Arun Kumar Saxena vs Union Of India & Ors.
- Court
- Delhi High Court
$~28, 27, 29 to 65
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Date of Decision: 19 May, 2026
th
Uploaded on: 25 May, 2026
~28
+ W.P.(C) 5699/2025
MRITYUNJAY KUMAR .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~27
+ W.P.(C) 4619/2025
ARUN KUMAR SAXENA .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~29
+ W.P.(C) 4621/2025
SANJOY KUMAR PAUL .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~30
+ W.P.(C) 4622/2025
BISWAJIT BANERJEE .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~31
+ W.P.(C) 4623/2025
DEO KUMAR GHATAK .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~32
+ W.P.(C) 4663/2025
NARENDRAKANT G GITE .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~33
+ W.P.(C) 6272/2025
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 1 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
HIMANI BANSAL .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~34
+ W.P.(C) 6274/2025
SHRI KRISHAN GUPTA .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~35
+ W.P.(C) 6352/2025
RAJ GUPTA .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~36
+ W.P.(C) 6353/2025
SATYAM AGGARWAL .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~37
+ W.P.(C) 6984/2025&CM APPL. 31516/2025
MALATHI HARIHARAN .....Petitioner
versus
THE UNION OF INDIA, THROUGH
MINISTRY OF COOPERATION & ORS. .....Respondents
~38
+ W.P.(C) 6987/2025&CM APPL. 31527/2025
CHITYALA JAYARAM .....Petitioner
versus
UNION OF INDIA, THROUGH MINISTRY OF COOPERATION &
ORS. .....Respondents
~39
+ W.P.(C) 6991/2025&CM APPL. 31539/2025
M. RAZI ANWAR .....Petitioner
versus
THE UNION OF INDIA & ORS. .....Respondents
~40
+ W.P.(C) 6992/2025&CM APPL. 31541/2025, CM APPL.
Signature Not Verified
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Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
43335/2025, CM APPL. 43496/2025, CM APPL. 48937/2025
VIJAY DAVE .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~41
+ W.P.(C) 8969/2025
SAURABH AGGARWAL .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~42
+ W.P.(C) 8972/2025
ALOK KUMAR AGGARWAL .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~43
+ W.P.(C) 9384/2025
PREM KUMAR ARORA .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~44
+ W.P.(C) 9397/2025
CHAND SAROOP .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~45
+ W.P.(C) 9398/2025
SHUBHANKAR BHATTACHARYA .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~46
+ W.P.(C) 9421/2025
AJAY KUMAR .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~47
+ W.P.(C) 9552/2025
NIRMAL DEVI .....Petitioner
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 3 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
versus
UNION OF INDIA & ORS. .....Respondents
~48
+ W.P.(C) 9594/2025
NAVNIT GHAI .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~49
+ W.P.(C) 11166/2025
ISPAT CO-OP GROUP HOUSING SOCIETY LTD.....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~50
+ W.P.(C) 9633/2025
MEENA RANI NAYAK .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~51
+ W.P.(C) 9691/2025
DHARAM PAL SHARMA .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~52
+ W.P.(C) 9731/2025
PURAN CHAND .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~53
+ W.P.(C) 9834/2025
MAHENDRA KUMAR KATHPAL .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~54
+ W.P.(C) 10055/2025
MITTER SAIN .....Petitioner
versus
UNION OF INDIA& ORS. .....Respondents
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 4 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
~55
+ W.P.(C) 12132/2025
MANJIT SINGH .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~56
+ W.P.(C) 12208/2025
RAJENDRA SINGH .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~57
+ W.P.(C) 12450/2025
GAURI SHANKAR DUBEY .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~58
+ W.P.(C) 14264/2025
PURNIMA SINGH .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~59
+ W.P.(C) 14294/2025
S MUTHUSAMI .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~60
+ W.P.(C) 16732/2025
ANUP NARAIN GAUR .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~61
+ W.P.(C) 16756/2025
NEENA BHASIN .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~62
+ W.P.(C) 16825/2025
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 5 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
MANI SINGH .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~63
+ W.P.(C) 18677/2025
MADAN MOHAN .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~64
+ W.P.(C) 19248/2025
HARISH KUMAR BHARDWAJ .....Petitioner
versus
UNION OF INDIA & ORS. .....Respondents
~65
+ W.P.(C) 5477/2026
MANJU MODI .....Petitioner
versus
UNION OF INDIA AND ORS .....Respondents
APPEARANCE:
ON BEHALF OF THE PETITIONERS.:
Mr. Raunak Jain, Adv. (M: 9999297088)
Mr. Hardik Giri, Mr. Hitesh Kumar, Mr. Vedant Pradhan & Mr. Pranav Singh
Gautam, Advs. (M: 9599422383)
Mr Faiz Khan, Ms Bhavni Kashyap, Advs.
