Case Background
This case concerns a Chartered Accountant firm based in Patna which had been engaged to audit co-operative societies in Bhagalpur district. The firm was empanelled with the Co-operative Department and was assigned the audit of Srijan Mahila Co-operative Society, Sabour, for multiple financial years.
On 18.10.2017, the Registrar, Co-operative Societies, Patna first blacklisted the firm, removed it from the departmental panel, and recommended cancellation of its registration to the Institute of Chartered Accountants of India (ICAI). That order was challenged in CWJC No.18220 of 2017. A Single Judge of the Patna High Court, by order dated 11.01.2018, quashed the blacklisting order and sent the matter back to the Registrar to reconsider the period of blacklisting after giving the firm a proper hearing.
After remand, the Registrar again acted against the firm. By order dated 02.11.2018, issued under Memo No.9347, the Registrar blacklisted the firm for 30 years. The firm again approached the Patna High Court in CWJC No.1665 of 2019. By order dated 13.02.2024, a Single Bench set aside the 30-year blacklisting and once again remanded the matter to the Registrar. The Registrar was directed to issue a fresh show cause notice and pass a new order after giving an opportunity of hearing.
Following this direction, a fresh show cause notice was issued and the firm submitted its reply. Thereafter, on 07.03.2025, the Registrar passed yet another order (Memo No.2238) blacklisting the firm for five years and delisting it from the panel of the Department.
The present writ petition, CWJC No.8101 of 2025, is the third round of litigation. The firm challenged Memo No.2238 dated 07.03.2025, sought protection of its right to practice, claimed damages and costs, and also asked the Court to fix responsibility on officials for alleged non-compliance with earlier judicial directions.
What the Court Examined and Decided
The Division Bench of the Patna High Court, comprising Hon’ble Mr. Justice Sudhir Singh and Hon’ble Mr. Justice Rajesh Kumar Verma, heard the matter. The judgment was authored by Hon’ble Mr. Justice Rajesh Kumar Verma and delivered on 24.02.2026.
The central question framed by the Court was narrow and specific: whether, in the facts and circumstances of the case, the Registrar, Co-operative Societies, Bihar has power under the Bihar Co-operative Societies Act, 1935 to blacklist a Chartered Accountant firm.
The petitioner firm, through its counsel, argued that there is no provision in the Bihar Co-operative Societies Act, 1935 or the Bihar Co-operative Societies Rules, 1959 that authorises the Registrar to blacklist a Chartered Accountant firm. According to the firm, Section 33 of the Act only deals with audit of co-operative societies and the appointment and duties of auditors. It does not grant any specific power to blacklist or permanently disqualify a Chartered Accountant or a firm.
The petitioner relied heavily on the text of Section 33, which the Court reproduced in full. Section 33 lays down that co-operative societies must get their accounts audited every financial year by auditors from a panel approved by the State Government or the authorised authority. It prescribes the qualifications and experience required for such auditors or Chartered Accountant firms. It also details how auditors are to be appointed by the General Body, the time limits for conducting audits, the contents of audit reports, and the duties of the Board and society officials to cooperate with the auditors. Finally, it provides that if the society fails to get its accounts audited on time, the Registrar shall get the audit done and the cost will be borne by the society.
The petitioner’s counsel pointed out that none of these provisions confer power on the Registrar to blacklist a Chartered Accountant firm. At best, the Registrar can delist or remove a firm from the panel used for allotting audit work, and may order revision of audit or re-audit under Rule 57(2). Any penal action for alleged professional misconduct, according to the petitioner, lies exclusively with the ICAI under the Chartered Accountants Act, 1949.
The petitioner also claimed that, despite earlier High Court orders quashing previous blacklisting decisions, the firm had effectively remained blacklisted since 2017. It was not given fresh empanelment after 30.09.2020, nor was its name restored to the list. It had received no audit assignment after 2017. The petitioner alleged that other Government Departments cancelled work and payments, relying on blacklisting orders which had already been set aside, and that the impugned order therefore caused continuing financial and reputational harm.
On behalf of the State, the learned counsel placed the background leading to the action against the firm. It was stated that the firm had been authorised to audit co-operative societies in Bhagalpur, including Srijan Mahila Co-operative Society, Sabour, for the years 2003-04 to 2012-13 and 2014-15 to 2015-16. According to the State, the firm ignored or deliberately overlooked several irregularities committed by that society. These alleged omissions contributed to financial irregularities and fraud involving siphoning of Government money.
The State argued that a Chartered Accountant firm plays a vital role in auditing the financial activities of an institution. In this case, the firm allegedly failed to discharge that role, paving the way for serious financial irregularity. A show cause letter bearing No.7457 dated 14.09.2017 had been issued. After considering the firm’s reply, which the authorities found unsatisfactory, and keeping in view a defective audit report, the Registrar delisted and blacklisted the firm.
