[Cooperative Societies Act] Audit Reports/Inquiry Orders Are Only Preparatory Steps, Not 'Orders' For Revision: Bombay High Court
The Bombay High Court has held that a Special Report submitted under Section 81(5B) of the Maharashtra Cooperative Societies Act, 1960, and an order directing inquiry under Section 88 are not “orders” or “decisions” amenable to revisional jurisdiction under Section 154 of the Act. The Court observed that if Section 154 is interpreted to include audit reports under Section 81, the parties would challenge reports before inquiry even begins, and the inquiry contemplated under Section 88 would become redundant because proceedings would be stalled at the threshold.
Justice Amit Borkar was hearing a writ petition challenging the order dated 17 December 2025, passed by the Minister for Cooperation in a revision application. By the impugned order, the Minister had allowed the revision, set aside the Special Report dated 14 August 2024 submitted by the Statutory Auditor under Section 81(5B), and annulled the order dated 12 September 2024 passed by the Additional Registrar directing an inquiry under Section 88. The Minister held that the report had been prepared without affording opportunity and that certain transactions were time-barred.
The Court noted that Section 81 contemplates audit as a financial scrutiny mechanism. An audit report or Special Report is essentially a reporting function, and does not adjudicate liability, impose recovery, or determine civil consequences. Section 88 provides for an inquiry to fix responsibility for loss caused to society. At that stage, evidence is examined, explanations are sought, and liability may be determined. It is only upon the conclusion of such an inquiry that rights and liabilities crystallise.
Interpreting Section 154, the Court held that revisional power is supervisory in nature and arises only against an “order” or “decision” affecting rights or liabilities. The provision contemplates scrutiny of adjudicatory outcomes and not preliminary or administrative steps in the statutory process.
“Audit under Section 81 triggers attention. Inquiry under Section 88 examines the matter in detail. Revision under Section 154 lies only after a decision affecting rights is passed… Revisional jurisdiction is crystallised for situations where an actual determination has been made,” the Court observed.
Applying this framework, the Court held that neither the Special Report dated 14 August 2024 nor the order dated 12 September 2024 directing inquiry under Section 88 determined any civil rights or imposed liability. They were preparatory steps and part of the statutory chain leading to potential adjudication. Consequently, they were not amenable to revisional jurisdiction under Section 154. It observed:
“The revision was entertained at a stage where the process had not been converted into an adjudicatory determination. By setting aside the Special Report and the order directing inquiry, the revisional authority effectively prevented the statutory inquiry from taking place.”
Holding that the Minister had exceeded jurisdiction in entertaining the revision and annulling the Special Report and the Section 88 order, the High Court quashed the impugned order dated 17 December 2025. The order dated 12 September 2024 directing an inquiry under Section 88 was restored.
Case Title: Shivkrupa Sahakari Patpedhi Limited v. State of Maharashtra & Ors. [Writ Petition No. 676 of 2026]
Citation: 2026 LiveLaw (Bom) 94