Mr. Shrey Kumar, Adv. (M: 9818493330)
ON BEHALF OF THE RESPONDENTS:
Mr. Anshuman, Adv. (M: 9818571429)
Mr. Gaurav Sharma, SPC with Ms. Manpreet Kour, Adv. for UOI
Mr. Mukul Singh, CGSC with Mr. Aryan Dhaka and Ms. Sunidhi Tyagi,
Advs. for UOI
Dr. B. Ramaswamy, CGSC
Mr. Himanshu Pathak, SPC with Mr Mohit Gupta, Adv. for UOI (M:
8393959440)
Mr. Puneet Yadav, SPC with Mr. Vivek Nagar, GP for UOI
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 6 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
Mr. Sharang Dhulia, CGSC with Mr. Chetan Jadon, Adv. for UOI (M:
9690051398)
Ms. Sabyasachi Roy Chowdhury, Mr. Soayib Qureshi, Mr. Sheelbhadra
Sanyal, Ms. Chandramouli Roy Chowdhury, Mr. Varnit Vashistha, Advs. for
R-4. With Mr. Amitava Sarkar (Chairman of Society in person)
Mr. Abhishek Gupta, CGSC with Mr. Dhananjay Singh & Mr. Chanakya
Kene (Advocates) for UOI (M: 74174 45213)
Mr Rakesh Kumar SPC with Mr. Sunil, Adv. for UOI (M: 9811549455)
Mr. Sahaj Garg, SPC with Mr. Soumyadip Chakraborty, Adv. for UOI
Mr. Premtosh K Mishra, CGSC with Mr. Shrey Sharma, Mr. Anubhav
Upadhyay and Mr. Arpit Bamal, Advs. for UOI (M: 9670407033)
Mr. Piyush Gupta, CGSC with Mr. Atishay Jain, Ms. Himanshi Soni and Ms.
Komal, Advs.
Mr. Viplav Acharya, Ms. Laavanya Kaushik & Ms. Khyaati Bansal, Advs.
(M: 9871049640)
Ms. Shagun Shahi Chugh, Mr. Varun Chugh and Ms. Ayushi Agarwal, Advs
for UOI (M: 8630164988)
Mr. Kushagra Kumar (SPC) for UOI (M: 8178303621)
Mr. Manish Kumar, Senior Panel Counsel with Mr. Ankit Kumar Tiwari,
Adv. for R-1 (M: 9873950114)
Mr. Vikrant Nilesh Goyal, Mr. Rahul Kumar, GP, Mr. Yash Basoya, Mr.
Inderpreet Singh and Mr. Kunal Dixit, Advs. for UOI (M: 9953228888)
Mr. Nirvikar Verma, SPC & Mr. Varun Kumar, Adv. for UOI
Mr. Rahul Mourya, Adv. for UOI (M: 9810103680)
Ms. Preetika Dwivedi, Mr. Abhisek Mohanty, Mr. Ansh Rajauria, Advs for
Respondent No. 5
Ms Arunima Dwivedi, CGSC Ms Himanshi Singh Adv Ms Monalisha
Pradhan Adv. for UOI.
Mr. Nishant Gautam, CGSC with Ms. Kavya Shukla, Adv.
Mr. Nitinjya Chaudhry, CGSC with Mr. Rahul Mourya, Adv.
Mr. Rajesh Mishra, SPC with Ms. Anita R. Mishra, Ms. Divyam, Mr. Tushar
Saini, Mr. Raghav Sharma, Mr. Nishchay Dutt, and Ms. Ananya Yadav, Advs.
Mr. Jaswinder Singh, Adv.
Mr. Rajesh Kumar, SPC with Mr. Siddharth Shekhar, Adv. for UOI.
Mr. Siddhartha Shankar Ray, CGSC with Ms. Sonali Modi and Mr. Mukul
Dev, Advs.
Mr. Pritish Sabharwal, SC for UOI.
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 7 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
Mr. Amitava Sarkar, Chairman (SAIL Society)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE MADHU JAIN
JUDGMENT
Prathiba M. Singh, J.
1. This hearing has been done through hybrid mode.
2. These writ petitions reveal an unfortunate saga of several employees,
retired and/or serving, of a Public Sector Undertaking, struggling to withdraw
their hard earned money deposited with a Multi-State Cooperative Credit
Society formed, ironically, for their financial benefit. Such a regrettable
situation has arisen despite several of the Petitioners having favourable orders
passed by the Co-Operative Ombudsman, an authority specifically introduced
under the Multi-State Cooperative Societies Act, 2002 (hereinafter, “ the
MSCS Act ”), for grievance redressal of the society members.
