DHANRAJ N ASAWANIversusAMARJEET SINGH MOHINDER SINGH BASI AND OTHERS

               [2023] 11 S.C.R. 297 : 2023 INSC 710



                           CASE DETAILS

                       DHANRAJ N ASAWANI
                                    v.
  AMARJEETSINGH MOHINDERSINGH BASI AND OTHERS
                  (Criminal Appeal No. 2093 of 2023)
                             JULY 25, 2023
         [DR. DHANANJAYA Y. CHANDRACHUD, CJI,
          J.B. PARDIWALA AND MANOJ MISRA, JJ.]

                             HEADNOTES

     Issue for consideration: Whether the provisions of s.81(5B) of
Maharashtra Co-operative Societies Act, 1960 can be construed as
preventing a share holder of the society such as the appellant, who was
also an erstwhile director, from independently setting the criminal law
in motion.
     Maharashtra Co-operative Societies Act, 1960 – s.81(5B) – The
High Court was of the view that since the provisions of the 1960 Act
are special, the provisions of s.81(5B) would preclude the registration
of an FIR at the behest of a person, such as the appellant, who is a
shareholder of the co-operative society – Propriety of:
      Held: S.81 of the 1960 Act casts a public duty on the auditor and
the Registrar to audit co-operative societies – A statutory obligation is
cast on the auditor and the Registrar because they are the first persons
to acquire knowledge about the financial irregularities in a co-operative
society – S.81(5B) of the Act casts a positive obligation on the auditor
or the Registrar to file an FIR – S.81(5B) demands accountability and
vigilance from the auditor and the Registrar in performance of their public
duty – It does not use any negative expression to prohibit persons other
than the auditor or the Registrar from registering an FIR – Therefore,
it would be contrary to basic principles of statutory construction to
conclude that s.81(5B) debars persons other than the auditor or the
Registrar from filing an FIR. [Paras 20 and 24]

                                   297
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     Maharashtra Co-operative Societies Act, 1960 – s.81(5B) – FIR
registered by appellant-share holder against respondents for offences
punishable u/ss.420, 406, 409, 465, 467, 468 and 471 r/w. s.34 of IPC
– FIR quashed by High Court relying on s.81(5B) of the 1960 Act –
Propriety of:
      Held: The High Court held that s.81(5B) contains special provisions for
the submission of a special report and the obtaining of the permission of the
Registrar before the lodging of an FIR – It held that these provisions would be
rendered otiose if the general provisions in the Code of Criminal Procedure 1973
were to apply – In the instant circumstances, the High Court has erred in quashing
the FIR which was lodged by the appellant – S.81(5B) cannot be interpreted to
mean that any other person who comes to know about the financial irregularity
on the basis of the audit report is debarred from reporting the irregularity to the
police – It is correct that the FIR adverted to the audit which was conducted in
respect of the affairs of the co-operative society – However, once the criminal
law is set into motion, it is the duty of the police to investigate into the alleged
offence – This process cannot be interdicted by relying upon the provisions of
sub-section (5B) of s. 81 which cast a duty on the Registrar/auditor to lodge a
first information report – Impugned Judgment and order of the High Court set
aside. [Paras 7, 26 and 29]

        LIST OF CITATIONS AND OTHER REFERENCES

     Lalita Kumari v. Government of U P (2014) 2 SCC 1 : [2013] 14 SCR
713; A.R. Antulay v. Ramdas Sriniwas Nayak (1984) 2 SCC 500 : [1984] 2
SCR 914 – followed.
     Jamiruddin Ansari v. CBI (2009) 6 SCC 316 : [2009] 7 SCR 759;
Jeewan Kumar Raut v. CBI (2009) 7 SCC 526 : [2009] 10 SCR 272; State
of Haryana v. Bhajan Lal (1992) Supp (1) SCC 335 : [1990] 3 Suppl. SCR
259 – distinguished.
     State of Punjab v. Balbir Singh (1994) 3 SCC 299 : [1994] 2 SCR
208; Directorate of Enforcement v. Deepak Mahajan (1994) 3 SCC 440 :
[1994] 1 SCR 445; Mirza Iqbal Hussain v. State of Uttar Pradesh (1982) 3
SCC 516; T.T Antony v. State of Kerala (2001) 6 SCC 181 : [2001] 3 SCR
942; Sheonandan Paswan v. State of Bihar (1987) 1 SCC 288 : [1987] 1
SCR 702; Ratanlal v. Prahlad Jat (2017) 9 SCC 340 : [2017] 8 SCR 682;
DHANRAJ N ASAWANI v. AMARJEETSINGH MOHINDERSINGH 299
                BASI AND OTHERS


