1. Court’s decision
The Bombay High Court allowed three connected writ petitions and set aside the Section 88 report dated 28 February 2022, its submission dated 1 March 2022, the recovery certificate under Section 98 demanding ₹49,45,673, and the revisional orders dated 29 January 2024. The Court held that once the Registrar replaced the earlier Authorised Officer with a newly appointed officer, the former became functus officio and lacked legal authority to prepare or submit a report. Ignorance of the replacement order did not revive extinguished statutory power. The Court remitted the matter for fresh hearing under Section 88 before a duly authorised officer. All merits were kept open.
2. Facts
Proceedings began on 30 October 2018 when the Deputy Registrar initiated a Section 83(1) enquiry into Amit Darshan Cooperative Housing Society for the years 2012–2016, later extended to October 2018. On 1 August 2019, the enquiry officer submitted a Section 83 report noting financial lapses. Based on this, a Section 88 enquiry commenced on 7 October 2019 with Respondent No.6 appointed as Authorised Officer. Charges were framed on 31 May 2021; replies were filed by the petitioners in September 2021.
On 14 February 2022, due to delay, the Registrar replaced Respondent No.6 and appointed a new Authorised Officer. Despite this, Respondent No.6 prepared and submitted a Section 88 report (28 February/1 March 2022). Relying on that unauthorised report, a Section 98 recovery certificate was issued. The petitioners challenged the Section 83 report, Section 88 report, Section 98 certificate, and the revisional orders upholding them.
3. Issues
The Court considered:
• Whether an Authorised Officer who has been replaced can still file a Section 88 report on the ground that he was unaware of his substitution.
• Whether a report submitted after cessation of authority can form the legal foundation for a Section 98 recovery certificate.
• Whether the Revisional Authority erred by failing to consider that the report was submitted without jurisdiction.
• Whether petitioners who were not committee members during the relevant years could be saddled with liability without proper appraisal.
• Whether challenges to a Section 83 report are maintainable.
4. Petitioners’ arguments
The petitioners argued that several of them were not committee members between 2012 and 2018 and were wrongly implicated. They contended that Respondent No.6 was clearly substituted by a valid order on 14 February 2022; hence he had no authority to issue or submit a report after that date. They stressed that the enquiry officer wrongfully ignored crucial documents such as the General Body Resolution and the Section 101 certificate.
They further argued that the enquiry under Section 83 illegally extended beyond the statutory five-year window. Most critically, they contended that the recovery certificate was entirely founded on an invalid report, rendering the entire chain of proceedings void. They alleged denial of fair hearing at the revisional stage.
5. Respondents’ arguments
The State and the society contended that Respondent No.6 had no knowledge of his replacement because the order was not served on him. They urged that ignorance meant his authority must be treated as continuing. They argued that the Registrar’s subsequent conduct—including requesting an explanation for delay—implicitly validated or condoned late submission.
Relying on Rohan Builders (India) Pvt Ltd v Berger Paints (2024), they argued that proceedings should not automatically lapse due to procedural delays, analogising Section 88 to Section 29A of the Arbitration Act. They relied on State of Punjab v Amar Singh Harika (1966) to contend that unserved administrative orders do not bind the affected officer. Thus, they claimed that the report and recovery certificate were validly issued.
6. Analysis of the law
The Court emphasised foundational principles of statutory authority: an officer acts only as long as the statute—and the competent authority—confers power. When the appointing authority replaces an officer, the earlier officer automatically loses jurisdiction. Knowledge or lack of knowledge is irrelevant; the existence of the order, not its service, determines cessation of authority.
The Court applied the maxim cessante ratione legis, cessat ipsa lex—when the reason for the authority ends, the authority ends. Section 88’s structure, including strict timelines and substitution powers, reflects legislative intent for swift, authoritative proceedings under a single authorised officer at any given time.