I. Factual Background
3. The Petitioners are retired or serving employees of the Steel Authority
of India (hereinafter “ SAI ”), who had come together and formed in 1977 the
Steel Authority of India Limited Employees Co-operative Credit Society
Limited (hereinafter “ the Respondent Society ”). The Respondent Society has
its registered office in Kolkata. The same is a Multi-State Co-operative
Society registered under the MSCS Act, and accordingly, is governed by the
provisions of the said Act.
4. It is noted that each of the petitions have certain facts that are peculiar
to their respective cases, however, there is a broad consensus as to the factual
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 8 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
background leading to the present petitions. The Petitioners had become
members of the Respondent Society in different years as far back as 1992, and
thereafter, are stated to have deposited various amounts with the Respondent
Society in the form of Fixed Deposits. Over the years the amounts deposited
by the respective Petitioners have accumulated and become substantial.
5. Sometime in 2024, various members had sought closure of their Fixed
Deposits and release of their amounts for personal reasons, including towards
hosting a wedding in the family or managing certain medical ailments etc.
However, despite seeking premature closure of the Fixed Deposits the
respective amounts were not released to the Petitioners by the Respondent
Society.
6. Most of the Petitioners, being aggrieved by the inaction of the
Respondent Society in releasing their deposited amounts, filed complaints
with the Cooperative Ombudsman under Section 85A of the MSCS Act. In
some of these matters, the Cooperative Ombudsman had passed orders
directing the Respondent Society to pay the respective members their claims
along with interest thereon. As an illustration, the relevant portion of the order
dated 17th February, 2025 passed by the Cooperative Ombudsman in W.P.(C)
6272/2025 titled Himani Bansal vs. Union of India & Ors., which was
passed in respect of several Petitioners, is extracted hereunder:
“19. After due consideration of the documents
submitted, representation made and the relevant
provisions of law, the matter is hereby disposed off
with the following directions:
(i) Steel Authority of India Employees Cooperative
Credit Society Ltd., Kolkata is hereby directed to pay
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 9 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
the amount due & claimed by the complainants
against their respective deposits along with up-to-
date interest thereon within 15 days from ·the date of
issue of this Order.
(ii) The Society is further directed that In respect of
all other complaints received/being received in this
office as also the claims being filed with the
Society, to pay the members their claims along with
upto date Interest thereon within 15 days from the
date of complaints/claims received by them .
(iii) Compliance reports to be submitted by the
Society to this office .”
7. In the above proceedings, the CEO of the Society, Sh.Saugata Roy had
represented the Respondent Society and pursuant to the submissions made by
the Respondent Society and the Petitioners, the order dated 17th February,
2025 was passed. As is clear from the above, the Cooperative Ombudsman
had directed the Respondent Society to pay the amount due to the
Complainants thereto with up-to-date interest within 15 days. In addition, in
respect of the lead matter being W.P.(C) 5699/2025 titled Mrityunjay Kumar
vs. Union Of India & Ors., the Cooperative Ombudsman had issued a letter
dated 12th March, 2025 directing the Respondent Society as under:
“Sub.: Complaint filed before the Hon'ble
Cooperative Ombudsman by Shri Mrityunjay Kumar
against Steel Authority of India Employees’ Coop.
Credit Society Ltd.- reg.
Sir,
Reference Is invited to Order dated 17th February
2025 (which has already been communicated to you
as also available on our website, http://crcs.gov.in,
by the Hon'ble Cooperative Ombudsman in case of
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 10 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
claims of the members pertaining to Steel Authority
of India Employees Cooperative Credit Society Ltd.,
Kolkata.
2. Shri Mrityunjay Kumar has filed a complaint
before the Hon'ble Cooperative Ombudsman. The
same is forwarded herewith for making necessary
payment of the claims filed and due as per para 19
(ii) of the Order referred above.
3. This is issued with the approval of the Cooperative
Ombudsman.”
8. These petitions, inter alia, seek enforcement of the above and other
similar orders passed by the Cooperative Ombudsman, since the Respondent
Society has failed to comply with the same. In addition, in cases where no
orders have been passed by the Cooperative Ombudsman, the prayer in the
writ petitions, inter alia, is for release of their respective deposits by the
Society.
