Vaishali Pandurang Manjrekar & Ors. vs State of Maharashtra & Ors.

ORAL JUDGMENT (PER BHARATI DANGRE, J) :

1 By consent of the respective learned counsel, we issue ‘Rule’. Rule is made returnable forthwith.

2 Chapter VIII of the Maharashtra Co-operative Societies Act, 1960 relate to Audit, Inquiry, Inspection and Supervision.

As far as Section 81 is concerned, which pertains to Audit, the provision contemplate that Society shall caused to be audited its account at least once in each financial year by the Auditor or Auditing Firm from a panel prepared by the Registrar and approved by the State Government or an authority authorized by it in its behalf, which shall be placed in the Annual General Body Meeting.

If, however, the Registrar is satisfied that the Society has failed to intimate and file return as provided under sub-section 2A of Section 75 and sub-section 1B of Section 79, he may cause the accounts of the Society to be audited by an Auditor from the panel of Auditors approved by the State Government or an Authority authorized in this behalf.

Section 83 in the said Chapter pertain to an inquiry to be conducted by the Registrar and sub-section (1) of Section 83 reads thus :-

Upon such an inquiry being conducted, it is imperative for all the officers, members and past members of the Society to render all necessary assistance by handing over the information , books and papers relating to the Society which are in their possession and offer all necessary assistance.

As a consequence of the inquiry, the Registrar shall bring the defects disclosed in the inquiry or inspection to the notice of the Society and direct the Society or its officers to take such action as may be prescribed in the order to remedy the defects within time specified therein.

3 In the Scheme of the enactment, Section 88 set out the power of the Registrar to assess damages against delinquent promoters etc. and as per sub-section (1) of Section 88 during the course of or as a result of an audit under Section 81 or an inquiry under Section 83 or an inspection under Section 84 , the Registrar is satisfied on the basis of the report made by the Auditor or the person authorized to make inquiry under Section 83 or the person authorized to inspect the books under Section 84, when it appear that any person who has taken part in the organization of the management of the Society has within a period of 5 years prior to the date of commencement of the Audit, has been guilty of misfeasance or breach of trust in relation to the Society, then charges could be framed against such person(s) after giving an opportunity to the person concerned to answer the same and make an order requiring him to repay or restore the money or property or any part thereof, with interest at such rate as the Registrar or the person authorized in his behalf may determine or to contribute such sum to the assets of the Society by way of compensation in regard to misapplication, retention, misfeasance or breach of trust, as he may determine.

4 In the whole Scheme of the Maharashtra Co-operative Societies Act, 1960, it is pertinent to note that Section 81 relate to Audit, whereas, Section 83 relate to an inquiry by the Registrar, who is empowered to conduct an inquiry suo motu or on the application of one-fifth of the members of the Society or such an inquiry can be initiated on the basis of special report under third proviso to sub-section (5B) of Section 81 and this inquiry shall revolve around the constitution, working and financial conditions of the Society.

It is a trite position in law that if the Statute prescribe a particular thing to be done in particular manner and in such a contingency, the act shall be done only in the manner prescribed by the Statute.

For the purposes of conduct of inquiry by the Registrar there are three modes which are set out viz. either a suo motu inquiry by the Registrar, or on an application made by one-fifth of the members of the Society or on the basis of the special report which is received under third proviso to sub-section (5B) of Section 81, and it is only in this manner, the Registrar shall conduct an inquiry.

The whole process ensure sanctity of the process, to be undertaken by the Registrar when he find that all is not well in the Society or when one-fifth of the members of the Society file an Application requesting for such an inquiry or that the special report under third proviso to sub-section (5B) of Section 81 indicating some aspect, which warrant such an inquiry to be conducted by the Registrar, which is touching the constitution, working and financial conditions of the Society. Keeping in mind the spirit of the provision, when inquiry by the Registrar is permissible only by one of the three modes, we find that in the present case when the inquiry has been conducted on 29/09/2025 by invoking the power under Section 83 of the Maharashtra Co-operative Societies Act, 1960 and one Shri Deepak Khandekar, Regional Deputy Commissioner , Textile Department, has been appointed as an Inquiry officer and is directed to submit his report to the Deputy Registrar, Co-operative Societies.

5 The order passed by the Registrar (Deputy Registrar) record that Kurla Kamgar Co-operative Housing Society Ltd. is a Society registered under the Maharashtra Co-operative Societies Act and it is imperative for the Society to conduct its affairs in light of the provisions of the Act as well as the bye-laws framed by it and the circulars issued from time to time by the State Government and its officials.

