November 29th 2025.
The recent ruling by the Bombay High Court has shed light on the legality of a report submitted under Section 88 of the Maharashtra Cooperative Societies Act. According to the court, if the report is filed after the officer in charge has been replaced, it is considered illegal. Section 88 gives the Registrar the power to appoint an "Authorised Officer" who is responsible for determining financial losses of the society and determining the amount that must be repaid by each individual.
Justice Amit Borkar, who presided over the case, stated that once an officer is replaced, they become functus officio, meaning they no longer have the authority to continue with the inquiry. Even if the officer claims to be unaware of their replacement, their powers do not revive and any actions taken by them after the replacement hold no legal standing.
This case arose from an inquiry into the Amit Darshan Cooperative Housing Society in Vile Parle West. The Deputy Registrar initiated the investigation under Section 83 in October 2018, which allows authorities to examine the functioning and accounts of a cooperative society. However, the report submitted under this section is considered to be an opinion and does not assign responsibility.
In October 2019, an officer was appointed under Section 88 to determine the financial losses and assign responsibility. However, due to delays in completing the report, the Registrar replaced this officer in February 2022. Despite losing his authority, the previous officer went ahead and submitted a report in March 2022. Based on this report, a recovery certificate of Rs 49.45 lakh was issued in October 2022 under Section 98.
This report and the subsequent orders were challenged by eight members of the managing committee before the high court. They argued that the officer did not examine all necessary documents and that three of the petitioners were not even members of the committee at the time the alleged losses occurred. Despite these facts, they were held responsible for the losses without any legal basis under the Act.
The court found that the report was invalid as the officer had no authority to act after being replaced. Therefore, the recovery certificate and other orders based on this report were also deemed invalid. The court has ordered a fresh inquiry under Section 88 to be conducted by the new or any future authorised officer. All parties involved must be given a fair hearing and the proceedings must be conducted in accordance with the law.
This ruling by the Bombay High Court has also brought attention to other sections of the Maharashtra Cooperative Societies Act, such as Section 83, which allows for an inquiry into the functioning and financial affairs of a cooperative society. The final report submitted under this section is considered to be an opinion and does not assign responsibility. Section 98 allows the Registrar to issue a recovery certificate to recover any amount found due under Section 88.
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