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Bombay High Court: Audit Reports and Inquiry Directions Under Cooperative Societies Act Not Subject to Revision
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The Bombay High Court has clarified that audit-related reports and preliminary inquiry directions issued under the Maharashtra Cooperative Societies Act, 1960, cannot be treated as “orders” capable of being challenged in revision under Section 154 of the Act. The Court explained that such steps are only part of the statutory process and do not amount to final determinations affecting rights or liabilities.
The matter came before Justice Amit Borkar in a writ petition challenging a decision dated 17 December 2025 passed by the Minister for Cooperation. The Minister, while deciding a revision application, had set aside a Special Report dated 14 August 2024 prepared by the Statutory Auditor under Section 81(5B), and had also annulled the Additional Registrar’s order dated 12 September 2024 directing an inquiry under Section 88. The Minister had reasoned that the report was prepared without granting an adequate opportunity of hearing and that certain transactions referred to were barred by limitation.
Examining the statutory framework, the High Court noted that Section 81 deals with audits, which function as financial examinations of a cooperative society’s affairs. A Special Report prepared during such an audit merely brings certain issues to notice and does not decide liability or impose any recovery. In contrast, Section 88 provides for a detailed inquiry process where responsibility for financial loss can be examined, evidence assessed, and explanations considered before any conclusion is reached.
The Court emphasized that revisional powers under Section 154 are supervisory and can be exercised only against decisions that conclusively determine rights or obligations. Preliminary measures, such as audit reports or orders initiating inquiry, do not fall within this category. According to the Court, allowing revision at the audit stage would interrupt the statutory mechanism and potentially render the inquiry process under Section 88 ineffective.
Applying this reasoning, the Court held that neither the Special Report nor the order directing inquiry constituted adjudicatory decisions. They were preparatory in nature and formed part of the procedural chain leading to a possible determination of liability. By entertaining the revision and setting aside these steps, the Minister had effectively halted the inquiry process at a premature stage.
Concluding that the revisional authority had exceeded its jurisdiction, the High Court quashed the Minister’s order dated 17 December 2025. As a result, the direction dated 12 September 2024 ordering an inquiry under Section 88 was reinstated.
The matter came before Justice Amit Borkar in a writ petition challenging a decision dated 17 December 2025 passed by the Minister for Cooperation. The Minister, while deciding a revision application, had set aside a Special Report dated 14 August 2024 prepared by the Statutory Auditor under Section 81(5B), and had also annulled the Additional Registrar’s order dated 12 September 2024 directing an inquiry under Section 88. The Minister had reasoned that the report was prepared without granting an adequate opportunity of hearing and that certain transactions referred to were barred by limitation.
Examining the statutory framework, the High Court noted that Section 81 deals with audits, which function as financial examinations of a cooperative society’s affairs. A Special Report prepared during such an audit merely brings certain issues to notice and does not decide liability or impose any recovery. In contrast, Section 88 provides for a detailed inquiry process where responsibility for financial loss can be examined, evidence assessed, and explanations considered before any conclusion is reached.
The Court emphasized that revisional powers under Section 154 are supervisory and can be exercised only against decisions that conclusively determine rights or obligations. Preliminary measures, such as audit reports or orders initiating inquiry, do not fall within this category. According to the Court, allowing revision at the audit stage would interrupt the statutory mechanism and potentially render the inquiry process under Section 88 ineffective.
Applying this reasoning, the Court held that neither the Special Report nor the order directing inquiry constituted adjudicatory decisions. They were preparatory in nature and formed part of the procedural chain leading to a possible determination of liability. By entertaining the revision and setting aside these steps, the Minister had effectively halted the inquiry process at a premature stage.
Concluding that the revisional authority had exceeded its jurisdiction, the High Court quashed the Minister’s order dated 17 December 2025. As a result, the direction dated 12 September 2024 ordering an inquiry under Section 88 was reinstated.
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