70. Appointment and remuneration of auditors.—(1) Every multi-State co-operative society shall
cause to be audited by an auditor referred to in sub-section (2), its accounts at least once in each year.
(2) Every multi-State co-operative society shall, at each annual general meeting, appoint an auditor or
auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general
meeting and shall, within seven days of the appointment, give intimation thereof to every auditor so
appointed:
1
[Provided that such auditors or auditing firm shall be appointed from a panel approved by the Central
Registrar:
Provided further that in case of multi-State co-operative banks, multi-State credit societies with
deposits of above five hundred crore rupees and multi-State non-credit societies with turnover of above
five hundred crore rupees, the auditor shall be appointed from a panel of auditors approved for audit of
such societies by the Central Registrar.]
(3) Every auditor appointed under sub-section (1) shall, within thirty days of the receipt from the
multi-State co-operative society of the intimation of his appointment, inform the Central Registrar in
writing that he has accepted, or refused to accept, the appointment.
2
[(3A) An auditor appointed under sub-section (2) shall submit the audit of accounts report to the
multi-State co-operative society, within six months from the date of closing of the financial year, to which
such accounts relate.]
(4) A retiring auditor shall be re-appointed unless—
(a) he is not qualified for re-appointment;
1. Subs. Act 11 of 2023, s. 27, for proviso (w.e.f. 3-8-2023).
2. Ins. by s. 27, ibid. (w.e.f. 3-8-2023).
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(b) he has given the multi-State co-operative society a notice in writing of his unwillingness to be
re-appointed;
(c) a resolution has been passed at the general meeting of members appointing some body instead
of him or providing expressly that he shall not be re-appointed; or
(d) where notice has been given of an intended resolution to appoint some person or persons in
the place of a retiring auditor, and by reason of the death, incapacity or disqualification of that person
or all those persons, as the case may be, the resolution cannot be proceeded with.
(5) Where at an annual general meeting no auditors are appointed or re-appointed, the Central
Registrar may appoint a person to fill the vacancy.
(6) First auditor or auditors of a multi-State co-operative society shall be appointed by the board
within one month of the date of registration of such society and the auditor or auditors so appointed shall
hold office until the conclusion of the first annual general meeting:
Provided that—
(a) the multi-State co-operative society may, at a general meeting, remove any such auditor or all
or any of such auditors and appoint in his or their places any other person or persons who have been
nominated for appointment by any member of the multi-State co-operative society and of whose
nomination notice has been given to the members of the multi-State co-operative society not less than
fourteen days before the date of the meeting; and
(b) if the board fails to exercise its powers under this sub-section, the multi-State co-operative
society in the general meeting may appoint the first auditor or auditors.
(7)(a) The multi-State co-operative society may fill any causal vacancy in the office of an auditor; but
while any such vacancy continues, the remaining auditor or auditors, if any, may act:
1
[Provided that where such vacancy is caused by the resignation or death of an auditor, the vacancy
shall be filled by the board from the panel of auditors from which such auditor was appointed.]
(b) Any auditor appointed in a causal vacancy shall hold office until the conclusion of the next annual
general meeting.
(8) Any auditor appointed under this section may be removed from office before the expiry of his
term by the multi-State co-operative society in general meeting.
(9) The remuneration of the auditors of a multi-State co-operative society—
(a) in the case of an auditor appointed by the board or the Central Registrar may be fixed by the
board or the Central Registrar, as the case may be; and
(b) subject to clause (a), shall be fixed by the multi-State co-operative society in general meeting
or in such manner as the multi-State co-operative society in general meeting may determine.
Explanation.—For the purposes of this sub-section, any sums paid by the multi-State co-operative
society in respect of the auditors’ expenses shall be deemed to be included in the expression
“remuneration”.
2
[(10) The audit report of the accounts of the national co-operative societies shall be laid before each
House of Parliament.]
3
[70A. Concurrent Audit.— In case of multi-State co-operative societies,––
(i) having an annual turnover more than the amount as determined by the Central Government; or
(ii) having deposit of more than the amount as determined by the Central Government,
the concurrent audit shall be carried out by an auditor appointed from a panel of auditors approved by
the Central Registrar.]
1. Subs. by Act 11 of 2023, s. 27, for clause (a) (w.e.f. 3-8-2023).
2. Ins. by s. 27, ibid. (w.e.f. 3-8-2023).
3. Ins. by s. 28, ibid. (w.e.f. 3-8-2023).
37
71. Provision as to resolutions for appointing or removing auditors.—(1) A special notice shall be
required for a resolution at an annual general meeting appointing as auditor a person other than a retiring
auditor, or providing expressly that a retiring auditor shall not be re-appointed.
