accountants having its
Head Office at Patna, through its Partner, Sri A. K. Mishra. @ Amiy Kumar
Mishra aged about 57 years (M), son of Late Tulsi Das Mishra, resident of
Road No. 01, North Patel Nagar, Keshari Nagar, P.S.- Patliputra, District
Patna.
... ... Petitioner/s
Versus
1. The State of Bihar through the Principal Secretary, Co-operative
Department, Government of Bihar, Old Secretariat, Patna - 800015.
2. The Registrar, Co-operative Societies, Bihar, having its office at Vikas
Bhawan, Bailey Road, Patna - 800001.
3. The Joint Registrar, Co-operative Societies, Bihar, Vikas Bhawan, Bailey
Road, Patna - 800001.
4. The District Audit Officer, Co-operative Societies, Bhagalpur, District -
Bhagalpur, Bihar.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mrs.Shama Sinha, Advocate
: Mr. Vijayansh Pratap Singh, Advocate
: Mr. Surya Prakash, Advocate
For the Respondent/s : Mrs. Dimpal Kumari, A.C. to G. P.-11
======================================================
CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
and
HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA
CAV JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA)
Date : 24-02-2026
Heard Mrs. Shama Sinha, learned counsel for the
petitioner and Mrs. Dimpal Kumari, learned A.C. to G.P.-11 for the
State.
2. The present writ application has been filed for the
following reliefs:
(I) To issue an appropriate writ/order/direction
in the nature of Certiorari for quashing Memo
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No. 2238 dated 07.03.2025 (Annexure- 10),
issued by the Registrar, Co-operative
Societies, Bihar, whereby the Pecutioner firm,
M/s A.K. Mishra & Associates, has been
blacklisted and delisted for five years without
issuing a valid show cause notice disclosing
specific charges, without supplying the
documents relied upon, and without granting
any effective opportunity of hearing while
illegally invoking Section 26 of the Indian
Partnership Act, 1932 to extend liability to all
other partners, despite there being no express
power under the Bihar Co-operative Societies
Act, 1935 or the Rules framed thereunder
empowering the Registrar to blacklist a firm of
Chartered Accountants as the power to deal
with alleged professional misconduct lying
solely with the Institute of Chartered
Accountants of India (ICAI) under the
Chartered Accountants Act, 1949;
(II) To issue an appropriate
writ/order/direction in the nature of
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Mandamus, restraining the Respondents from
giving effect to or acting upon Memo No. 2238
dated 07.03.2025, and from circulating or
relying on the same to prejudice the Petitioner
firm's right to profession and livelihood during
the pendency of this writ petition;
(III) To award costs of litigation in favour of
the Petitioner firm, which has been compelled
to repeatedly approach this Hon'ble Court for
enforcement of basic procedural safeguards,
due to the continued and deliberate violation
of principles of natural justice and non-
compliance with the binding directions of this
Hon'ble Court rendered in CWJC No.
18220/2017 and CWJC No. 1665/2019;
(IV) To hold and declare that the Registrar,
Co-operative Societies, Bihar, not being a
statutory authority under the Chartered
Accountants Act, 1949, or the Bihar Co-
operative Societies Act, 1935, has no
jurisdiction to determine professional
misconduct or to blacklist a Chartered
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Accountant firm thereof for alleged lapses in
audit, particularly when the petitioner firm
was neither empanelled after 30.09.2020
under the fresh panel of Chartered Accountant
firms issued by the Registrar, Co-operative
Societies, Bihar, nor was its name restored in
the said empanelment list, and had not been
allotted any audit assignment post-2017,
despite subsisting favourable orders of the
Hon'ble High Court
(V) To direct the Respondents to pay
appropriate damages to the Petitioner firm for
the financial loss, reputational harm, and
professional hardship suffered as a result of
the continued de facto blacklisting and
delisting since 2017, despite no proven
misconduct by the Petitioner firm or its
partners and in view of the fact that no
adverse findings were ever returned by the CBI
or the ICAl, and further as the impugned order
seeks to rely upon an alleged interpretation
issued by ICAI, which was neither disclosed to
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the Petitioner nor ever issued, as confirmed by
ICAI itself.
(VI) To past an appropriate order/direction for
fixing responsibility and accountability on the
officials concerned who deliberately and
wilfully disobeyed judicial orders, causing
unnecessary litigation and injury to the
Petitioner firm;
(VII) To grant such other relief or reliefs as
this Hon'ble Court may deem fit and proper in
the facts and circumstances of the case.
