Bombay High Court
SHAILAJA GIRISH GASTEversusTHE DEPUTY REGISTRAR CO OPERATIVE SOCIETIES THANE CITY AND ORS
- Decided
- Disposal
- Disposed Off
Holding
The communication was in accordance with Section 81 of the Maharashtra Co‑operative Societies Act, 1960 and the writ petition is dismissed.
Summary
Shailaja Girish Gaste, an authorised officer of Cielo Co‑operative Housing Society, filed a writ petition challenging a communication dated 20 July 2026 sent by the District Special Auditor to the Senior Police Inspector, which sought criminal action based on an audit report under Section 81 of the Maharashtra Co‑operative Societies Act, 1960. The petitioner contended that the auditor was beyond its competence and that she was not the authorised officer during the alleged period of misappropriation. The Court examined the provisions of Section 81(1)(a), 81(3)(b) and 81(5B), which empower the Registrar and the auditor to direct investigations and lodge FIRs where fraud is suspected. Finding that the communication was made pursuant to the statutory audit report and fell within the auditor’s statutory powers, the Court rejected the petitioner's contentions. The petition was dismissed, leaving the petitioner free to pursue any remedies if an FIR is eventually registered.
Issues considered
- Whether the District Special Auditor’s communication to the police under Section 81 of the Maharashtra Co‑operative Societies Act, 1960 is within its statutory competence.
- Whether the petitioner was an authorised officer during the period of alleged financial defalcation, affecting the validity of the audit findings.
- Whether the writ petition challenging the auditor’s communication is maintainable.
Legislation cited
- Maharashtra Co-operative Societies Act, 1960 — s. 81(1)(a), 81(3)(b), 81(5B)
Subjects
- audit
- co‑operative societies
- financial defalcation
- Section 81
- FIR
- writ petition
- government servant
- auditor's powers
Judgment
NISHA Digitally signed by
NISHA SANDEEP
SANDEEP CHITNIS
Date: 2026.09.05
CHITNIS 13:59:48 +0530
6-wp.11139.2026.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.11139 OF 2026
Shailaja Girish Gaste ...Petitioner
Versus
The Deputy Registrar
Co-operative Societies, Thane City and Ors. ...Respondents
Mr. Aniesh S. Jadhav with Mr. Rushikesh Kekane, Ms. Nikita Kaushik
and Ms. Amisha Lolusare for the Petitioner.
Mr. Karan S. Thorat, ‘B’ Panel Counsel for the Respondent Nos.1, 3
and 4-State.
CORAM: BHARATI DANGRE &
ASHISH S. CHAVAN, JJ.
DATE : 31st AUGUST 2026
P.C. :
1. The petitioner raises a challenge to the impugned
communication dated 20th July 2026 issued by the District Special
Auditor, Class-1, Co-operative Societies, Thane, i.e. respondent No.2,
addressed to the Senior Police Inspector, Kasarvadavali Police Station,
pursuant to the audit enquiry conducted by Mr. Suhas Kamble,
Auditor, Class-1, and the report submitted by him on 10 th April 2023.
The said communication records that there was financial defalcation
N. S. Chitnis 1/6
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during the tenure of the authorised officer and that, therefore, the
Deputy Registrar, Co-operative Societies, Thane City, by his
communication dated 29th April 2026, directed respondent No.2 to
take necessary steps in that regard. Pursuant thereto, respondent No.2
addressed the communication dated 20th July 2026 to the Senior Police
Inspector, Kasarvadavali Police Station, requesting that appropriate
action be taken, as the conduct of the petitioner, who was named in
the said report, had resulted in financial defalcation and she is an
authorised officer, therefore a Government servant.
