Ashok Verma v. State of U.P. and

Judgment

2. seeking condonation of delay, the application is allowed.

3. Delay in filing the appeal is condoned. Order on Appeal

1. Heard Shri Manish Singh, learned counsel for the appellant, learned Standing Counsel for the respondent nos. 1 and 2 and Shri Sumit Kakkar, learned counsel for the respondent no. 3.

2. This intra court appeal assails validity of the order dated 13.11.2024 whereby the learned Single Judge has dismissed the appellant's Writ-C No. 30941 of 2024 (Ashok Verma Vs. State of U.P. and 2 others) with certain observations.

The said writ petition was filed with a grievance that the petitioner- appellant, who happens to be the Ex-President of Prabhu Narayan Union Club, Varanasi, had filed a complaint before the Assistant Registrar, Firms, Societies and Chits, Varanasi to investigate into the act of misappropriation of funds of the club by the respondent no. 3 (Shri Kumar Saurabh). Further case was that when investigation warranted under 2 Section 24 of the Societies Registration Act, 1860 (for short 'the Act, 1860'), as applicable in the State of U.P., was not being conducted, Writ-C No. 17447 of 2022 was filed, which was disposed of by issuing directions to the Assistant Registrar to consider the representation submitted by the writ petitioner and take appropriate action in accordance with law. Pursuant to the order of the writ court, the Assistant Registrar appointed one M/s M.S.K.S. and Associates (Chartered Accountants) as the Agency to conduct inquiry/ investigation, whereafter a report was prepared by the said agency on 17.07.2024 and submitted before the Assistant Registrar on 18.07.2024. The grievance of the writ petitioner was that despite the report clearly reflected misappropriation of funds by third respondent, the Assistant Registrar passed an order dated

18.07.2024 appointing a Government Auditor to investigate and conduct inquiry. It was this order which was assailed before the learned Single Judge and further directions were sought for the Assistant Registrar to take appropriate decision based upon the inquiry report dated 17.07.2024.

4. Learned Single Judge, having considered the rival submissions and the material available on record, found that an order was earlier passed by Assistant Registrar on 22.02.2024 appointing Shri S.N. Garg, as a Chartered Accountant to inquire the matter, however, he was replaced by M/s M.S.K.S. and Associates on 02.05.2024 whereafter objections were raised by the third respondent through applications dated 23.05.2024, 02.07.2024 and

06.07.2024 questioning the impartiality of the subsequent Chartered Accountant. Learned Single Judge held that since the order impugned in the writ petition itself recites that a Government Auditor would investigate the matter, it would be pre-empting the 2 of 8 3 issue at this juncture and, consequently, while dismissing the writ petition, an observation was made that the Investigating officer so appointed pursuant to the order impugned dated 18.07.2024, shall conduct the investigation/inquiry strictly in accordance with law, bearing in mind the report dated 17.07.2024 and, after evaluating the case, conclude the proceedings within a period of three months.

5. Assailing the order of the learned Single Judge, learned counsel for the appellant vehemently argued that the inquiry at the end of M/s M.S.K.S. and Associates already stood completed in terms of its report dated 17.07.2024, which was brought on record before the Assistant Registrar on 18.07.2024 and, on the same day, he went on to pass an order directing re-investigation by a Government Auditor, which power did not vest in him. Submission has been made that Section 24 of the Act, 1860 does not contain a provision for re-investigation or further investigation, rather it is confined only for removal of any defects or irregularities, vide sub- section (5) thereof and, hence, the order of the Assistant Registrar is without jurisdiction. It is further urged that there being no allegation made by the third respondent against M/s M.S.K.S. and Associates as regards any collusion between the appellant and the said Chartered Accountant company, the Assistant Registrar was not justified in accepting vague applications filed by the third respondent and direct for re-investigation. It is further submitted that the learned Single Judge has discarded the argument on 'malice in law' merely on the ground that officer was not impleaded in personal capacity and there was no factual foundation, whereas, for establishing a case on 'malice in law', impleadment of officer was not necessary as the things were apparent on the face of record. 3 of 8 4

6. Per contra, learned counsel for the third respondent submits that the said respondent moved specific applications dated

23.05.2024, 02.07.2024 and 06.07.2024 clearly objecting to the impartiality of M/s M.S.K.S. and Associates requesting appointment of any other agency and, therefore, the Assistant Registrar was under obligation to ensure that investigation is fairly conducted and, hence, the order dated 18.07.2024 did not suffer from any illegality. It is further urged that the learned Single Judge has gone into the facts in detail and observed that on earlier occasion a different Chartered Accountant was appointed in February, 2024 but was replaced by M/s M.S.K.S. and Associates and, while dismissing the writ petition, inquiry has not been hampered but, in so many words, it has been directed to come to a logical end.

7. Further, copy of an order dated 03.03.2025 passed by the Assistant Registrar was placed before us whereby the Assistant Registrar has closed the proceedings under Section 24 of the Act taking note of the fact that despite various communications made by him, the appellant had failed to provide necessary documents and, consequently, the inquiry was dropped. Further submission is that the order dated 03.03.2025 having not been challenged, the appellant has no case at all.