3. This is the 3rd round of litigation on behalf of the
petitioner in which the petitioner has challenged the legality and
validity of order dated 07.03.2025 which was issued under Memo
No. 2238 by the respondent No.2 i.e. the Registrar, Cooperative
Society, Bihar whereby the petitioner’s firm M/s A.K. Mishra &
Associates, has been blacklisted and delisted for five years without
issuing a valid show cause notice disclosing specific charges,
without supplying the documents relied upon, and without
granting any effective opportunity of hearing.
4. Earlier, vide order dated 18.10.2017, the Registrar,
Cooperative Society, Patna had blacklisted the petitioner’ firm and
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had delisted it from the panel of the Department and further,
recommended to the Institute of Chartered Accountants of India
(ICAI) for cancellation of registration of the petitioner’s firm. The
same was challenged by the petitioner in CWJC No.18220 of
2017, on the ground that the order of blacklisting has been passed
without proper show cause as well as blacklisting has been made
effective for an indefinite period.
5. A Single Bench of this Hon’ble Court vide order dated
11.01.2018 after taking note of the submission of the parties,
quashed the impugned order dated 18.10.2017 and remanded the
matter to the Registrar, Cooperative Societies, Bihar, Patna for
taking a fresh decision with respect to the period of blacklisting to
be imposed upon the petitioner after grant of opportunity of
hearing to the petitioner in accordance with law.
6. Thereafter, the respondent No.2 after hearing the
parties had issued an order dated 02.11.2018 passed by the
respondent No.2. Again the respondent No.2 had been pleased to
blacklist the petitioner’s firm for 30 years. The same was
challenged in CWJC No.1665 of 2019 and was allowed by a
Single Bench of this Hon’ble Court vide order dated 13.02.2024
and a Coordinate Bench of this Hon’ble Court had been pleased to
set aside the order dated 02.11.2018 which was issued under
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memo No.9347 and after setting aside the order dated 02.11.2018
the matter was remanded back to the respondent authority to issue
a fresh show cause upon the petitioner and pass a fresh order after
giving an opportunity of hearing to the petitioner.
7. Learned counsel for the petitioner submits that
thereafter the petitioner has been given show cause and the
petitioner has replied to the same, and without considering the
show cause on behalf of the petitioner, the respondent No.2 has
passed the present impugned order dated 07.03.2025 (Annexure-
10) by which the petitioner’s firm was again blacklisted for five
years and was also delisted from the panel of the Department.
8. The question that arises for consideration in the
present writ application before this Court is whether, in the facts
and circumstances of the case the “Registrar, Cooperative Society
has the power under the statute to pass an order in respect of
blacklisting of a firm of the petitioner under the Bihar Cooperative
Societies Act, 1935”.
9. Learned counsel for the petitioner submits that from a
bare perusal of the Bihar Cooperative Societies Act, 1935, there is
no such provision/power to the Registrar, Bihar Cooperative
Society under the statute to pass an order in respect to blacklisting
of a firm in question. She further submits that Section 33 of the
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Bihar Cooperative Societies Act, 1935 talks about audit of a
Cooperative Society. Section 33 of the Bihar Cooperative Societies
Act, 1935 is extracted hereinbelow:
“[33. Audit – (1) A Co-operative Society shall
get its accounts audited by Auditor from a
panel approved by State Government or the
authority authorized by the State Government,
at least once in every financial year. Such
Auditor shall ether be Chartered Accountants
within the meaning of the Chartered
Accountants Act, 1949 or Auditor from the
office of the Registrar.
(2) The minimum educational qualification of
the Auditors from a panel approved by State
Government or an authority authorized by the
State Government shall be Graduate (with
Mathematics) or commerce Graduate from any
recognised University. Such Auditor or
Chartered Accountants firm shall be required
to have at least three years of audit
experience. Only such Auditor or Chartered
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Accountants firm shall be eligible for the audit
of the accounts of Co-operative Society.
(3) The audit of the accounts of every Co-
operative Society shall be done by the Auditor
or Chartered Accountant firm, specified under
sub-section (2), appointed by the General
Body of Co-operative Society.
(4) It shall be mandatory to audit the accounts
of every Co-operative Society within six
months of the end of the financial year to
which accounts is related to.
(5) Apex Co-operative Society, with the
approval of General Body, shall compulsorily
submit the Audit Report, after the audit of its
statement of accounts, to the Registrar within
thirty day's which shall be placed before the
State Legislature in accordance with the
procedure laid down for this purpose by the
State Government.