(2) On receipt of notice of such a resolution, the multi-State co-operative society shall forthwith send
a copy thereof to the retiring auditor.
(3) Where notice is given of such a resolution and the retiring auditor makes with respect thereto
representations in writing to the multi-State co-operative society (not exceeding a reasonable length) and
requests their notification to members of the multi-State co-operative society, the multi-State co-operative
shall, unless the representations are received by it too late for it to do so,—
(a) in any notice of the resolution given to members of the multi-State co-operative society, state
the fact of the representations having been made; and
(b) send a copy of the representation to every member of the multi-State co-operative society to
whom notice of the meeting is sent, whether before or after the receipt of the representations by the
multi-State co-operative society,
and if a copy of the representations is not sent as aforesaid because they were received too late or because
of the multi-State co-operative society’s default, the auditor may (without prejudice to his right to be
heard orally) require that the representations shall be read out at the meeting.
72. Qualifications and disqualifications of auditors.—(1) A person shall not be qualified for
appointment as an auditor of a multi-State co-operative society unless he is a chartered accountant within
the meaning of the Chartered Accountants Act, 1949 (38 of 1949).
(2) None of the following persons shall be qualified for appointment as auditor of a multi-State
co-operative society—
(a) a body corporate;
(b) an officer or employee of the multi-State co-operative society;
(c) a person who is a member, or who is in the employment, of an officer or employee of the
multi-State co-operative society;
(d) a person who is indebted to the multi-State co-operative society or who has given any
guarantee or provided any security in connection with the indebtedness of any third person to the
multi-State co-operative society for an amount exceeding one thousand rupees.
(3) A person shall also not be qualified for appointment as an auditor of a multi-State co-operative
society if he is, by virtue of sub-section (2), disqualified for appointment as an auditor of any other body
corporate or multi-State co-operative society or co-operative society.
(4) If an auditor becomes subject, after his appointment, to any of the disqualifications specified in
sub-sections (2) and (3), he shall be deemed to have vacated his office as such.
73. Powers and duties of auditors.—(1) Every auditor of a multi-State co-operative society shall
have a right of access at all times to the books, accounts and vouchers of the multi-State co-operative
society, whether kept at the head office of the multi-State co-operative society or elsewhere, and shall be
entitled to require from the officers or other employees of the multi-State co-operative society such
information and explanations as the auditor may think necessary for the performance of his duties as an
auditor.
(2) Without prejudice to provisions of sub-section (1), the auditor shall inquire,—
(a) whether loans and advances made by the multi-State co-operative society on the basis of
security have been properly secured and whether the terms on which they have been made are not
prejudicial to the interests of the multi-State co-operative society or its members;
(b) whether transactions of the multi-State co-operative society which are represented merely by
book entries are not prejudicial to the interests of the multi-State co-operative society;
(c) whether personal expenses have been charged to revenue account; and
(d) where it is stated in the books and papers of the multi-State co-operative society that any
shares have been allotted for cash, whether case has actually been received in respect of such
38
allotment, and if no cash has actually been so received, whether the position as stated in the account
books and the balance-sheet is correct, regular and not misleading.
(3) The auditor shall make a report to the members of the multi-State co-operative society on the
accounts examined by him and on every balance-sheet and profit and loss account and on every other
document required to be part of or annexed to the balance-sheet or profit and loss account, which are laid
before the multi-State co-operative society in general meeting during his tenure of office, and the report
shall state whether, in his opinion and to the best of his information and according to the explanations
given to him, the said accounts give the information required by this Act in the manner so required and
give a true and fair view,—
(a) in the case of the balance-sheet, of the state of the multi-State co-operative society’s affairs as
at the end of its financial year; and
(b) in the case of the profit and loss account, of the profit or loss for its financial year.
(4) The auditors’ report shall also state—
(a) whether he has obtained all the information and explanations which to the best of his
knowledge and belief were necessary for the purposes of his audit;
(b) whether, in his opinion, proper books of account have been kept by the multi-State
co-operative society so far as appears from his examination of those books, and proper returns
adequate for the purposes of his audit have been received from branches or offices of the multi-State
co-operative society not visited by him;
(c) whether the report on the accounts of any branch office audited by a person other than the
multi-State co-operative society’s auditor has been forwarded to him and how he has dealt with the
same in preparing the auditor’s report;
(d) whether the multi-State co-operative society’s balance-sheet and profit and loss account dealt
with by the report are in agreement with the books of account and returns.
(5) Where any of the matters referred to in clauses (a) and (b) of sub-section (3) or in clauses (a), (b),
(c) and (d) of sub-section (4) is answered in the negative or with a qualification, the auditor’s report shall
state the reason for the answer.