Rangku Dutta v. State of Assam (2011) 6 SCC 358 : [2011] 8 SCR 639;
Union of India v. Popular Construction (2001) 8 SCC 470 : [2001] 3 Suppl.
SCR 619 – referred to.

      OTHER CASE DETAILS INCLUDING IMPUGNED
             ORDER AND APPEARANCES

     CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
2093 of 2023.
     From the Judgment and Order dated 16.11.2021 of the High Court of
Judicature at Bombay in Writ Petition No. 4134 of 2019.
     With
     Special Leave Petition (Criminal) No. 2246 of 2022.
     Appearances:
     V. Giri, Deepak Nargolkar, Sr. Advs., Prashant Shrikant Kenjale,
Naresh Shamnani, Minal Chandani, Siddharth Dharmadhikari, Aaditya
Aniruddha Pande, Bharat Bagla, Sourav Singh, Shreya Saxena, Ms. Yamini
Singh, Shrirang Verma, Shantanu Phanse, Sudhanva Bedekar, Gaurav Singh,
Soumik Ghosal, Sunil Fernandes, Ms. Nupur Kumar, Divyansh Tiwari, Ms.
Muskan Nagpal, Amol Nirmalkumar Suryawanshi, Abhishek Bharti, Ms.
Aarti Mahto, Balaji Srinivasan, Pravartak Pathak, Ms. Ankita Chaudhary,
Advs. for the appearing parties.

      JUDGMENT / ORDER OF THE SUPREME COURT

                             JUDGMENT
     DR. DHANANJAYA Y CHANDRACHUD, CJI
     1. Leave granted.
      2. This appeal arises from a judgment dated 16 November 2021 of a
Division Bench of the High Court of Judicature at Bombay by which it has
quashed FIR No 806 of 2019 lodged by the appellant for offences punishable
under Sections 420, 406, 409, 465, 467, 468 and 471 read with Section 34
of the Indian Penal Code1 at Police Station Pimpri, Chinchwad.


1   “IPC”
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      3. The first respondent was the Chief Executive Officer of Seva Vikas
Co-operative Bank, registered under the provisions of the Maharashtra
Co-operative Societies Act 19602. The second respondent is the former
Chairperson of the bank. Several complaints were lodged by individuals,
members, share-holders, and depositors of the bank against the management
alleging acts of cheating and misappropriation of funds. On the basis of the
complaints, the Economic Offences Wing 3 at Pimpri-Chinchwad registered
an FIR and conducted investigations in January 2019 and thereafter. FIR Nos.
235 and 241 of 2019 were registered at the behest of the bank for offences
punishable under Sections 406 and 420 read with Section 34 of the IPC.
During the course of the investigation, the EOW issued a communication
on 16 February 2019 to the District Sub Registrar, Co-operative Societies,
Pune, inter alia, seeking details and information regarding the forensic audit,
credit policy, collateral policy and loan policies, and the RBI guidelines
pertaining to the affairs of the bank.
      4. On 2 May 2019, a letter was addressed by the Police Inspector
of the EOW, Pimpri-Chinchwad to the Commissioner of Co-operation
and Registrar of Co-operative Societies Maharashtra seeking a copy of
the forensic audit report of the bank. By a letter dated 9 May 2019, the
Commissioner of Co-operation and Registrar of Co-operative Societies
requested the Joint Registrar (Audit) to conduct an investigation and to
provide the documents which were sought by the EOW. It appears that
thereafter an investigation was conducted and an inspection report dated
12 June 2019 was submitted.
      5. Based on an application under the Right to Information Act 2005,
the appellant sought a copy of the inspection report. On 16 June 2019, the
Joint Registrar submitted a copy of the inspection report to the appellant.
According to the appellant, the report indicated that loans were advanced
to persons and entities who were not eligible or creditworthy and they were
diverted for purposes other than those for which they were availed; and
monies were siphoned off and misappropriated. It has been alleged that the
bank did not take steps to recover the loans and a large number of accounts
were declared as non-performing assets.


