Mumbai, Nov 29: The Bombay High Court has ruled that a report submitted by an officer under Section 88 of the Maharashtra Cooperative Societies Act is illegal if it is filed after the officer has been replaced. Section 88 allows the Registrar to appoint an “Authorised Officer” (AO) to determine who is responsible for financial losses to the society and to calculate how much each person must repay.
Officer Becomes Functus Officio After Replacement
Justice Amit Borkar held that once an officer is substituted, he becomes functus officio, meaning he no longer has any authority to continue the inquiry. Even if the officer says he was unaware of the replacement order, his powers do not revive, and anything he does afterward has no legal effect.
Inquiry Into Amit Darshan Society Triggered Case
The case arose from an inquiry into Amit Darshan Cooperative Housing Society, Vile Parle West. In October 2018, the Deputy Registrar, suo motu (on its own) began an investigation under Section 83, which allows the authorities to examine the functioning and accounts of a cooperative society. This report is only an opinion and does not fix responsibility.
Section 88 Officer Replaced for Delay
After this inquiry, an officer was appointed under Section 88 in October 2019. Section 88 is used to determine who is responsible for financial losses to the society and how much each person must repay. The appointed officer framed charges and received replies but delayed completing the report. Because of the delay, the Registrar replaced him on 14 February 2022.
Old Officer Filed Report Despite Losing Authority
Despite losing his authority, the old officer went ahead and prepared a report on 28 February and submitted it on 1 March 2022. Based on this report, the authorities issued a recovery certificate of Rs 49.45 lakh in October 2022 under Section 98, which is the provision that allows recovery of amounts determined under Section 88.
Managing Committee Members Challenge Report
Eight members of the managing committee challenged this before the high court, contending that the AO did not examine material documents. Also, three of the petitioners were not members of the managing committee at the relevant time. Despite this undisputed fact, they have been held liable for the alleged loss without any basis under the Act.
Court Sets Aside Report and Recovery Certificate
The court held that the report was void because the AO had no authority to act once he was replaced. Since the report was invalid, the recovery certificate and the later appellate and revisional orders based on it also could not stand.
Fresh Section 88 Inquiry Ordered
Justice Borkar directed that the matter must be sent back for a fresh Section 88 inquiry, to be conducted by the new or any future authorised officer. The officer must give all parties a fair hearing and complete the proceedings according to law.
Also Watch:
Section 83: Allows the Registrar to conduct an inquiry into the functioning and financial affairs of a cooperative society. The final report is only an opinion — not a decision fixing responsibility.
Section 88: Allows the Registrar to appoint an “Authorised Officer” to determine who is responsible for financial losses to the society and to calculate how much each person must repay.
Section 98: Allows the Registrar to issue a recovery certificate, which is like an order to recover money found due under Section 88.