2. The learned counsel for the petitioner submits that the
impugned communication is beyond the competence of the respondent
No.2 and this submission, we must out rightly reject. On reading of
the communicated dated 20th July 2026, it is seen that a Special Audit
was conducted for Cielo Co-operative Housing Society Ltd., Thane,
under the directions of the Deputy Registrar, Co-operative Societies,
under Section 81 of the Maharashtra Co-operative Societies Act, 1960
(‘MCS Act’). The Auditor, Class-1, submitted his report under Section
N. S. Chitnis 2/6
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81(3)(b) on 10th April 2023, and it mentioned that the
misappropriation had taken place during the tenure of the authorised
officer and directions were issued that criminal proceedings be
initiated in this regard. The Deputy Director, Co-operative Societies,
by his communication of 29th April 2026, directed the District Special
Auditor, Class-1, Co-operative Societies, Thane, to take appropriate
steps and by exercising the power conferred upon him and in the wake
of the power conferred to lodge a report under Section 81(5B), a
complaint has been lodged which is yet to be taken cognizance of by
the concerned Police Station. A perusal of Chapter VIII of the MCS
Act, pertain to Audit, Inquiry, Inspection and Supervision. It is
indicated that the Society shall cause to be audited its accounts as
directed under Section 81(1)(a) by an auditor from the panel prepared
by the Registrar and approved by the State Government or an
authority authorised by it in this behalf, possessing required
qualifications and experience and such report of the auditor shall be
furnished to the Society, the audit being directed to be carried out as
per the auditing standards notified by the State Government from time
N. S. Chitnis 3/6
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to time.
For the purpose of conducting such audit, it is imperative
for the Society and its members to permit the auditor to have access to
all the books, accounts, documents, papers, securities, cash and other
properties belonging to, or in the custody of, the Society, and any
person being summoned on the ground that he/she is in possession or
responsible for the custody of any such books, it will be imperative to
follow the said directions. If the Registrar has reason to believe that
there exists an element of fraud, mis-application of funds,
manipulation of the accounts and the accounts of the Society are likely
to be tampered with, then it is competent to depute a Flying Squad to
a Society or Societies for examination of such documents as are
necessary and the report of the Flying Squad shall be treated as
sufficient evidence for further action, if any.
The auditor upon carrying the audit shall submit a report
to the Society and to the Registrar, in terms of Section 81 (5B) on the
accounts examined by him and act on the basis of the balance sheet
and profit and loss account. However, if the auditor comes to a
N. S. Chitnis 4/6
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conclusion in his audit report that any person is guilty of any offence
relating to the accounts or any other offences, he shall file a specific
report to the Registrar and the auditor concerned, after obtaining
written permission of the Registrar, file a First Information Report of
the offence. The said proviso also mandate that the auditor who fails
to file the First Information Report, shall be liable for disqualification
and his name shall be liable to be removed from the panel of auditors
and he shall also be liable for any other action as the Registrar may
think fit.
3. In light of the aforesaid specific provision as contemplated
under Section 81, we find that the impugned communication dated
20th July 2026 addressed by the District Special Auditor, Class-1, Co-
operative Societies, Thane, to the Senior Police Inspector,
Kasarvadavali Police Station, is in tune with the said provision. Though
the learned counsel for the petitioner has vehemently asserted before
us, certain points indicating that the petitioner was not the authorised
officer during the relevant period and the accusation as regards fraud
N. S. Chitnis 5/6
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against her is not established, in our view, this is not the stage, when
we would indulge into the same, as we find that the invocation of the
power in issuing the impugned communication, is based upon the
Report under Section 81. For this reason, we dismiss the writ petition.
Though the learned counsel for the petitioner makes a
categorical statement that the petitioner has paid the entire disputed
amount to the Society, which is alleged to be defaulted, it would be
for the petitioner to demonstrate the same, as and when the FIR is
registered.
Needless to state, we leave it open to the petitioner to avail
of such remedies as may be available in law, in the event an FIR is
registered.
Writ Petition stands disposed of accordingly.
ASHISH S. CHAVAN, J. BHARATI DANGRE, J.
N. S. Chitnis 6/6
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