2     “1960 Act”
3     “EOW”
DHANRAJ N ASAWANI v. AMARJEETSINGH MOHINDERSINGH 301
BASI AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, CJI]


      6. On 19 July 2019, the appellant lodged FIR No. 806 of 2019 at PS
Pimpri, Pimpri-Chinchwad against the first and second respondents alleging
the commission of offences under Sections 420, 406, 409, 465, 467, 468 and
471 read with Section 34 of the IPC. The substance of the FIR was based on
the inspection report prepared by the Joint Registrar (Audit) which allegedly
indicated financial irregularities by the office bearers of the bank.
      7. The High Court was moved by the first and second respondents in
a writ petition under Article 226 of the Constitution for quashing the FIR.
The High Court allowed the petition by its impugned judgment dated 16
November 2021. The High Court held that Section 81(5B) contains special
provisions for the submission of a special report and the obtaining of the
permission of the Registrar before the lodging of an FIR. It held that these
provisions would be rendered otiose if the general provisions in the Code
of Criminal Procedure 19734 were to apply and hence the latter must yield
to the special procedure which has been prescribed under the 1960 Act.
The High Court held that where the allegations in regard to the commission
of offences are solely based on an audit which has been conducted under
Section 81, the peremptory procedure prescribed in Section 81(5B) must be
scrupulously followed. The High Court concluded that the FIR was based
on the report of the auditor who was appointed under Section 81(3)(c) and
hence it was not open to the appellant to fall back on the general principle
that the criminal law can be set in motion by any individual upon which
the police are duty bound to register an FIR absent a statutory prohibition.
     8. We have heard Mr Prashant Shrikant Kenjale, counsel for the
appellant and Mr V Giri and Mr Deepak Nargolkar, senior counsel with Mr
Shantanu Phanse, counsel for the respondents. Mr A N S Nadkarni, senior
counsel and Mr Sunil Fernandes, counsel appeared for the intervenor.
     9. Notice was issued by this Court in these proceedings on 29 April
2022 since the interpretation of the provisions of Section 81(5B) of the
1960 Act is involved.
      10. The 1960 Act was enacted to provide orderly development of
the co-operative movement in Maharashtra. Chapter VIII of the 1960 Act
provides for ‘audit, inquiry, inspection and supervision’. Section 81 mandates
the society to cause its accounts to be audited at least once every financial


4   “CrPC”
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year by an auditor from a panel prepared by the Registrar and approved by
the State government. The first proviso to Section 81(1)(a) empowers the
Registrar to audit or cause to be audited the accounts of a society by a panel
of auditors approved by the State government. Section 81(3) stipulates that
the Registrar or the person authorized shall for the purpose of audit at all
times have access to books, accounts, documents, papers, securities, cash and
other properties belonging to or in the custody of the co-operative society.
Section 81(3)(c) empowers the Registrar or any person authorized to carry
out or cause to be carried out a test audit of the accounts of the co-operative
society. Section 81(5B) details the subsequent actions required to be taken
by the auditor or the Registrar after the preparation of the audit report:
      “81(5B) The auditor shall submit his audit report within a period of
      one month from its completion and in any case before issuance of
      notice of the annual general body meeting to the society and to the
      Registrar in such form as may be specified by the Registrar, on the
      accounts examined by him and on the balance sheet and profit and loss
      account as on the date and for the period up to which the accounts have
      been audited, and shall state whether in his opinion and to the best of
      his information and according to the Explanation given to him by the
      society, the said accounts give all information required by or under
      this Act and present the true and fair view of the financial transaction
      of the society:
      Provided that, where the auditor has come to a 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 within a period of fifteen days from the date
      of submission of his audit report. The auditor concerned shall,
      after obtaining written permission of the Registrar, file a First
      Information Report of the offence. The auditor, who fails to file
      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 to any other action as the Registrar may think fit:
      Provided further that, when it is brought to the notice of the
      Registrar that, the auditor has failed to initiate action as specified
      above, the Registrar shall cause a First Information Report to be
      filed by a person authorised by him in that behalf:
DHANRAJ N ASAWANI v. AMARJEETSINGH MOHINDERSINGH 303
BASI AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, CJI]


