Bombay High Court
CHIRAG SHETH AND ANRversusDEPUTY REGISTRAR OF CO OPERATIVE SOCIETIES SRA AND ORS
- Decided
- Disposal
- Disposed Off
Holding
The Assistant Registrar erred in disqualifying the entire managing committee; disqualification under Section 82(4) must be limited to those actually responsible, and the order is set aside and remanded.
Summary
The petitioners challenged an order dated 10 August 2026 by the Assistant Registrar of Co‑operative Societies which disqualified the entire managing committee of a cooperative society under Section 82(4) of the Maharashtra Co‑operative Societies Act for failing to submit audit rectification reports for 2023‑24 and 2024‑25, and appointed an authorized officer under Section 77A(1)(b‑1). The Court examined the statutory language of Section 82(4) and held that disqualification may be imposed only on persons who are actually responsible for the default, not automatically on all committee members. It noted inconsistencies in the Registrar’s findings, the lack of a legal requirement to obtain the auditor’s opinion, and the absence of a proportionality analysis. Relying on the principles laid down in Kailash Maheshwari v. State of Maharashtra, the Court found the Registrar’s exercise of jurisdiction to be materially irregular. Consequently, the Court set aside both the disqualification order and the appointment of the authorized officer, and remanded the matter to the Assistant Registrar for fresh adjudication in accordance with the law.
Issues considered
- Whether the Assistant Registrar can disqualify the entire managing committee under Section 82(4) of the Maharashtra Co‑operative Societies Act for failure to submit audit rectification reports.
- Whether the audit rectification report must contain the auditor’s opinion as a condition for compliance.
- Whether the principle of proportionality applies to the disqualification power under Section 82(4).
- Whether the order suffers from jurisdictional irregularity warranting its setting aside.
Legislation cited
- Maharashtra Co-operative Societies Act, 1960 — s. 75, 77A(1)(b-1), 82(4)
- Maharashtra Co-operative Societies Rules, 1961 — s. Rule 73
Subjects
- Co-operative societies
- Disqualification of managing committee
- Audit rectification report
- Section 82(4) MCS Act
- Section 77A MCS Act
- Proportionality
- Registrar jurisdiction
- Maharashtra law
Judgment
2026:BHC-AS:33791
Renuka 905-WP-10494-2026.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 10494 OF 2026
Chirag Sheth and Anr ...Petitioners
V/s.
Deputy Registrar Of Co-Operative
Societies SRA and Ors ...Respondents
________________
Mr. Karl Tamboly with Mr. Adil Parsurampuria, Mr. Atul Mishrra,Mr.
Tejas Agarwal and Ms. Darshi i/b Mr. Aditya Lele for Petitioners.
Mr.Saurish Shetye with Ms. Farheen Mustafa i/b Adv. Jenil Shah for
Respondent No. 9.
Ms. Savina R. Crasto, AGP for Respondent-State.
________________
CORAM: SANDEEP V. MARNE, J.
DATED: 14 AUGUST 2026.
P.C.:
1) The challenge in the present Petition is to order dated 10
August 2026 passed by the Assistant Registrar Co-operative Societies
(East and West Suburbs), SRA Mumbai (Assistant Registrar).
2) By the impugned order passed under Section 82 (4) of the
Maharashtra Co-operative Societies Act, 1960 (MCS Act), the Assistant
Registrar has disqualiBed the entire managing committee of the Society
on account of failure to submit the rectiBcation report for the years
2023-2024 and 2024-2025. The Assistant Registrar has also passed a
consequent order dated 10 August 2026 appointing an Authorized OfBcer
on the society on account of disqualiBcation of the entire managing
Page No.1 of 6
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Renuka 905-WP-10494-2026.docx
committee by exercising powers under Section 77A 1(b-1) of the
Maharashtra Co-operative Societies Act. 1960 (MCS Act).
3) Mr. Shetye, the learned counsel appears on behalf of Mr.
Ankit Narendra Shah and submits that the impugned orders are passed
based on the complaint made by his client. Accordingly, Mr. Ankit
Narendra Shah be impleaded as Respondent No. 9 to the Petition.
Amendment to be carried out forthwith.
4) I have heard Mr. Tamboly, the learned counsel appearing for
the Petitioner, Mr. Shetye, the learned counsel appearing for Respondent
No. 9 and Ms. Crasto, the learned AGP appearing for Respondent-State
and have considered the submissions canvassed by them.