8. To the aforesaid submission, learned counsel for the appellant submits that pursuant to a First Information Report registered at Case Crime No. 032 of 2024, investigation is being conducted by the Special Investigation Team (S.I.T.) and the original documents were handed over to the appellant by the Investigating Agency and there being no order by the said agency, the appellant was not under obligation to handover documents to 4 of 8 5 anyone and, therefore, documents were not provided to the Assistant Registrar

9. Having heard learned counsel for the parties, we find that pursuant to the order dated 29.09.2022 passed by the writ court in a previously filed Writ-C No. 17447 of 2022 (Prabhu Narain Union Club Vs. State of U.P. and 2 others), the Assistant Registrar, by an order dated 22.02.2024, appointed Shri S.N. Garg, Chartered Accountant to conduct inquiry and submit a report before him. Thereafter, by order dated 02.05.2024, M/s M.S.K.S. and Associates was appointed as an Auditor. The third respondent filed an application on 23.05.2024 before the Assistant Registrar questioning the impartiality of M/s M.S.K.S. and Associates with the assertion that the said Chartered Accountant was having close friendship with the appellant and Ex-President of the club, namely Shri Ambuj Kishore Narain and was also an Auditor/Chartered Accountant of the business firm of Shri Ambuj Kishore Narain and that the appellant as well as Shri Narain were instrumental in hetching up a conspiracy to book the appellant in various false cases and, accordingly, a request was made from the Assistant Registrar to replace M/s M.S.K.S. and Associates by any other impartial Chartered Accountant so as to facilitate an impartial inquiry. Further applications on the same lines were submitted on

02.07.2024 and 06.07.2024, which all formed part of the record of writ petition.

10. Though it is true that when M/s M.S.K.S. and Associates submitted a report dated 17.07.2024 adverse to the third respondent, immediately the Assistant Registrar passed the order dated 18.07.2024 directing investigation by a Government Auditor, however, the same, in itself, does not mean that the Assistant 5 of 8 6 Registrar acted without jurisdiction or in teeth of the provisions under Section 24 of the Act, 1860. The Scheme of the Act, 1860 reflects that any society registered under the said Act has to function strictly as per the provisions contained therein and, in case, occasion arises to carry out investigation into affairs of a society, the Registrar, which term includes an Assistant Registrar, is empowered to carry out such investigation. Sub-section (5) of Section 24, as argued on behalf of the appellant, provides that after such inspection or investigation, the Registrar may give such direction to the society as he may think fit for removal of any defects or irregularities and in the event of default in taking action according to such directions, the Registrar may proceed to take action under Section 12-D or Section 13-B, as the case may be.

11. We are not impressed by the submissions advanced on behalf of the appellant that the Assistant Registrar has no power to change Inquiry Officer culmination of investigation/inquiry by the previously appointed Agency. The reason is that the Assistant Registrar is not, in all cases, supposed to blindly accept a report that comes before him. He has to apply his mind to the facts and circumstances of the matter before him in its entirety. We may here refer to Section 19-A of of U.P. General Clauses Act, 1904, which is quoted below:- "Section 19-A.- Ancillary Powers.- Where, by any Uttar Pradesh Act, a power is given to a person, officer or functionary to do or enforce the doing of any act or things, all such powers shall be deemed also to be given as are necessary to enable that person, officer or functionary to do or enforce the doing of the act or thing."

12. In the instant case, we find that there were three consecutive applications dated 23.05.2024, 02.7.2024 and 06.07.2024 filed by 6 of 8 7 the third respondent before the Assistant Registrar questioning the impartiality of M/s M.S.K.S. and Associates raising specific allegations against it. The said applications remained unconsidered/ undisposed of and, for the first time, they were taken into consideration by the Assistant Registrar on 18.07.2024. As an officer exercising powers under the Act, 1860 where allegations of misappropriation of funds were levelled, an SIT was also carrying investigation and the third respondent, since after the investigation task was handed over to M/s M.S.K.S. and Associates, was continuously submitting specific written objections against the said company, the same could not be ignored by the Assistant Registrar. In such view of the matter, when we examine the reasoning assigned by the learned Single Judge in the order impugned, we find that though no interference was made by the learned Single Judge in replacement of Chartered Accountant, direction to conduct investigation/inquiry was issued bearing in mind the report dated

17.07.2024 submitted by M/s M.S.K.S. and Associates. Hence, the earlier report dated 17.07.2024 has not been brushed aside by the learned Single Judge.

13. As regards the argument on 'malice in law', we are of the view that in paragraph no. 30 of the writ petition, specific allegations were levelled by the petitioner-appellant against the Assistant Registrar that he had passed the order dated 18.07.2024 under undue influence or for extraneous consideration with ulterior motive and with mala fide intention to save the third respondent. Therefore, the learned Single Judge has not erred in discarding the said argument in absence of the Assistant Registrar being a party in his personal capacity. 7 of 8 8

14. At this stage, we find that since the Assistant Registrar has already closed the investigation proceedings by order dated

03.03.2025 for the reasons stated above and the said order has not been challenged, interference in the order of learned Single Judge or making any further observation in the instant appeal would be an exercise in futility.

15. In view of the above discussion, we are of the view that even in absence of specific power conferred by Section 24 of the Act, 1860, the Assistant Registrar was well within his ancillary power to pass any order so as to enforce the statutory power conferred by the Act of 1860 upon him and if he has done so and the learned Single Judge, in his discretionary exercise of powers under Article 226 of the Constitution of India, has declined to interfere with the said order, we do not find any good reason to take a different view of the matter. Consequently, the appeal is dismissed. Order Date :- 10.3.2025 AKShukla/- (Kshitij Shailendra, J) (Arun Bhansali, CJ) 8 of 8