     Provided also that, on conclusion of his audit, if the auditor finds that
     there are apparent instances of financial irregularities resulting into
     losses to the society caused by any member of the committee or officers
     of the society or by any other person, then he shall prepare a Special
     Report and submit the same to the Registrar alongwith his audit report.
     Failure to file such Special Report, would amount to negligence in
     the duties of the auditor and he shall be liable for disqualification for
     appointment as an auditor or any other action, as the Registrar may
     think fit.”
                                                          (emphasis supplied)
      11. Under Section 81(5B), the auditor is under an obligation to submit
an audit memorandum duly signed by them to the society and to the Registrar
on the accounts examined by them and on the balance sheet and profit and
loss account as on the date and for the period up to which the accounts have
been audited. The auditor has to state whether in their opinion the accounts
give all the information by or under the 1960 Act and present a true and fair
view of the financial transactions of the society. In terms of the first proviso
to Section 81(5B), when the auditor has come to the conclusion in the audit
report that any person is guilty of any offence relating to the accounts or any
other offences, they are obligated to file a specific report to the Registrar.
The auditor is then required, after obtaining the written permission of the
Registrar, to file an FIR. The second proviso stipulates that when it is brought
to the notice of the Registrar that the auditor has failed to initiate action as
specified in the first proviso, the Registrar shall cause an FIR to be filed by
a person authorized by them in that behalf. In terms of the third proviso, if
the Registrar finds apparent instances of financial irregularities resulting into
losses to the society at the behest of a member of the committee or officers
or by any other person, he has to prepare a special report and submit it to
the Registrar together with his audit report.
      12. As already noted, in the present case, several FIRs have been lodged
in respect of the affairs of the bank. This included three FIRs dated 11 and 12
August 2021, FIR Nos 525, 526 and 527 of 202, which were lodged by the
auditor. These FIRs were lodged soon after the audit report dated 6 August
2021. At this stage, it would be material to note that the FIR which was
lodged by the appellant was on 19 July 2019, prior to the date of the audit
report. The narrow issue which falls for consideration in the present appeal
304           SUPREME COURT REPORTS                             [2023] 11 S.C.R.


is whether the provisions of Section 81(5B) can be construed as preventing a
share holder of the society such as the appellant, who was also an erstwhile
director, from independently setting the criminal law in motion.
      13. The respondents have submitted that the institution of the FIR by the
appellant, which is based on the audit report, is in contravention of Section
81(5B). It is contended that only the auditor or the Registrar is empowered
to file an FIR in terms of Section 81(5B). The substance of the respondents’
argument is that the procedure laid down under Section 81(5B) is a special
procedure, and will prevail over Section 154 of the CrPC. To fortify their
submission, the respondents have relied on the decisions of this Court in
Jeewan Kumar Raut v. CBI5 and Jamiruddin Ansari v. CBI.6
      14. The High Court was of the view that since the provisions of the
1960 Act are special in the sense that they govern co-operative societies in
the state, the provisions of Section 81(5B) would preclude the registration of
an FIR at the behest of a person, such as the appellant, who is a shareholder
of the co-operative society. We are unable to accept the view of the High
Court. Neither expressly nor by necessary implication does the 1960 Act
preclude the setting into motion of the criminal law by any person other
than the auditor or the Registrar.
      15. Section 4 of the CrPC provides that all offences under the IPC shall
be investigated, inquired, and tried according to the provisions of the CrPC.
Section 4(2) structures the application of the CrPC in situations where a
special procedure is prescribed under any special enactment. 7 Section 4 is
extracted below:
      4. Trial of offences under the Indian Penal Code and other laws.—
      (1) All offences under the Indian Penal Code (45 of 1860) shall be
      investigated, inquired into, tried, and otherwise dealt with according
      to the provisions hereinafter contained.
      (2) All offences under any other law shall be investigated, inquired
      into, tried, and otherwise dealt with according to the same provisions,
      but subject to any enactment for the time being in force regulating the