5) Perusal of the order dated 10 August 2026 passed by the
Assistant Registrar would indicate that he has disqualiBed the entire
managing committee by exercising power under Section 82 (4) of the
MCS Act. Under sub-section (4) of Section 82 of the MCS Act, the
Registrar can order disqualiBcation only of such person who is found
responsible for failure to submit the audit rectiBcation report. Section 82
(4) does not envisage automatic disqualiBcation of the entire managing
committee the moment failure to submit audit rectiBcation report
occurs. In any case, the Assistant Registrar has not recorded a Bnding as
to how all the members of the managing Committee were responsible to
submit the audit rectiBcation report.
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6) It also appears that the Assistant Registrar has ultimately
concluded that there is a failure on the part of the managing committee
to ‘submit’ the audit rectiBcation report. This conclusion appears to be
contrary to the Bndings recorded in earlier part of the order in which
the Assistant Registrar has taken note of Bling the audit rectiBcation
report by the managing committee. Thus, there appear to be
inconsistencies in the Bndings recorded by the Assistant Registrar in the
impugned order.
7) Going further, the Assistant Registrar has recorded a Bnding
that there was a delay in submission of the audit rectiBcation report and
that the audit rectiBcation report does not contain opinion of the
Auditor, who had conducted the audit. After going through provisions of
Section 82 of the MCS Act and Rule 73 of the Maharashtra Co-operative
Societies Rules, 1961, prima facie it appears that there is no provision for
obtaining opinion of the auditor while submitting the audit rectiBcation
report.
8) It is also seen that the Assistant Registrar has taken the
extreme step of disqualifying all the members of the managing
committee for a period of two years without even going into the issue of
proportionality. No effort is made to Bnd out the person who was
responsible for failure to submit the rectiBcation report. Also, since the
rectiBcation report is actually submitted, whether mere delay and failure
to obtain opinion of the auditor were factors sufBcient to mechanically
order disqualiBcation is not considered. In Kailash Maheshwari and Ors.
Page No.3 of 6
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V/s. State of Maharashtra and Ors. 1, this Court has laid down the
principles governing exercise of jurisdiction by the Registrar while
exercising the power of disqualiBcation of the managing committee
members in the context of provisions of Section 75 of the MCS Act. This
Court has held in paragraph No. 55 as under:-
55. Second, Section 75(5) clearly uses the expression "whose duty it
was." This means that liability cannot be fastened mechanically upon
all members of the committee. The Registrar was required to identify
which ofBce bearers had the statutory or functional duty to prepare
and place the relevant documents, such as the Secretary, Treasurer,
or Chairman. Ordinary members, who had no direct role in preparing
or placing audited accounts, rectiBcation reports, or budgets, cannot
be disqualiBed without evidence of complicity. The impugned order
fails to record such Bndings and has applied disqualiBcation
indiscriminately to the entire committee.
9) The principles discussed by this Court in Kailash
Maheshwari (supra) on the issues of proportionality and the need to
disqualify the entire managing committee in the context of Section 75
would squarely apply to the scenario of Section 82 of the MCS Act as
well.
10) There is also a serious allegation by the Petitioner that the
complainant (Respondent No. 9) is a relative of the developer and that
the disqualiBcation proceedings are initiated deliberately to protect the
interests of the developer and to scuttle the ongoing mediation
proceedings. Since the proceedings are being remanded, this Court is not
going into the merits of the allegations at this stage. Since the order of
the Assistant Registrar suffers from the vice of exercise of jurisdiction
1 Writ Petition No. 10587 of 2025 decided on 25 September 2025
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with material irregularity, I am inclined to ignore the availability of
alternate remedy for the Petitioner.
11) Considering the above position, in my view, the inquiry
conducted by the Assistant Registrar under Section 82 (4) of the MCS Act
appears to be contrary to the statutory scheme. In my view, therefore,
the proceedings deserve to be remanded before the Assistant Registrar
by setting aside the order dated 10 August 2026.
12) Petition accordingly succeeds in part and I proceed to pass
the following order:-
(i) Order dated 10 August 2026 passed under Section 82
(4) as well as the order dated 10 August 2026 passed under
Section 77 (A) of the MCS Act are set aside.
(ii) The proceedings under Section 82 (4) of the MCS Act
are remanded before the Assistant Registrar for fresh
adjudication.
(iii) The Assistant Registrar shall readjudicate the
proceedings having regard to the law laid down by this
Court in Kailash Maheshwari (supra) as well as after taking
into consideration provisions of Section 82 of the MCS Act
and Rule 73 of the MCS Rules.
13) All contentions of parties on merits are expressly kept open.
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14) Writ Petition is accordingly partly allowed and disposed of.
There shall be no order as to costs.
[SANDEEP V. MARNE, J.]
Signed by: Renuka S Thakur
Page No.6 of 6
Designation: PA To Honourable Judge 14 August 2026
Date: 17/08/2026 15:31:08
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