II. Proceedings before this Court
9. Initially, four writ petitions, including W.P.(C) 6272/2025, came to be
filed before the Court seeking enforcement of the order dated 17th February,
2025 passed by the Cooperative Ombudsman. These were considered by the
Court on 9th April, 2025 on which date the Respondent Society was duly
represented and various objections were raised as to the maintainability of the
said petitions. Further, after perusing the observations recorded by the
Cooperative Ombudsman as to the poor financial situation of the Respondent
Society, the Court had called for details of all its movable and immovable
assets. The relevant portions of the order dated 9th April, 2025 passed in
W.P.(C) 6272/2025 is extracted hereunder:
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W.P.(C) 5699/2025 & connected matters Page 11 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
“8. Mr. Garai, Id. Counsel for the Society submits
that he may be given 15 days time to obtain
instructions. He also submits that the said order of
the Ombudsman is appealable under Section
85(A)(3) of the MSGS Act and the Society is
contemplating to file an appeal in this matter as per
his instructions.
9. In addition, the issue of maintainability on the
ground of territorial jurisdiction is also raised, since
the Society is located in Calcutta. Mr. Garai, Id.
Counsel also submits that the Petitioners can always
seek enforcement of the Ombudsman's order under
Section 97 of the MSCS Act and hence, they have an
alternate remedy.
10. Let a short affidavit be filed by the Respondents
within four weeks. Rejoinder thereto, if any, be filed
within four weeks thereafter.
11. It is noticed that in the order passed by the Office
of Cooperative Ombudsman, the CEO had appeared
and had made a statement that 400 crores worth of
deposits have been accepted by the Society and the
same have been invested in hospitals etc.
Considering this position and the submission that
the Society is not in a good financial condition, let
the details of all the movable and immovable assets
of the Society be placed on record along with the
supporting documents .”
10. Thereafter, on 1st May, 2025 the Court had considered W.P.(C)
5699/2025 . On the said date again the Respondent Society was duly
represented and it was submitted that active steps are being taken to liquidate
assets of the Respondent Society to pay the Petitioner therein and similarly
placed members. Accordingly, the Court had directed the Respondent Society
to place on record an affidavit in respect of the steps taken towards payment
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 12 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
of the dues. The relevant portion of the order dated 1st May, 2025, reads as
under:
“9. Ld. Counsel for the Respondent No.4 further
submits that active steps are being taken to liquidate
the assets in some manner and pay the Petitioner and
other similarly placed parties.
10. An affidavit in respect of the steps taken by the
Respondent No. 4 shall also be placed on record by
10th July, 2025.”
11. Thereafter, further writ petitions were filed by the Petitioners herein
which were tagged along with the initial four writ petitions. The Ld. Counsels
for the Petitioners have repeatedly urged before this Court that majority of the
Petitioners are senior citizens who are retired employees of SAI, and had
invested their hard earned money into the fixed deposit which were made with
the Respondent Society.
12. This batch of petitions were first considered on 22nd July, 2025 on
which date the Court had noted that despite the directions passed in the orders
st
dated 9th April, 2025 and 1 May, 2025, the Respondent Society has neither
taken steps to give effect to the orders of the Cooperative Ombudsman nor
placed its affidavit on record. It was further observed by the Court that though
Section 85A of the MSCS Act provides for a redressal mechanism to members
of Multi-State Cooperative Societies, there appears to be no provision for
enforcing the orders passed by the Cooperative Ombudsman. Accordingly,
the Court had directed the Central Registrar to file an affidavit suggesting the
mode and method for enforcement of orders passed by the Cooperative
nd
Ombudsman. Relevant extracts of the order dated 22 July 2025, is set out
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W.P.(C) 5699/2025 & connected matters Page 13 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
below:
“6. Though, on earlier occasion, two opportunities
were granted to the counsel appearing for the
respondent/Society to make its submissions and to
honour the order of the Ombudsman particularly as
reflected in the Order dated 09.04.2025 and
01.05.2025, no response has been received from the
Society or its counsel.
7. It appears that the Society is not inclined towards
complying with the orders of the Ombudsman and
also extend cooperation or assistance in the matter
of deciding the issue, which is brought before this
Court by the petitioners.
8. Petitioners’ appear to be senior citizens, who
have deposited their hardened money in the Society
so as to have support during their advanced age.
9. Some of the petitioners appear to be retired from
the public sector undertakings and the family
members are facing hardship, as in one case it is
sought to be demonstrated that his spouse is
suffering from cancer.
10. As far as the orders of the Ombudsman which
are sought to be implemented in this case, there is a
statutory remedy provided under the Act of 2002.
Once such remedy is provided by the Act, there
ought to be a mechanism to implement the order and
for taking the same to its logical end.
11. We are afraid as we are unable to notice any
such mechanism under the Act.
