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Sayed Maqsood Ahmed   17 September 2023

rejection of audited financial documents in the housing society AGM

dear learned advocates

AGM of our housing society was held on 27th August, and majority of members voted against the audited financial accounts for 2022-23.

33 members rejected the audited accounts document and only 16 had approved it.

under the above circumstances, what action must the MC now take. Will they have to resign enmass. or correct the accounts and resubmit in the Adjourned AGM scheduled on 27th September

kindly advice your expert legal views on this matter as soon as possible.

thanks in advance

Best regards


 9 Replies

P. Venu (Advocate)     17 September 2023

The posting suggests deeper issues. How is it that rejection of the audited report renders the MC unfit to continue in office.

Sayed Maqsood Ahmed   17 September 2023

Dear learned sir

Therefore I need your valuable option left for MC of housing society


T. Kalaiselvan, Advocate (Advocate)     17 September 2023

If the audit report was rejected by the general body meeting then the association has to get it re-audited or to invoke the provisons of the bylaws in this regard.

Proper accounts need to be maintained and presented before the members for their approval in the Annual General Body Meeting. Therefore, the accounts need to be properly audited before 31 st July of every year as per the provisions of the Act.

If there is no response from the MC members to explain the observations and if any irregularities found then the matter can be taken up with the registrar of societies too.


Sayed Maqsood Ahmed   17 September 2023

Many thanks sir for valuable legal advice. 

So the MC cannot step down due to rejection of the accounts by the AGM members 

Best regards 

Sayed Maqsood Ahmed   17 September 2023

Respected sir

Actually the MC put up the audited financial report for 22-23 for voting after discussions and the resolution was defeated by 33 votes as against 16 votes 

Please advise accordingly 

Thank you in advance 

Best regards 

Dr. J C Vashista (Advocate and Legal Consultant)     18 September 2023

What were the reasons for rejection of audited balance sheet of the Society, has to be introspected by MC and initiate suitable remedial / corrective / rectification action(s) on those issues, which cannot be presumed and obliged by experts on this platform.

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     18 September 2023

Was it that the auditor gave an unfavourable audit report or that the accounts were defective but the auditor gave a favourable audit report?

In the former case the MC should be given a chance to correct the accounts, the accounts re-audited and submitted again to a re-convened general meeting. In the latter case the accounts should be re-audited by another auditor after correcting the defects in the account. It the accounts are beyond correction the matter should be reported to the Registrar. It is for the Registrar to decide whether the Managing Committee should be dismissed. All these are cumbersome and never works in practice. What action should be taken would depend on the seriousness of the problem. The registrars and the so called approved auditors are not knowledgeble. They scratch each other's back.

Sayed Maqsood Ahmed   18 September 2023

Many thanks learned Sir for your valuable information

Best regards 


T. Kalaiselvan, Advocate (Advocate)     21 September 2023

You are welcome for your appreciations 

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