1
[(6) the multi-State co-operative society or class of multi-State co-operative societies, as the case
may be, shall adopt such standards of auditing and accounting as may be determined by the Central
Government:
Provided that until such standards of auditing and accounting are specified, the auditing and
accounting standards specified by the Institute of Chartered Accountants of India constituted by subsection (1) of section 3 of the Chartered Accountants Act, 1949 shall be deemed to be the standards of
auditing and accounting:
Provided further that the multi-State co-operative banks shall adopt the standards of accounting and
auditing, if any, laid down by the Reserve Bank.]
74. Signature of audit report, etc.—Only the person appointed as an auditor of the multi-State
co-operative society shall sign the auditor’s report, or sign or authenticate any other document of the
multi-State co-operative society required by law to be signed or authenticated by the auditor.
75. Reading and inspection of auditor’s report.—The auditor’s report shall be read before the
multi-State co-operative society in the general meeting and shall be open to inspection by any member of
the multi-State co-operative society.
76. Right of auditor to attend general meeting.—All notices of, and other communications relating
to, any general meeting of a multi-State co-operative society, which any member of the multi-State
co-operative society is entitled to have sent to him, shall also be forwarded to the auditor of the multiState co-operative society; and the auditor shall be entitled to attend any general meeting and to be heard
at any general meeting which he attends on any part of the business which concerns him as auditor.
1. Ins. by Act 11 of 2023, s. 29 (w.e.f. 3-8-2023).
39
77. Power of Central Government to direct special audit in certain cases.—(1) Where the Central
Government is of the opinion—
(a) that the affairs of any multi-State co-operative society are not being managed in accordance
with self-help and mutual aid and co-operative principles or prudent commercial practices; or with
sound business principles; or
(b) that any multi-State co-operative society is being managed in a manner likely to cause serious
injury or damage to the interest of the trade, industry or business to which it pertains; or
(c) that the financial position of any multi-State co-operative society is such as to endanger its
solvency,
the Central Government may at any time by order direct that a special audit of the multi-State
co-operative society’s accounts for such period or periods as may be specified in the order, shall be
conducted and may by the same or a different order appoint either a chartered accountant as defined in
clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) or the
multi-State co-operative society’s auditor himself to conduct with special audit:
Provided that the Central Government shall not order for special audit of a multi-State co-operative
society’s accounts if that Government or the State Government either by itself or both hold less than
fifty-one per cent. of the paid-up share capital or of the shares in such multi-State co-operative society.
(2) The chartered accountant or the multi-State co-operative society’s auditor appointed under
sub-section (1) to conduct a special audit as aforesaid is hereafter in this section referred to as the special
auditor.
(3) The special auditor shall have the same powers and duties in relation to the special audit as an
auditor of a multi-State co-operative society has under section 73:
Provided that the special auditor shall, instead of making his report to the members of the multi-State
co-operative society, make the same to the Central Government.
(4) The report of the special auditor shall, as far as may be, include all the matters required to be
included in the auditors’ report under section 73 and, if the Central Government so directs, shall also
include a statement on any other matter which may be referred to him by that Government.
(5) The Central Government may by order direct any person specified in the order to furnish to the
special auditor within such time as may be specified therein such information or additional information as
may be required by the special auditor in connection with the special audit.
(6) On receipt of the report of the special auditor, the Central Government may take such action on
the report as it considers necessary in accordance with the provisions of this Act or any other law for the
time being in force:
Provided that if the Central Government does not take any action on the report within four months
from the date of its receipt, that Government shall send to the multi-State co-operative society either a
copy of, or relevant extract from, the report with its comments thereon and require the multi-State
co-operative society either to circulate that copy or those extracts to the members or to have such copy or
extracts read before the multi-State co-operative society at its next general meeting.
(7) The expenses of, and incidental to, any special audit under this section (including the
remuneration of the special auditor) shall be determined by the Central Government which determination
shall be final and paid by the multi-State co-operative society and in default of such payment, shall be
recoverable from the multi-State co-operative society as an arrear of land revenue.
78. Inquiry by Central Registrar.—(1) The Central Registrar may, on a request from a federal
co-operative to which a multi-State co-operative society is affiliated or a creditor or not less than
one-third of the members of the board or not less than one-fifth of the total number of members of a
multi-State co-operative society 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
multi-State co-operative society:
Provided that no inquiry under this sub-section shall be held unless a notice of not less than fifteen
days has been given to the multi-State co-operative society.
