The Office of the Central Registrar of Cooperative Societies (CRCS) has initiated winding-up proceedings against two Multi-State Cooperative Societies (MSCS), one in Maharashtra and another in Kerala, for alleged financial mismanagement, governance failures, statutory violations and non-repayment of members’ deposits, signalling a tougher regulatory stance against errant cooperatives.
In separate notices issued under Section 86 of the Multi-State Cooperative Societies Act, 2002, Central Registrar of Cooperative Societies Shiv Pal Singh observed that both societies appeared to have ceased functioning in accordance with the provisions of the Act and cooperative principles. The societies and all interested parties have been given 15 days to file objections, failing which formal winding-up proceedings will be initiated.
The more serious of the two cases relates to Sai Seva Multi State Co-operative Credit Society Ltd., Kashti, Maharashtra, where inspections and three consecutive statutory audit reports uncovered widespread financial and governance irregularities. The action follows an inspection conducted by the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, along with adverse audit findings for FY 2021-22, FY 2022-23 and FY 2023-24.
According to the inspection report, the society failed to maintain key statutory records, including election documents, membership registers and board meeting minutes. It also allegedly violated provisions relating to employee appointments, statutory audits, Employees’ Provident Fund compliance, borrowing limits, unsecured lending norms and statutory investments.
The audit reports further revealed alleged diversion of nearly Rs 78 crore through loans sanctioned to senior functionaries and their relatives. Around Rs 47.70 crore was reportedly disbursed to the General Manager, his family members and entities under his control. Another Rs 10.58 crore was extended to the Chairman’s family, Rs 8.89 crore to directors and their relatives, and Rs 10.79 crore to the Cashier’s family members.
Auditors also flagged fictitious loan accounts, bogus land development loans without supporting documents, proxy borrowers, round-tripping of funds through a sister concern, accommodation entries, conflict of interest, weak internal controls and suspected fraud involving several crores of rupees. The society was proposed for a “D (Bad)” audit classification for three consecutive years, while auditors issued disclaimer opinions on its financial statements and recommended legal action against those responsible.
The CRCS had served a show-cause notice on June 1, 2026, seeking an explanation within ten days. However, the society failed to submit any response.
In Kerala, the CRCS has initiated similar proceedings against Southern Green Farming and Marketing Multi-State Cooperative Society Ltd., Kozhikode, following multiple complaints from depositors alleging non-repayment of investments.
The notice states that a Cooperative Ombudsman had directed the society in July 2025 to refund deposits with interest to 13 complainants within 15 days, but the order remained unimplemented. Despite three hearings convened by the CRCS, no representative of the society appeared.
The society also failed to file its mandatory annual returns for FY 2024-25. In addition, a report from the Deputy Police Superintendent, Kottayam, alleged that the society had mobilised deposits from the public before ceasing operations without refunding investors.
The twin actions underscore the Ministry of Cooperation’s growing emphasis on accountability, financial discipline and protection of members’ interests in the multi-state cooperative sector. By invoking the winding-up provisions of the MSCS Act, the CRCS has indicated that persistent violations of cooperative law, financial mismanagement and failure to safeguard depositors’ funds will invite stringent regulatory action.
