Chapter V Chapter V

Audit and inspection

Audit.-

1. (1) The Registrar shall audit or cause to be audited by some person (hereinafter referred to as the auditor ) authorised by him by general or special order in writing in this behalf the accounts of every registered society once at least in very year.
2. (2) Every officer or member of the society shall furnish such information in regard to the transactions and working of the society as the Registrar or the auditor any require.
3. (3) The audit under sub-section
4. (1) shall be conducted according to the rules, and shall include an examination of over due debts, if any, the verification of the cash balance and a securities a valuation of the assets and liabilities of the society.
5. (4) The auditor shall submit a report on such examination, verification and valuation, and shall include in his report a statement of –
   • (a) every transaction which appears to the auditor to be contrary to law or to the rules or bye-laws of the society;
   • (b) the amount of any deficiency or loss which appears to have been incurred by the culpable negligence or misconduct of any person;
   • (c) the amount of any sum which ought to have been but has not been brought into account by any person; and
   • (d) any money or property belonging to the society which has been misappropriated or fraudulently retained by any person taking part in the organization or management of the society or by any past of present officer of the society or any other person.
6. (5) The Registrar may determine the sum to be paid by any society towards the cost of auditing its accounts under this section, and such sum shall be paid by the society in such manner as the Registrar may direct.

Inspection by Registrar. – The Registrar may from time to time inspect a registered society himself or cause it to be inspected by some person authorised by him in this behalf by general or special order.

Inquiry by Registrar. –

1. (1) The Registrar may, of his own motion and shall, on the request of the Collector, or on application of a majority or the managing committee, or of not less than one-third of the members, hold an inquiry, or direct some person authorised by him by order in writhing in this behalf to hold an inquiry, into the constitution, working and financial condition of a registered society.
2. (2) The Registrar of the person authorised by him under sub-section
3. (1) may -
   • (a) require an officer of the society to call a general meeting at such time and place at the headquarters of the society, and require the society to take into consideration such matters, as he may direct, and
   • (b) if the officer of society refuses or fails to call such a meeting or if there be no quorum at a meeting so convened, call such meeting himself by giving notice to the members in such a way as he may consider reasonable, notwithstanding any rules or byelaws prescribing the period of notice for calling a general meeting of the society. Any meeting so convened by the Registrar of the person authorised by him under sub-section
4. (1) shall have all the powers of a general meeting convened under the bye-laws of the society.
5. (3) When an enquiry is made under this section, the Registrar shall communicate the results of the inquiry to the society, the financing bank, if any, to which the society is affiliated and to the persons or authority, if any at whose instance the inquiry is made.

Inspection of books by Registrar. –

1. (1) The Registrar may, on the application of a creditor of a registered society, inspect or direct some person authorised by him in this behalf by order in writing to inspect, the book of the society.
2. (2) No inspection shall be made or directed under section
3. (1) unless the applicant –
   • (a) satisfies the Registrar that debt is a sum then due, and that he has demanded payment thereof and has not received satisfaction within a reasonable time; and
   • (b) deposits with the Registrar such sum as security for the costs of the proposed inspections as the Registrar may require.
4. (3) Where an inspection is made under sub-section (1), the Registrar shall communicate the results of such inspection to the creditor, to the society and to the financing bank, if any to which the society is affiliated.

Inspection of books by financing bank. –

1. (1) A financing bank may cause an inspection to be made of the books of any registered society which is affiliated to it and may direct such society to furnish such information, statement and returns as may be required.
2. (2) An Inspection under sub-section
3. (1) may be made by any of the officers of the financial bank or by any member of its paid staff approved by the Registrar by general or special order.
4. (3) The financing bank shall communicate the result of such inspection to the Registrar and to the society concerned.

Power to call for documents and to issue summons. - The Registrar of any person authorised to audit the accounts of a society under section 33 or to make an inspection or to hold an inquiry under sections 34,35,36 or 37

1. (a) Shall at all reasonable time have free access to the books, accounts, documents, securities, cash and other properties belonging to, or in the custody of the society and may summon any person in possession of or responsible for the custody of any such books, accounts, documents, securities, cash or other properties, to produce the same at the office of the society or at any branch thereof or except in the case of a financing bank, at any place at its headquarters;
2. (b) may summon any person who, has reason to believe has knowledge of any of the affairs of the society to appear before him at the office of the society or at any branch thereof or, except in the case of a financing bank, at any place at its headquarters, and may examine such person on oath; 2[ and]
3. (c) may seize in presence of two persons the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society if he apprehends any fraud, of damage or mutilation of any of the articles above referred to, and the officer so doing shall grant proper receipt therefore and, when he is an officer other than the Registrar, immediately report the seizure to his immediate superior officer and the Registrar:

Cost of inquiry and inspection Cost of inquiry and inspection. – Where an inquiry is held under section 35, or an inspection is made under section 36, the Registrar may, after giving the parties an opportunity of being heard and after recording the reasons, apportion the costs of such inquiry or inspection, or such part of the costs as he may think fit, between the society, the members of creditor demanding inquiry of inspection and the officers of former officers of the society.

Surchrge.-

1. (1) Where as the result of an audit under section 33 or an inquiry under section 35, or an inspection under section 34, section 36,or section 37, or the winding up of a society, it appears to the Registrar that any person who has taken part in the organisation or management of the society or any past or present officer of the society has-
   • (a) made any payment which is contrary to law or to the rules or byelaws of the society, 1[ or against the directions or instructions of the financing bank for which the society is acting as agent under sub-section
2. (3) of Section 16], or
   • (b) by reason of his culpable negligence or misconduct, involved the society, 2[ or the financing bank for which it is acting as agent under sub-section
3. (3) of Section 16] in any loss or deficiency, or
   • (c) failed to bring into account any sum which ought to have been brought into account, or
   • (d) misappropriate or fraudulently retained any property of the society 1[ or of the financing bank, for which it is acting as agent under sub-section
4. (3) of Section 16. The Registrar may inquire into the conduct of such person, or officer and after giving such person or officer an opportunity of being heard make an order requiring him to contribute such sum to the assets of the society 1[ or of the financing bank, as the case may be], by way of compensation in respect or such payment or loss of sum, or to restore such property as the Registrar thinks fit, together with such sum as the Registrar may fix to meet the cost of the proceeding under this section: Provided that, before any order requiring such person or officer to contribute is passed in respect of a payment referred to in clause
   • (a) reasonable time shall be given to such person or officer to recover the amount of such payment from the payee and credit it to the society, or, as the case may be, of the financing bank]: Provided further that any order under this sub-section shall be passed for any commission or omission specified in (a), (b),
   • (c) and
   • (d) within six years from the date of occurrence or within three years from the date of submission of surcharge proposal whichever is earlier
5. (2) This section shall apply notwithstanding that such person or officer may have incurred criminal liability under this Act or under any other law.
6. (3) An appeal shall lie from an order of the Registrar under sub-section
7. (1) to the State Government on application made by the person or officer against whom such order was passed within three months from the date of the communication to him of such order. The order of the State Government on appeal, and subject to the result of such appeal, if any, the order of the Registrar, shall be final.