In a significant ruling impacting cooperative housing societies across Maharashtra, the Bombay High Court has quashed a ₹49.45 lakh recovery order issued against several members of Amit Darshan Cooperative Housing Society, Vile Parle (West). The court held that the inquiry report — which formed the basis of the recovery — was “non est in law” because it was filed by an officer after he had already been replaced.
Replaced Officer Had “No Authority” to Submit Report: Court
A Division Bench headed by Justice [Name omitted in document] examined whether an authorised officer could continue an inquiry despite being removed. The Court ruled that once an officer is replaced under Section 83(1)(b) of the Maharashtra Cooperative Societies Act, he becomes functus officio — meaning he loses all powers with immediate effect.
The judgment emphasised:
“The moment a new enquiry officer is appointed, the previous officer ceases to have any authority whatsoever. A report submitted thereafter is without jurisdiction.”
The officer in question, referred to as Respondent No. 6, submitted a Section 88 inquiry report on 28 February and 1 March 2022, despite being replaced on 14 February 2022 due to long delays.
Recovery Order, Revision Order Both Quashed
The invalid inquiry report had led the Registrar to issue a recovery certificate of ₹49,45,750, fixing financial responsibility on society members under Section 88.
Subsequently, in January 2024, the Revisional Authority upheld the recovery.
The High Court has now struck down both orders, noting that:
- The officer had no jurisdiction to submit the report.
- Any action taken on the basis of such a report is illegal and unsustainable.
- The financial liability imposed on the petitioners cannot stand.
Fresh Inquiry Ordered Under Section 88
The Court directed the Registrar to appoint a new Authorised Officer to conduct the Section 88 inquiry afresh.
Key directions include:
- All parties must be given a full and fair hearing.
- The officer must evaluate the existing Section 83 findings and records.
- Proceedings should be completed within the statutory timelines.
- Petitioners are free to raise all their defences again.
Ignorance Not a Defence for Replaced Officers
The replaced officer had argued that he was unaware of his removal.
The High Court rejected this defence entirely:
“Lack of knowledge of replacement does not revive jurisdiction. Authority ends upon replacement — not upon communication.”
This principle now becomes a notable precedent for cooperative society inquiries statewide.
What the Judgment Means for Housing Societies
Legal experts say the ruling will reinforce procedural discipline in cooperative inquiries, especially in cases involving:
- financial irregularities,
- mismanagement allegations,
- redevelopment disputes, and
- misuse of society funds.
The Court’s insistence on strict compliance ensures that inquiry officers cannot continue working after being substituted — a recurring issue across housing societies.
