Chapter XIV AUDIT, INQUIRY, INSPECTION AND SURCHARGE

(1) The auditor or auditing firms shall by such date as may be prescribed, submit to the co-operative society and to the Registrar, an audit report including a statement of– (a) every transaction which appears to him to be contrary to law or to the rules or bye-laws; (b) every sum which ought to have been but has not been brought into account; (c) the amount of any deficiency or loss which requires further investigation; (d) any money or property belonging to the society which appears to have been misappropriated or fraudulently retained by any person; (e) any of the assets which appears to him to be bad or doubtful; and (f) any other matter as may be specified by the Registrar. (2) A co-operative society shall be afforded by the Registrar an opportunity of explaining any defects or irregularities pointed out by the auditor or auditing firms and thereafter the society shall, within such time and in such manner as the Registrar may direct, remedy such defects and irregularities and report to the Registrar the action taken by it. In sub section 1 & 2 substituting word "auditor" wherever occurring, the words "auditor or auditing firms" by Act No. 10 of 2013.

(1) The Registrar or any person authorized by general or special order in this behalf by the registrar, may inspect a co-operative society. For the purpose of inspection he shall at all time have access to all books, accounts, papers, vouchers, securities, stock and other property of the society and may in the event of serious irregularities discovered during the inspection take them into custody and shall have power to verify the cash balance of the society and subject to general or special order of the Registrar to call a meeting of the committee or a general meeting. Every officer or member of the society shall furnish such information as he may require. (2) The apex society and the central society shall inspect every affiliated society annually and shall prepare report regarding their administrative functioning and financial management.

(1) The Registrar may on his own motion or on the application of a majority of the committee or of not less than one-third of the members, hold an inquiry or direct some person authorized by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a society. (2) The Registrar or the person authorized by him under sub-section (1) shall have the following powers, namely :- (a) he shall at all times have, for purposes of examination access to the books, accounts, cash and other properties belonging to or in the custody of the society and may summon any person in possession or responsible for the custody of such books, accounts, documents, securities, cash or other properties to (2) [The Registrar or his authorized representative may] produce the same at any place, within the district within which the society has its registered office and may if considered necessary by him, take such books or record into custody after giving receipt for the same: Provided that the books, accounts or documents so seized shall be retained by him only for so long as may be necessary for their examination and for the purpose of enquiry : Provided further that the books, accounts or documents shall not be retained for more than sixty days at a time except with the permission of the next higher authority; (b) he may notwithstanding any rules or bye-laws specifying the period of notice of a general meeting of the society, require the officers of the society to call a general meeting at such time and place at the headquarter of the society, to consider such matters as may be specified by him, and where the officers of the society refuse or fail to call such a meeting he shall have power to call it himself; (c) he may summon any person who is reasonably believed by him to have any knowledge of the affairs of the society to appear before him at any place at the headquarters of the society or any branch thereof and may examine such person on oath. (3) Any meeting called under clause (b) of sub-section (2) shall have all the powers of a general meeting called under the bye-laws of the society and its proceedings shall be regulated, by such bye-laws. (4) The Registrar shall communicate a brief summary of the report of the inquiry to the society, the financing institutions, if any, and to the person at whose instance the inquiry is made.

(1) The Registrar shall on the application of a creditor of a co-operative society, inspect or direct some person authorized by him by order in writing in this behalf to inspect the books of the society: Provided that no such inspection shall be made unless the applicant – (a) satisfies the Registrar that the debt is 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 proposed inspection as the Registrar may require. (2) The Registrar shall communicate the result of any such inspection to the creditor.

Where an inquiry is held under section 98 or an inspection is made under section 99, the Registrar may pass an order to apportion the costs or such part of the costs as he may think fit between the society, the members, the creditor demanding an inquiry or inspection, the officers or former officers and the members or past members of the society : Provided that – (a) no order of the apportionment of the costs shall be made under this section unless the society or the person liable to pay the costs has been afforded a reasonable opportunity of being heard; and (b) the Registrar shall state in writing the ground on which the costs are apportioned.

(1) If it comes to the notice of the Registrar that any person who is or was entrusted with the organization or management of a co-operative society or who is or has at any time been a member of the committee, officer or an employee of the society, had made any payment contrary to this Act, the rules or bye-laws or has caused any deficiency in the assets of the society by misconduct or wilful negligence or has misappropriated or fraudulently retained any money or other property belonging to the society or has caused losses, or depleted profits of the society ignoring diligence of ordinary man of prudence or by acting against the interest of the society, the Registrar may, of his own motion or on the application of the committee, liquidator or any creditor, enquire himself or direct any person authorized by him by an order in writing in this behalf to enquire into the conduct of such person. (2) Where an enquiry is made under sub-section (1), the Registrar may after giving the person concerned an opportunity of being heard, make an order in writing requiring him to repay or restore the money or property or any part thereof with interest at such rate, or to pay contribution and costs or compensation to such extent as the Registrar may consider just and equitable: Provided that no surcharge proceedings shall be initiated under this section in respect of any act or omission in respect of a person against whom an enquiry is made except within five years of the date on which such act or omission was committed. However, any proceedings pending under this section in any court or before any authority shall continue as if the provisions of the Haryana Co-operative Societies (Amendment) Act, 2006, were not passed.