The order mention that on 14/08/2025 two members of the Society viz. Mr.Dharmendra Nakhate and Mr.Shrikrishna Sangle alleged that a financial loss has been caused to the Society by the ex-members and an inquiry be conducted under Section 83 and the nature of accusations were also specifically set out, and the power under Section 83 has been invoked, by the Registrar considering the gravity of the accusations levelled.

6 It is this action which is challenged by the Petitioners on the ground that the parameters required for initiation of inquiry under Section 83 (1) are not satisfied as neither of the three contingencies that are contemplated in sub-section (1) existed before directing an inquiry to be conducted.

7 Opposing the Writ Petition, we have an Affidavit filed by the Deputy Registrar, L Ward Cooperative Societies, and in the said Affidavit, reliance is placed upon the decision in case of Janhit Nagari Sahakari Patsanstha vs. State of Maharashtra & Ors.^{11.2023 SCC OnLine BOM 2701}.

We have perused the said decision when the learned Single Judge has interpreted the wording ‘may’ applied in sub-section (1) of Section 83 and has clarified that the word ‘may’ is used for holding suo-motu inquiry by Registrar and this is an option available to the Registrar in contradiction of the word ‘shall’, where it is imperative for the Registrar to hold an inquiry when an application is received from one-fifth of the members of the Society or on the basis of special report.

Thus, the ratio which flows from the authoritative pronouncement is that the statutory scheme is such that if one-fifth members of the Society make an application, holding of inquiry is mandatory.

8 Based upon the aforesaid decision and interpreting it in a restrictive manner, the deponent proceed to state thus :

9 We find the stand to be completely unacceptable, as it is only as the three modes contemplated for initiation of inquiry under Section 83 are distinct viz. an inquiry may be initiated by the Registrar viz. suo motu or when he receive an application from one-fifth of the members of the Society or on the basis of the special report under third proviso to sub-section (5B). Then it is imperative for him to hold an inquiry into the constitution, working and financial condition of the Society or he may authorize any person on his behalf to conduct such an inquiry.

By no stretch of imagination the said provision make it permissible to take cognizance of the complaint and then treat it as a ‘suo motu exercise’ and this is precisely what the Officer has attempted to plead before us, when it is stated that the Respondent has exercised ‘suo motu’ power to hold an inquiry under Section 83 by placing reliance upon the letter dated 14/08/2025 and 29/09/2025 as they are accepted as source of information, but thereafter, the officer applied his mind independently to come to a prima facie conclusion that an investigation is required under Section 83, which resulted into passing of the order on 29/09/2025.

10 We do not agree with the said interpretation and we must observe that it was open to the Registrar to conduct an inquiry suo-motu, but the route of proceeding with the inquiry on an application received by one-fifth of the members was a different route. Here, only two members of the Society made a complaint and what the Registrar tell us through the Affidavit, is that he accepted it as a source of information and ordered an inquiry suo-motu.

11 The expression ‘Suo motu’, being synonymous with ‘on his own motion’ , indicate that the action is initiated on one’s own initiative and though it is permissible to collect the information by the Authority himself or he can act on the material furnished by some external agency, but he must look into the information and apply his mind in arriving at a decision, and this decision must be of his own.

An attempt is made to canvass before us that the source for initiating the inquiry is the complaint, in normal parlance it would be befitting to take cognizance on the basis of the said complaint, but in the wake of the wording specifically set out in sub-section (1) of Section 83, where ‘suo motu’ is described to be one of the mode, for the Registrar to set his machinery rolling for conduct of an inquiry and the other mode being complaint preferred by not less than one-fifth of the capacity of members, the object in introducing the later provision being that it should not be one or two members who have some grievance to make or have an axe to grind against the members of the Managing Committee against whom an inquiry is sought to be initiated, but it must be a majority public opinion and this requires as good as one fifth of the members seeking such an inquiry.

Therefore, in our view, the stand adopted that the source of information was the complaint and thereafter the Registrar applied his mind, do not appeal to us as it is not a discharge of the function as contemplated in sub-section (1) of Section 83 and falls foul of the intention of the legislature in prescribing three modes in conducting an inquiry under Section 83 of the Act of 1960.

11 For this reason, the decision of the Deputy Registrar in passing the order on 29/09/2025 cannot be sustained . The order is quashed and set aside.

On quashing of the said order, we declare that no further consequential action be taken on the basis of the said report.