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Supreme Court Allows FIR Against Housing Society for Financial Misconduct


Background and Case Overview

The Supreme Court recently in Criminal Appeal No. 2093 of 2023 (Arising out of SLP (Crl) No. 1715 of 2022) set aside a High Court judgment that quashed an FIR lodged by a shareholder of a cooperative society. The appellant, a former director of the society, had filed the FIR alleging financial irregularities based on an audit report. The core issue was whether Section 81(5B) of the Maharashtra Cooperative Societies Act, 1960 barred any person other than an auditor or the Registrar from initiating criminal proceedings.


Details of the Case

In July 2019, the appellant filed an FIR against certain office bearers of the cooperative society, alleging serious financial misconduct including siphoning off funds and advancing loans to ineligible parties. The High Court, however, quashed the FIR on the grounds that only an auditor or the Registrar could file such reports as per Section 81(5B) of the 1960 Act.


High Court's Rationale

The High Court held that the specific provisions of Section 81(5B) override the general provisions of the Criminal Procedure Code (CrPC), meaning that the appellant, as a shareholder, did not have the locus standi to set the criminal law in motion based on the audit report.


Supreme Court's Judgment

The Supreme Court disagreed with the High Court's interpretation, asserting that Section 81(5B) does not preclude other individuals from filing FIRs. The Court highlighted several key points:

1. Independence of Criminal Investigation: Once criminal law is set in motion, the police have an independent duty to investigate. This duty is not curtailed by the provisions of the 1960 Act.

2. Interpretation of Section 81(5B): The section does not expressly or impliedly restrict the initiation of criminal proceedings to auditors or the Registrar. The Supreme Court emphasized that there is no legal bar preventing any individual from lodging an FIR when they suspect a crime has been committed.

3. Public Interest in Criminal Prosecution: The Court reiterated the principle that criminal law can be invoked by any individual and that this is crucial for ensuring that offenders are brought to justice in the interest of society.


Conclusion

The Supreme Court's decision reinstates the FIR lodged by the appellant, allowing the police investigation to proceed. This judgment underscores the broader interpretation of legal provisions to facilitate the initiation of criminal proceedings and upholds the principle that criminal law can be set into motion by any individual, thereby reinforcing public interest in prosecuting criminal activities.

This ruling not only clarifies the scope of Section 81(5B) of the Maharashtra Cooperative Societies Act but also reaffirms the duty of the police to investigate alleged crimes regardless of the source of the complaint.


Read Complete Judgement

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