5 (2009) 7 SCC 526
6 (2009) 6 SCC 316
7 See State of Punjab v. Balbir Singh, (1994) 3 SCC 299; Directorate of Enforcement
v. Deepak Mahajan, (1994) 3 SCC 440
DHANRAJ N ASAWANI v. AMARJEETSINGH MOHINDERSINGH 305
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      manner or place of investigating, inquiring into, trying or otherwise
      dealing with such offences.
       16. Section 4(2) lays down that the provisions of the CrPC shall
apply to all offences under any other law apart from the IPC. However,
the application of the CrPC will be excluded only where a special law
prescribes special procedures to deal with the investigation, inquiry, or the
trial of the special offence. For instance, in Mirza Iqbal Hussain v. State of
Uttar Pradesh,8 this Court was called upon to determine whether the trial
court had jurisdiction to pass an order of confiscation under the Prevention
of Corruption Act, 1947. This Court held that the provisions of the CrPC
would apply in full force because the Prevention of Corruption Act, 1947
did not provide for confiscation or prescribed any mode by which an order
of confiscation could be made. Therefore, it was held that a court trying
an offence under the Prevention of Corruption Act, 1947 was empowered
to pass an order of confiscation in view of Section 452 of the CrPC. In
determining whether a special procedure will override the general procedure
laid down under the CrPC, the courts have to ascertain whether the special
law excludes, either specifically or by necessary implication, the application
of the provisions of the CrPC.
      17. The CrPC provides the method for conducting investigation,
inquiry, and trial with the ultimate objective of determining the guilt of the
accused in terms of the substantive law. The criminal proceedings kick in
when the information of the commission of an offence is provided to the
police or the magistrate. Section 154 of the CrPC details the procedure for
recording the first information in relation to the commission of a cognizable
offence. It provides that any information relating to the commission of
a cognizable offence if given orally to an officer in charge of a police
station shall be reduced into writing by them or under their direction. The
information provided by the informant is known as the FIR.9
      18. In Lalita Kumari v. Government of U P,10 a Constitution Bench
of this Court held that the main object of an FIR from the point of the view
of the informant is to set the criminal law in motion and from the point of


8 (1982) 3 SCC 516
9 T T Antony v. State of Kerala, (2001) 6 SCC 181
10 (2014) 2 SCC 1
306           SUPREME COURT REPORTS                            [2023] 11 S.C.R.