The Court found Rohan Builders inapplicable because Section 29A deals with continuation of arbitral proceedings absent a termination order, whereas Section 88 confers authority strictly through an active authorisation that ceases immediately upon substitution. Amar Singh Harika was also distinguished because the issue here was not enforceability of an order against the officer, but cessation of statutory power once replaced.
7. Precedent analysis
The Court relied on Sayajirao Narayan Takwane v Divisional Joint Registrar (2025), which held that a Section 83 report is not a decision and cannot be directly challenged, as it only places material before competent authority. Applying that precedent, one of the petitions challenging the revisional order did not survive.
The Court also reiterated settled legal principles from prior Supreme Court jurisprudence that authority terminates once statutory appointment ends, and any action thereafter is void. While Rohan Builders and Amar Singh Harika were cited by respondents, both were found inapplicable to the statutory scheme of Section 88. The Court’s reasoning strongly aligned with general doctrines of functus officio, jurisdictional cessation, and statutory certainty.
8. Court’s reasoning
The Court held unequivocally that Respondent No.6 became functus officio on 14 February 2022 when the new Authorised Officer was appointed. His subsequent report was wholly without jurisdiction. Allowing an officer to act merely because he claims ignorance would destabilise statutory certainty and make legality dependent on a subjective state of mind.
The Registrar’s power to authorise necessarily includes the power to replace. Once replaced, no officer can continue the enquiry or file a report. A void report cannot sustain a recovery certificate; therefore, the Section 98 certificate was equally void.
The Revisional Authority erred by not evaluating the legality of the foundation upon which liability was imposed. Since the very basis of proceedings was invalid, all consequential orders were required to be quashed. The Court clarified that the successor officer need not restart proceedings—he should rely on the existing record and provide a hearing before completing the process lawfully.
9. Conclusion
The High Court declared the 28 February / 1 March 2022 Section 88 report illegal, set aside the recovery certificate, quashed all revisional orders, and remitted the matter for a fresh Section 88 enquiry. The new enquiry must be completed within statutory timelines, giving all parties an opportunity of oral hearing. All substantive questions—such as individual liability of committee members—were left open.
The judgment strongly reinforces the doctrine that public officers cannot act beyond the life of their statutory authority and that proceedings built upon such actions are void.
10. Implications
This ruling has broad implications for cooperative society governance:
• Statutory certainty: Officers lose jurisdiction immediately upon replacement; subsequent actions are nullities.
• Administrative accountability: Authorities must ensure service and communication of orders, but legality does not depend on the officer’s knowledge.
• Protection against wrongful liability: Committee members cannot be saddled with financial liability without a valid enquiry by a duly empowered officer.
• Strict scrutiny of recovery certificates: Certificates under Section 98 must rest on a legally sustainable foundation.
• Procedural discipline: Section 88 enquiries must reflect continuity of lawful authority; deviation invites judicial invalidation.
The ruling brings welcome clarity to the interplay between Sections 83, 88, 98, and revisional jurisdiction.
CASE LAW REFERENCES
1. Sayajirao Narayan Takwane (2025 SCC OnLine Bom 214)
Held that a Section 83 report is not a decision and cannot be challenged directly. Applied to hold one writ petition unsustainable.
2. Rohan Builders (India) Pvt Ltd v Berger Paints (2024)
Cited by respondents, but distinguished because Section 29A of the Arbitration Act does not apply to the statutory structure of Section 88.
3. State of Punjab v Amar Singh Harika (1966)
Cited to argue lack-of-service prevents operation of an order; distinguished because cessation of statutory authority depends on issuance, not knowledge.
FAQ
1. Can an Authorised Officer submit a Section 88 report after being replaced?
No. The Court held such an officer becomes functus officio immediately upon replacement. Any report submitted thereafter is wholly without jurisdiction.
2. Is ignorance of the substitution order a defence?
No. Legality depends on existence of the order, not the officer’s knowledge. Authority ceases the moment the replacement order is issued.
3. What happens to a recovery certificate based on an invalid Section 88 report?
It collapses automatically. The Court set aside the Section 98 certificate because it rested entirely on an unauthorised report.