(6) The Auditor's Report in addition to the
report on the accounts of the Co operative
Society shall also contain report on the
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attendance at Board meeting, by Directors, the
loans and advances sanctioned to or the
business done with the Co-operative Society by
the Directors, expenditure on Board Meetings,
remuneration paid to Directors, expenditure
reimbursed to Directors, expenditure on
education and training for members, staff,
Directors and others.
(7) It shall be the duty of the Board to ensure
that annual financial statements are prepared
and presented for audit within forty-five days
of closure of the financial year.
(8) The remuneration of an Auditor shall be
fixed by the General Body; Provided that if
audit is done by the Auditor of the office of
Registrar, the Co operative Society shall pay
the audit fee fixed by the Registrar.
(9) The General Body may, at a special
meeting, remove an Auditor from office by a
resolution passed by a majority of the
members present and voting.
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(10) Upon the demand of the Auditor of a Co-
operative Society the present or former Office-
bearers, Board members or employees of the
Co-operative Society shall furnish-
(a) such information and
explanation, as may be considered necessary,
and
(b) each of the record, documents,
books, accounts and vouchers of the Co-
operative Society as are, in the opinion of the
Auditor, necessary to enable him to make the
examination and report.
(11) Where a Co-operative Society fails to get
it Annual Accounts audited when due,
Registrar shall get the accounts of the Co-
operative society audited within a period of
ninety days from the date when the audit was
due.
(12) The cost of conducting such audit shall be
borne by the Co-operative society.]”
10. Learned counsel for the petitioner submits that from
a bare perusal of the aforesaid, it appears that the Registrar, Bihar
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Cooperative Society, Patna has only power to delist the petitioner’s
firm from the panel of the Department. Neither the Bihar
Cooperative Societies Act, 1935 nor the Rules, 1959 confer any
specific power on the Registrar to blacklist or delist Chartered
Accountant Firm. The Registrar, Bihar Cooperative Society may
revise the audit report under Rule 57 (2) and order re-auditing.
Any penal action against a Chartered Accountant or a C.A. firm
for alleged professional misconduct lies exclusively within the
jurisdiction of the Institution of the Chartered Accountants of
India(ICAI) under the Chartered Accountant Act, 1949. The
impugned order has caused continued de facto blacklisting since
2017, as the petitioner’s firm has not sought any other assignment
from any Government Department, despite repeated quashing
earlier orders. Other Government Department have also cancelled
work and full payment, relying on blacklisting that no longer holds
legal validity in the present case.
11. Learned counsel for the State submits that the
petitioner’s firm was authorized to conduct audit for the
Cooperative Societies assigned at Bhagalpur. The petitioner’s firm
conducted audit of Srijan Mahila Cooperative Society, Sabour for
the year 2003-04 to 2012-13 and for the year 2014-2015 to 2015-
16. The petitioner’s firm ignored/deliberately overlooked several
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omission and commission committed by the said society which led
to financial irregularity and fraud siphoning Government money.
It is presumed that a Chartered Accountant Firm plays role of
auditing of financial activities of an institution and in the present
matter, the petitioner’s firm failed to play its statutory duty which
paved the way for such a big financial irregularity. A show cause
was asked from the petitioner’s firm vide letter No.7457 dated
14.09.2017. After considering the show cause reply filed by the
petitioner’s firm and having found the same unsatisfactory and
taking into consideration the defective audit report, the petitioner’s
firm has been delisted and blacklisted and so far as question raised
with respect to the authority of Registrar, Cooperative Society,
Bihar, Patna in blacklisting the petitioner’s firm is concerned, it is
in accordance with letter No. 4234 dated 24.09.2005 wherein
guidelines were already issued in respect of empanelled Chartered
Accountants. The order under challenge has been passed by the
answering respondents keeping in view of the Departmental
Circular dated 24.09.2005.
12. We have heard the learned counsel for the parties
and perused the material available on the record, considering the
aforesaid facts, it transpires that the respondent No.2 has no power
under the Bihar Cooperative Society Act, 1935 to blacklist the
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petitioner’s firm for a period of five years. In fact, the respondent
No.2 has only power to delist the petitioner’s firm as per letter No.
4234 dated 24.09.2005.
13. Accordingly, the order dated 07.03.2025 as
contained in Annexure-10 is set aside to the extent of blacklisting
of petitioner-firm, and this writ application stands partly allowed
as indicated above.
14. Pending application(s), if any, stands disposed of.
(Sudhir Singh, J)
I agree.
( Rajesh Kumar Verma, J)
Nitesh/-
AFR/NAFR NAFR
CAV DATE 12.02.2026
Uploading Date 24.02.2026
Transmission Date NA
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