view of the investigating authorities is to obtain information about the alleged
criminal activity to take suitable steps to trace and punish the guilty. The
criminal proceedings are initiated in the interests of the public to apprehend
and punish the guilty.11 It is a well settled principle of law that absent a
specific bar or exception contained in a statutory provision, the criminal
law can be set into motion by any individual. 12
      19. In A R Antulay v. Ramdas Sriniwas Nayak,13 a Constitution
Bench of this Court held that the concept of locus standi of the complainant
is not recognized in the criminal jurisprudence, except in situations where
the statute creating an offence provides for the eligibility of the complainant.
The Court observed that the right to initiate criminal proceedings cannot be
whittled down because punishing an offender is in the interests of the society:
      “This general principle of nearly universal application is founded on a
      policy that an offence i.e. an act or omission made punishable by any law
      for the time being in force [See Section 2(n) CrPC] is not merely an offence
      committed in relation to the person who suffers harm but is also an offence
      against society. The society for its orderly and peaceful development is
      interested in the punishment of the offender. Therefore, prosecution for
      serious offences is undertaken in the name of the State representing the
      people which would exclude any element of private vendetta or vengeance.
      If such is the public policy underlying penal statutes, who brings an act or
      omission made punishable by law to the notice of the authority competent
      to deal with it, is immaterial and irrelevant unless the statute indicates to
      the contrary. Punishment of the offender in the interest of the society
      being one of the objects behind penal statutes enacted for larger good
      of the society, right to initiate proceedings cannot be whittled down,
      circumscribed or fettered by putting it into a strait-jacket formula
      of locus standi unknown to criminal jurisprudence, save and except
      specific statutory exception.”
                                                             (emphasis supplied)
     20. The 1960 Act is a special law enacted to govern co-operative
societies in Maharashtra. Section 81 of the 1960 Act casts a public duty on


11 Sheonandan Paswan v. State of Bihar, (1987) 1 SCC 288
12 Ratanlal v. Prahlad Jat, (2017) 9 SCC 340
13 (1984) 2 SCC 500
DHANRAJ N ASAWANI v. AMARJEETSINGH MOHINDERSINGH 307
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the auditor and the Registrar to audit co-operative societies. In pursuance
of this objective, Section 81(5B) obligates them to register an FIR in
case they discover any financial irregularities in the audit reports of a co-
operative society. According to said provision, when the auditor comes to
the conclusion in the audit report that any person is guilty of an offence
relating to the accounts or of any other offences, they are mandated to file
a specific report to the Registrar. Where the auditor has failed to do so, the
Registrar is empowered to cause an FIR to be filed by a person authorized
by them in that behalf. The statutory obligation is cast on the auditor and the
Registrar because they are the first persons to acquire knowledge about the
financial irregularities in a co-operative society in the course of conducting an
audit. Since only the auditor and the Registrar are privy to such irregularity,
the 1960 Act obligates them to bring the information about the financial
irregularity to the knowledge of the police.
     21. The respondents have relied on the decision of this Court in
Jamiruddin Ansari (supra) to contend that the 1960 Act, being a special
law, will prevail over the provisions of the CrPC. In Jamiruddin Ansari
(supra) the issue before a two-Judge Bench of this Court was whether
Section 23(2) of the Maharashtra Control of Organized Crime Act, 1999 14
excludes the application of Section 156(3) of the CrPC. The MCOCA is a
special law enacted by the state legislature to prevent and control crimes by
organized crime syndicates or gangs. Section 23 of MCOCA begins with a
non-obstante clause. Section 23(2) provides that the special judge cannot
take cognizance of any offence under the MCOCA without the previous
sanction of a police officer not below the rank of the Additional Director
General of Police. The relevant clause is extracted below:
     23. (1) Notwithstanding anything contained in the Code,—
     (a) no information about the commission of an offence of organised
     crime under this Act, shall be recorded by a police officer without the
     prior approval of the police officer not below the rank of the Deputy
     Inspector General of Police;
     (b) no investigation of an offence under the provisions of this Act
     shall be carried out by a police officer below the rank of the Deputy
     Superintendent of Police.