Regarding the Registrar’s authority, the State relied on Departmental Circular/letter No.4234 dated 24.09.2005. According to the State, this circular contained guidelines concerning empanelled Chartered Accountants and, based on these guidelines, the Registrar was competent to act, including blacklisting.
The Court considered the rival submissions and examined the statutory scheme. It focused on the Bihar Co-operative Societies Act, 1935 and the scope of the Registrar’s powers under it, particularly in light of Section 33 which had been quoted in detail.
After hearing both sides and perusing the materials, the Division Bench reached a clear conclusion. It held that the Registrar, Co-operative Societies, Bihar (respondent no.2) has no power under the Bihar Co-operative Societies Act, 1935 to blacklist the petitioner’s firm for a period of five years.
The Court noted that, in fact, the Registrar only has power to delist the firm from the panel of empanelled auditors in terms of the Departmental letter No.4234 dated 24.09.2005. The judgment does not record any finding that this letter or the Rules grant a wider power to blacklist.
On this reasoning, the Court partly allowed the writ petition. It set aside the order dated 07.03.2025 (Memo No.2238) to the extent it blacklisted the petitioner-firm. The judgment is explicit that only the blacklisting portion is struck down. The Registrar’s power to delist the firm, i.e., to remove it from the panel, remains undisturbed.
Reliefs sought by the petitioner beyond this—such as declaration of jurisdiction exclusively with ICAI, damages, costs, and fixing accountability of officials—are not granted in the operative portion. The Court confines its final order to the limited question of statutory power to blacklist and grants relief only to that extent.
With this order, the writ application stood partly allowed, and any pending applications were disposed of.
Why This Judgment Matters
This decision is significant for Chartered Accountants and other professionals who take up government assignments in Bihar, especially with co-operative societies.
The Patna High Court has made it clear that the Registrar, Co-operative Societies cannot go beyond the powers given by the Bihar Co-operative Societies Act, 1935. While the Registrar can remove a firm from the panel and stop giving it government audit work, he cannot impose a formal blacklisting for a fixed period where the statute does not authorise it.
This distinction is important in practice. Delisting only affects work from that Department. Blacklisting, especially when recorded as such in official orders, can have much wider impact on the reputation and livelihood of a firm, and may influence other departments and clients. By striking down the blacklisting, the Court has limited the scope of administrative punishment to what the law actually permits.
The judgment also indirectly reminds authorities that if they believe a Chartered Accountant has committed professional misconduct, the proper forum is the ICAI under the Chartered Accountants Act, 1949. Co-operative authorities must act within their own law and cannot assume powers of professional regulators.
For professionals who feel that they have been punished without proper legal authority, this case shows that courts can intervene, especially where earlier orders have been ignored or exceeded.
Legal Issues and Answers
- Issue: Does the Registrar, Co-operative Societies, Bihar have statutory power under the Bihar Co-operative Societies Act, 1935 to blacklist a Chartered Accountant firm for a specified period?
Answer: No. The Patna High Court held that the Registrar has no such power under the Act and can only delist the firm from the panel in terms of departmental guidelines. - Issue: What is the status of the blacklisting order dated 07.03.2025 (Memo No.2238) against the petitioner-firm?
Answer: The Court set aside the order to the extent it blacklisted the firm for five years; the writ was partly allowed only to this limited extent.
Cases Cited by the Court
- The judgment refers to earlier writ petitions CWJC No.18220 of 2017 and CWJC No.1665 of 2019 involving the same parties and blacklisting orders, but does not cite or rely on any reported case law apart from these prior proceedings.
Case Details
Case Number: Civil Writ Jurisdiction Case No.8101 of 2025
Case Title: M/s A.K. Mishra and Associates v. The State of Bihar & Ors.
Citation: 2026 (2) PLJR 450
Court: High Court of Judicature at Patna
Coram: Hon’ble Mr. Justice Sudhir Singh and Hon’ble Mr. Justice Rajesh Kumar Verma
Date of Judgment: 24.02.2026
Nature of the Case: Writ petition under civil writ jurisdiction challenging blacklisting and delisting order passed by the Registrar, Co-operative Societies, Bihar
Advocates for Petitioner: Mrs. Shama Sinha, Advocate; Mr. Vijayansh Pratap Singh, Advocate; Mr. Surya Prakash, Advocate
Advocate for Respondents (State): Mrs. Dimpal Kumari, Assistant Counsel to Government Pleader-11
Impugned Order: Memo No.2238 dated 07.03.2025 issued by the Registrar, Co-operative Societies, Bihar
Link to Judgment: Click here to read the full judgment of the Patna High Court
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