Chapter VII AUDIT, INQUIRY, INSPECTION AND SURCHARGE

(1) The Registrar shall audit or cause to be audited by a person authorised by him by general or special order in writing in this behalf, the accounts of every co-operative society at least once in each year, (2) The audit under sub-section (1) shall include an examination of over-due debts, if any, the verification of the cash balance and securities, and a valuation of the assets and liabilities of the society. (3) The person auditing the accounts of a co-operative society shall have free access to the books, accounts, papers, vouchers, stock and other property of such society and shall be allowed to verify its cash balance and securities. (4) The directors, managers, administrators and other officers of the society shall furnish to the person auditing the accounts of a co-operative society all such information as to its transactions and working as such person may require. (5) The Registrar or the person authorised by him under sub-section (1) to audit the accounts of a co-operative society shall have power where necessary - (a) to summon at the time of his audit any officer, agent, servant or member of the society, past or present, who he has reason to believe can give valuable information in regard to transactions of the society or the management of its affairs; and (b) to require the production of any book or document relating to the affairs of, or any cash or securities belonging to the society by officer, agent, servant, or member in possession of such books, documents, cash or securities and in the event of serious irregularities discovered during audit, to take them into custody. (6) If at the time of audit the accounts of a society are not complete, the Registrar or the person authorised by him under sub-section (1) to audit, may cause the account to be written up at the expense of the society. (7) Audit fee, if any due from any co-operative society shall be recoverable in the same manner as is provided in section 67.

The Registrar, or any person authorised by general or special order in this behalf by the Registrar, may inspect a co-operative society. For the purpose of inspection, the Registrar or the person so authorised by the Registrar shall at all times 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 inspection take them into custody and shall have power to verify the cash balance of the society and subject to the general or special order of the Registrar to call a committee and a general meeting. Every officer or member of the society shall furnish such information with regard to the working of the society as the Registrar or the person making such inspection may require.

(1) The Registrar may of 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 authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a co-operative society. (2) The Registrar or the person authorised by him under sub-section (1) shall have the following powers, namely :- (a) he shall at all times have, for purposes of examination, free access to the books, accounts, cash and other properties belonging to or in custody of the society and may summon any person in possession or responsible for the custody of any such books, accounts, documents, securities, cash or other properties to produce the same at any place within the district within which the society has its registered address, and may, if considered necessary, by an order in writing, direct the society to hand over to him all such books, accounts, documents and securities as may be specified in the order ; (b) he may, notwithstanding any rule or bye-law specifying the period of notice for a general meeting of the society, require the officers of the society to call a general meeting at such time and place at the headquarters of the society to consider such matters, as may be directed 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; and (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 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, to which the society is affiliated, and to the persons or authority, if any , 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 authorised 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 a sum then due, and that he has demanded payment thereof and has not received satisfaction with 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 50, or an inspection is made under section 51, the Registrar may apportion the cost, or such part of the costs, as he may think fit between the society, the members or creditor demanding an inquiry or inspection, and the officers or former officers and the members or past member 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 thereunder has had a reasonable opportunity of being heard; and (b) the Registrar shall state in writing under his own hand the grounds on which the costs are apportioned.

Any sum awarded by way of costs under section 52 may be recovered, on application to a magistrate having jurisdiction in the place where the person , from whom the money is claimable, actually and voluntarily resides or carries on business, and such magistrate shall recover the same as if it were a fine imposed by himself.

(1) If in the course of an audit, inquiry, inspection or the winding up of a co-operative society it is found that any person, who is or was entrusted with the organisation or management of such society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to this Act, the rules or the bye-laws or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has misappropriated or fraudulently retained any money or other property belonging to such 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 authorised by him, by an order in writing in this behalf, to inquire into the conduct of such person: Provided that no such inquiry shall be held after the expiry of six years from the date of any act or omission referred to in this sub-section. (2) Where an inquiry is made under sub-section (1), the Registrar may, after giving the person concerned an opportunity of being heard, make an order 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.