14 “MCOCA”
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      (2) No Special Court shall take cognizance of any offence under this
      Act without the previous sanction of the police officer not below the
      rank of Additional Director General of Police.
      22. In Jamiruddin Ansari (supra), this Court held that the provisions
of the MCOCA will prevail over the provisions of the CrPC. The Court
held that a Special Judge is precluded from taking cognizance of a private
complaint and order a separate inquiry without the previous sanction of the
police officer not below the rank of Additional Director General of Police:
      67. We are also inclined to hold that in view of the provisions of Section
      25 of MCOCA, the provisions of the said Act would have an overriding
      effect over the provisions of the Criminal Procedure Code and the
      learned Special Judge would not, therefore, be entitled to invoke the
      provisions of Section 156(3) CrPC for ordering a special inquiry on a
      private complaint and taking cognizance thereupon, without traversing
      the route indicated in Section 23 of MCOCA. In other words, even on
      a private complaint about the commission of an offence of organised
      crime under MCOCA cognizance cannot be taken by the Special Judge
      without due compliance with sub-section (1) of Section 23, which
      starts with a non obstante clause.
      23. In view of the stringent provisions of the MCOCA, Section 23
provides a procedural safeguard that no information of an offence alleged
under the MCOCA shall be recorded without the prior approval of an officer
below the rank of the Deputy Inspector General of Police. No investigation
can be carried out by an officer below the rank of Deputy Superintendent of
Police. Section 23(2) contains a specific bar against the taking of cognizance
by a Special Judge without the previous sanction of a police officer not
below the rank of Additional Director General of Police. In Rangku Dutta
v. State of Assam,15 this Court interpreted the purport of Section 20-A(2)
of the Terrorist and Disruptive Activities (Prevention) Act, 1987, 16 which
was similar to Section 23 of the MCOCA. Section 20-A of the TADA is
extracted below:
      “20-A.Cognizance of offence.—(1) Notwithstanding anything
      contained in the Code, no information about the commission of an


15 (2011) 6 SCC 358
16 “TADA”
DHANRAJ N ASAWANI v. AMARJEETSINGH MOHINDERSINGH 309
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     offence under this Act shall be recorded by the police without the prior
     approval of the District Superintendent of Police.
     (2) No court shall take cognizance of any offence under this Act without
     the previous sanction of the Inspector General of Police, or as the case
     may be, the Commissioner of Police.”
      This Court held that the above provision was mandatory for two
reasons: first, it commenced with an overriding clause; and second, it used
the expression “No” to emphasize its mandatory nature. The Court observed
that the use of the negative word “No” was intended to ensure that the
provision is construed as mandatory.
      24. Section 81(5B) of the Act casts a positive obligation on the auditor
or the Registrar to file an FIR. It does not use any negative expression to
prohibit persons other than the auditor or the Registrar from registering
an FIR. Therefore, it would be contrary to basic principles of statutory
construction to conclude that Section 81(5B) debars persons other than the
auditor or the Registrar from filing an FIR. The ratio of the decision of this
Court in Jamiruddin Ansari (supra) is predicated on a provision of law
distinct from the statutory provision applicable to the present case.
      25. Further reliance has been placed by the respondent on the decision
of this Court in Jeewan Kumar Raut (supra) to contend that Section 81(5B)
debars by necessary implication any person other than the auditor or the
Registrar from filing an FIR. In that case, the issue before this Court was
whether the provisions of the Transplantation of the Human Organs Act,
199417 barred the applicability of Section 167(2) of the CrPC pertaining
to the grant of default bail. Section 22 of the TOHO Act prohibits taking
of cognizance by courts except on a complaint made by an appropriate
authority. This Court held that the TOHO Act is a special statute and will
override the provisions of the CrPC so far as there is any conflict between
the provisions of the two enactments. The Court further held that the police
report filed by the CBI can only be considered as a complaint petition made
by an appropriate authority under Section 22 of the TOHO Act. Therefore,
the filing of a police report in terms of Section 173(2) of the CrPC was held



17 “TOHO Act”
310           SUPREME COURT REPORTS                           [2023] 11 S.C.R.