40
1
[(1A) If the Central Registrar is satisfied on the basis of information available with him or furnished
to him by a Government agency, that the business of a multi-State co-operative society is being carried on
for a fraudulent or unlawful purpose, he may, after informing the multi-State co-operative society of the
allegations made against it, by a written order, call on the multi-State co-operative society to furnish in
writing any information or explanation, with the endorsement of the board of the society, on matters
contained in such order within the time specified therein:
Provided that if the Central Registrar is not satisfied with the explanation of the society, he shall
either himself or through an office or agency authorised by him, conduct inquiry into the constitution,
working and financial condition of the society.
(1B) Notwithstanding anything contained in this Act, the Central Registrar shall, either suo motu or
through an officer or agency authorised by him, conduct inquiry into the constitution, working and
financial condition of any multi-State co-operative society, once in such period as may be determined by
the Central Government.]
(2) The Central Registrar or the person authorised by him under sub-section (1) shall have the
following powers, namely:—
(a) he shall at all reasonable times have free access to the books, accounts, documents, securities,
cash and other properties belonging to or in the custody of the multi-State co-operative 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 specified by him;
(b) he may, notwithstanding any bye-law specifying the period of notice for a general meeting of
the multi-State co-operative society, require the officers of the society to call a general meeting of the
society by giving notice of not less than seven days 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;
(c) he may summon any person who is reasonably believed by him to have any knowledge of the
affairs of the multi-State co-operative 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 of the society called under the bye-laws of the society and its proceedings shall be regulated by
such bye-laws.
(4) The Central Registrar shall, within a period of three months of the date of receipt of the report,
communicate the report of inquiry to the multi-State co-operative society, the financial institutions, if any,
to which the society is affiliated, and to the person or authority, if any, at whose instance the inquiry is
made.
79. Inspection of multi-State co-operative societies.—(1) The Central Registrar may, on a request
from a federal co-operative to which a multi-State co-operative society is affiliated or a creditor or not
less than one-third of the members of the board or not less than one-fifth of the total number of members
of a multi-State co-operative society by general or special order in writing in this behalf, inspect-or direct
any person authorised by him by order in writing in this behalf to make an inspection into the
constitution, working and financial condition of a multi-State co-operative society:
Provided that no inspection under this sub-section shall be made unless a notice of not less than
fifteen days has been given to the multi-State co-operative society.
(2) (a) For the purpose of inspection under sub-section (1), the Central Registrar or the person
authorised by him under that sub-section shall at all times have access to all books, accounts, papers,
vouchers, securities, stock and other property of that 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 Central Registrar to call a meeting of the
board and also a general meeting of the society where such general meeting is, in his opinion, necessary.
1. Ins. by Act 11 of 2023, s. 30 (w.e.f. 3-8-2023).
41
(b) Every officer or member of a multi-State co-operative society shall furnish such information with
regard to the working of the society as the Central Registrar or the person making such inspection may
require.
(3) A copy of the report of inspection under this section shall be communicated to the multi-State
co-operative society within a period of three months from the date of completion of such inspection.
80. Inspection of books of indebted multi-State co-operative societies.—(1) The Central Registrar
shall, on the application of a creditor of a multi-State 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 Central Registrar that the debt is a sum then due, and that he has demanded
payment thereof and has not received satisfaction within a reasonable time;
(b) deposits with the Central Registrar such sum as security for the costs of the proposed
inspection as the Central Registrar may require.
(2) The Central Registrar shall communicate the result of any such inspection to the creditor.
81. Costs of inquiry and inspection.—Where an inquiry is held under section 78 or an inspection is
made under section 79, the Central Registrar may apportion the costs, or such part of the costs, as he may
think fit, between the multi-State co-operative society, the members or creditors demanding an inquiry or
inspection, and the officers or former officers and the members or past members of that society:
Provided that—
(a) no order of 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;
(b) the Central Registrar shall state in writing under his own hand the grounds on which the costs
are apportioned.
82. Recovery of costs.—Any sum awarded by way of costs under section 81 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.
83. Repayment, etc.—(1) If in the course of an audit, inquiry, inspection or the winding up of a
multi-State 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, 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 Central Registrar may, of his own motion or on
the application of the board, liquidator or any creditor inquire himself or direct any person authorised by
him, by an order in writing in this behalf, to inquire into the conduct of such person within a period of two
years from the date of the report of the audit, inspection or inquiry or the date of the order of winding up,
as the case may be:
Provided that where the Central Registrar is satisfied that such inquiry could not be commenced
during the period of two years aforesaid on account of fraud or concealment of facts, he may make or
direct the inquiry to be made within such period not exceeding six years from the date of the report of the
audit, inspection or inquiry or the date of the order of winding up, as he thinks fit.
(2) Where an inquiry is made under sub-section (1), the Central Registrar may, after giving the person
concerned a reasonable 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 Central Registrar may consider just and equitable.