Transparency and accountability are the backbone of a cooperative housing society. When a managing committee fails to explain financial transactions or does not cooperate in providing records, members are justified in seeking legal recourse. However, the law lays down specific conditions before the Registrar of Cooperative Societies can be approached for an inquiry.
Who Can Apply for an Inquiry?
An individual member alone cannot apply to the Registrar for conducting an inquiry into the affairs of the society. As per Section 83 of the Maharashtra Cooperative Societies (MCS) Act, such an application must be supported by at least one-fifth (1/5th) of the total members of the society. This requirement ensures that inquiries are not initiated frivolously or out of personal vendetta.
Grounds and Supporting Documents
Merely having a suspicion is not sufficient. Members applying for an inquiry must submit prima facie evidence or supporting documents indicating possible financial irregularities, misappropriation, or mismanagement. This may include unexplained expenses, inconsistencies in accounts, audit remarks, missing vouchers, or refusal by the committee to share records.
The stronger and more specific the material placed before the Registrar, the higher the likelihood of an inquiry being ordered.
Registrar’s Powers to Initiate an Inquiry
The Registrar has wide powers under the MCS Act. Apart from applications made by members, the Registrar may also:
• Initiate an inquiry suo motu (on his own)
• Order an inquiry based on a special audit report submitted by the society’s statutory auditor
Thus, even without a member-led application, serious audit observations can trigger an inquiry.
Deposit Towards Cost of Inquiry
Before commencing the inquiry, the Registrar may direct the applicants to deposit an amount towards the cost of inquiry. This amount is not fixed and depends on:
• Nature and seriousness of allegations
• Volume of records to be examined
• Complexity and duration of the inquiry
This deposit acts as a safeguard against misuse of the inquiry mechanism.
Who Ultimately Bears the Cost?
The final liability for inquiry costs depends on the outcome:
If Allegations Are Proved
If the inquiry substantially establishes financial irregularities, the deposit amount is refunded to the applicants. The Registrar may also apportion the inquiry cost, fully or partly, against:
• The society
• Past or present committee members
• Officers found responsible for the irregularities
If Allegations Are False, Malicious, or Vexatious
If the inquiry concludes that the allegations were baseless or motivated, the Registrar may direct the applicants to bear the full cost of the inquiry.
If Allegations Are Not Proved but Are Bona Fide
Where allegations are not proved, but are also not false or malicious, the State Government bears the cost of the inquiry.
Time Limit for Passing Orders
After receiving the Inquiry Report, the Registrar is required to pass appropriate orders within six months. This ensures that the process does not remain open-ended and that accountability is fixed in a time-bound manner.
Conclusion
Members suspecting financial misconduct must proceed carefully and collectively. The law provides a balanced mechanism—protecting societies from frivolous complaints while empowering genuine members to seek accountability. Proper documentation, collective action, and adherence to statutory requirements are key to a successful inquiry.
Relevant Legal Provisions
• Section 83 – Maharashtra Cooperative Societies Act
• Rule 71 – Maharashtra Cooperative Societies Rules