to be forbidden by necessary implication. Since CBI could not file a police
report under Section 173(2), Section 167(2) of the CrPC was also held to
be not applicable.
      26. Exclusion by necessary implication can be inferred from the
language and the intent of a statute.18 In Jeewan Kumar Raut (supra), this
Court looked at the words of the statute as well as the overall scheme of
investigation under the CrPC to infer that Section 22 of the TOHO Act bars
the applicability of Section 167(2) of the CrPC by necessary implication. In
the present case, the 1960 Act casts a positive obligation on the auditor or the
Registrar to file an FIR when they discover a financial irregularity in a co-
operative society. Section 81(5B) demands accountability and vigilance from
the auditor and the Registrar in performance of their public duty. Moreover,
a plain reading of the said provision does not lead to the conclusion that the
legislature intends to debar any person other than the auditor or the Registrar
from registering an FIR. Section 81(5B) cannot be interpreted to mean that
any other person who comes to know about the financial irregularity on the
basis of the audit report is debarred from reporting the irregularity to the
police. In the absence of any specific provision or necessary intendment,
such an inference will be against the interests of the society. The interests
of the society will be safeguarded if financial irregularities in co-operative
banks are reported to the police, who can subsequently take effective actions
to investigate crimes and protect the commercial interests of the members
of the society. In view of the above discussion, it is not possible for us to
infer that Section 81(5B) of the 1960 Act bars by necessary implication
any person other than an auditor or the Registrar from setting the criminal
law into motion.
      27. From the narration of submissions before this Court, it appears that
on 31 May 2021, the Minister in-charge of the Co-operative department has
set aside the audit report while directing a fresh audit report for 2016-2017
and 2017-2018. The order of the Minister has been called into question
in independent proceedings before the High Court. This Court has been
apprised of the fact that the proceedings are being heard before a Single Judge
of the High Court. The proceedings which have been instituted to challenge


18 Union of India v. Popular Construction, (2001) 8 SCC 470
DHANRAJ N ASAWANI v. AMARJEETSINGH MOHINDERSINGH 311
BASI AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, CJI]


the order of the Minister will have no bearing on whether the investigation
by the police on the FIR which has been filed by the appellant should be
allowed to proceed. The police have an independent power and even duty
under the CrPC to investigate into an offence once information has been
drawn to their attention indicating the commission of an offence. This power
is not curtailed by the provisions of 1960 Act. There is no express bar and
the provisions of Section 81(5B) do not by necessary implication exclude
the investigative role of the police under the CrPC.
      28. The High Court has relied on the decision of this Court in State
of Haryana v. Bhajan Lal19 to quash the FIR. In that case, this Court
held that the High Court can exercise its powers under Article 226 of the
Constitution or Section 482 of the CrPC to quash an FIR where there is an
express legal bar engrafted in any provisions of a special law with respect to
the institution and continuance of the proceedings. As held above, Section
81(5B) does not contain any express or implied bar against any person from
setting the criminal law in motion.
      29. In the circumstances, we are of the view that the High Court has
erred in quashing the FIR which was lodged by the appellant. It is correct
that the FIR adverted to the audit which was conducted in respect of the
affairs of the co-operative society. However, once the criminal law is set into
motion, it is the duty of the police to investigate into the alleged offence. This
process cannot be interdicted by relying upon the provisions of sub-section
(5B) which cast a duty on the auditor to lodge a first information report.
     30. We accordingly allow the appeal and set aside the impugned
judgment and order of the High Court dated 16 November 2021 by which
the FIR which was lodged by the appellant, namely, FIR No 806 of 2019
dated 19 July 2019 has been quashed.
      31. We, however, clarify that the proceedings which have been
instituted before the Bombay High Court to challenge the order of the
Minister shall not be affected by the present order.
     32. The appeal is allowed in the above terms.



19 (1992) Supp (1) SCC 335
312            SUPREME COURT REPORTS                         [2023] 11 S.C.R.


      33. The applications for intervention/impleadment are allowed.
      34. Pending applications, if any, stand disposed of.
      Special Leave Petition (Criminal) No 2246 of 2022
     35. The Special Leave Petition is disposed of in terms of the order passed
by this Court in Dhanraj N Asawani vs Amarjeet Singh Mohindersingh
Basi and Others [Criminal Appeal No 2093 of 2023].


Headnotes prepared by:                          Appeal allowed and SLP disposed of.
Ankit Gyan