The Bombay High Court has held that a Special Report submitted under Section 81(5B) of the Maharashtra Cooperative Societies Act, 1960 (MCS Act) and a direction to hold an inquiry under Section 88 do not amount to “orders” or “decisions” that can be challenged in revision under Section 154 of the Act.
Justice Amit Borkar made the observation while hearing a writ petition challenging the revisional order passed by the Minister for Cooperation on 17 December 2025.
Challenge to the Minister’s Revisional Order
In the impugned order, the Minister allowed a revision and set aside two steps in the statutory process. First, the Minister quashed the Special Report dated 14 August 2024, which the statutory auditor had submitted under Section 81(5B). Second, the Minister set aside the order dated 12 September 2024 passed by the Additional Registrar directing an inquiry under Section 88.
The Minister reasoned that the auditor prepared the Special Report without granting an opportunity of hearing. Additionally, the Minister observed that some of the transactions covered by the report appeared to be time-barred.
Statutory Scheme: Audit Versus Inquiry
The High Court closely examined the scheme of the MCS Act and clearly distinguished between audit proceedings and inquiry proceedings.
To begin with, the Court noted that Section 81 provides for an audit as a mechanism of financial scrutiny. An audit report or a Special Report under Section 81(5B) primarily performs a reporting function. Importantly, it neither adjudicates liability nor directs recovery. Consequently, it does not determine civil consequences.
In contrast, Section 88 operates at a different stage. It contemplates an inquiry aimed at fixing responsibility for loss caused to a cooperative society. During such an inquiry, the competent authority examines evidence, seeks explanations, and may determine liability. Therefore, rights and liabilities crystallise only after the inquiry reaches its conclusion.
Revision Under Section 154 Limited to Adjudicatory Decisions
Thereafter, the Court interpreted Section 154 and held that revisional jurisdiction under the provision remains supervisory in nature. It can be exercised only against an “order” or “decision” that affects rights or liabilities.
The Court clarified that Section 154 does not permit interference with preliminary or administrative steps in the statutory chain. Instead, it enables review only of adjudicatory determinations.
In this context, the Court observed:
“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.”
Audit Report and Inquiry Direction Not Revisable; Inquiry Restored
Applying this framework, the High Court held that the Special Report dated 14 August 2024 and the order dated 12 September 2024 directing an inquiry under Section 88 did not determine civil rights or impose liability. Accordingly, the Court treated both actions as preparatory steps within the statutory process.
Significantly, the Court noted that the revisional authority intervened before the process reached an adjudicatory stage. In doing so, the Minister effectively stalled the statutory inquiry.
The Court 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.”
As a result, the High Court held that the Minister had exceeded jurisdiction. It quashed the revisional order dated 17 December 2025 and restored the order dated 12 September 2024 directing an inquiry under Section 88.
Case Title: Shivkrupa Sahakari Patpedhi Limited v. State of Maharashtra & Ors.
