In a significant ruling impacting Maharashtra’s cooperative sector, the Bombay High Court has restored a statutory inquiry against former directors of Shivkrupa Sahakari Patpedhi Limited, holding that preliminary audit actions cannot be quashed through revisional powers before adjudication is completed.
The matter arose from a Special Report dated 14 August 2024 submitted by the statutory auditor under Section 81(5B) of the Maharashtra Cooperative Societies Act, 1960, flagging apparent financial irregularities in the functioning of the Navi Mumbai-based credit cooperative.
Acting on the report, the Additional Registrar on 12 September 2024 directed initiation of an inquiry under Section 88 to examine whether any financial loss had been caused to the society and to fix responsibility, if established.
The former directors challenged both the Special Report and the inquiry order before the State Government under Section 154 of the Act. In December 2025, the revisional authority set aside the audit report as well as the order directing inquiry, effectively halting the statutory process.
Hearing the society’s writ petition, Justice Amit Borkar held that a Special Report under Section 81(5B) is only a preliminary financial scrutiny and does not determine rights or liabilities.
The Court further observed that an order initiating inquiry under Section 88 is administrative in nature and merely sets the statutory mechanism in motion. Such actions, the Court ruled, do not qualify as an “order” or “decision” amenable to revision under Section 154.
Quashing the revisional order dated 17 December 2025, the High Court restored the 12 September 2024 order directing inquiry and clarified that the proceedings under Section 88 shall continue in accordance with law. All contentions on merits have been kept open for consideration by the competent authority.
The ruling reinforces the statutory framework governing cooperative societies by drawing a clear distinction between audit, inquiry, and revision, and by emphasizing that statutory inquiries must be allowed to reach their logical conclusion without premature interference.