12. In such an eventuality, the option left is to direct
the Central Registrar to file an affidavit within one
week thereby suggesting the mode and measures as
to how these statutory orders like the one passed by
the Ombudsman can be enforced and brought to its
logical end.”
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 14 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
13. Thereafter, the Central Registrar filed an affidavit dated 1st August,
2025 in respect of the statutory scheme under the MSCS Act qua orders of the
Cooperative Ombudsman and procedure for winding up of the Multi-State
Cooperative Societies under Section 86 of the said Act. As per the said
affidavit, the Central Registrar vide letter dated 24th December, 2024 had
directed the Registrar of Cooperative Societies, West Bengal to conduct an
inspection of the Respondent Society under Section 108 of the MSCS Act.
The inspection report dated 21st March, 2025, as received by the Central
Registrar, was forwarded to the Respondent Society vide letter dated 22nd
April, 2025, seeking comments and reply to the same. A reminder letter dated
28th May, 2025 was also sent to the Respondent Society. However, no
response was received from the Respondent Society. In the said affidavit of
the Central Registrar, it is also stated that the Respondent Society had been
granted a hearing through video conferencing on 25th July, 2025. In the said
hearing, the then Chairperson of the Respondent Society had stated that the
Respondent Society will appear before this Court and plan for refunding the
amounts due. Accordingly, it was stated in the affidavit that in absence of a
satisfactory response from the Respondent Society, the Central Registrar shall
consider issuing orders for winding up of the Respondent Society under the
MSCS Act.
14. The said affidavit of the Central Registrar was considered by the Court
on 1st August, 2025, and after considering the relevant provisions of the
MSCS Act, the Court had directed the Central Registrar to pass relevant orders
for conducting a special/forensic audit as provided under Section 86 of the
MSCS Act, before taking steps for winding up of the Respondent Society.
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 15 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
15. Further to the above order, another affidavit was filed by the Central
Registrar, as per which an inquiry into the constitution, working and financial
condition under Section 78 of the MSCS Act, had been initiated before taking
steps for winding up under Section 86 of the said Act. It was also informed
that vide order dated 8th August, 2025 the Institute of Public Auditors of India
(hereinafter “ IPAI ”) had been appointed for conducting the said inquiry. The
said affidavit was considered on 11th August, 2025, and after hearing the ld.
Counsels for the parties, the Court had passed the following directions:
“13. In that view of the matter, we direct respondent
no.2/Central Registrar to pass an order within 72 hours
from today as regards the steps that he intends to take
in the matter of securing the interest for depositors like
the petitioners, in whose favour orders are passed by
respondent no.3/ Cooperative Ombudsman directing
repayment of deposits .
14. Interim measures be made by the Central Registrar
may include restraint order on the powers to be exercised
by the newly elected managing committee until further
orders, and also in case if any stop gap arrangement in
the matter of payments is to be made to the parties, in
whose favour the Cooperative Ombudsman has passed an
order.
15. Let the response be placed before this Court within
one week from today.
16. However, we make it clear that the inquiry as ordered
under Section 78 of the MSCS Act, shall be completed
expeditiously within the time stipulated as mentioned in
the affidavit.
17. We also grant one week by way of last chance to the
respondent no.4/Cooperative Society to submit their
response on record, failing which this Court will be
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W.P.(C) 5699/2025 & connected matters Page 16 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
constrained to pass order of costs or initiation of
contempt proceedings.
18. No major policy or financial decision be indulged
into by the newly elected office bearers of the respondent
no.4/Cooperative Society, except day-to-day expenses,
till the response of Central Registrar is placed on
record.”
16. In respect of the above directions, on 22nd August, 2025 the Court was
apprised by the Central Registrar of certain difficulties being faced from the
new Managing Committee of the Respondent Society in completing the
aforementioned inquiry. However, it was stated that the same shall be
concluded by 12th September, 2025 and the report shall be placed on record
by 17th September, 2025.
17. On 24th September, 2025, the Court had perused the inquiry report
dated 12th September, 2025 prepared by IPAI, as per which, the financial
health of the Respondent Society had become severe. The relevant
observations of the Court in respect of the findings of IPAI are as under:
“3. Today our attention has been invited by the
counsel appearing for the Central Registrar of Co-
operative Societies to an inquiry report which has
been drafted by the Institute of Public Auditors of
India (IPAI).
4. It appears that the said report has drawn certain
conclusions and, amongst others, it appears that the
net worth of the Society prima facie stands eroded
and, as such, the Society is not in a position to meet
with its admitted liability. To say the least, the
senior citizens, who are its members and have made
deposits, are not being paid by the Society in case
such deposits are sought to be encashed.
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 17 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
5. In response to the Court’s query, it is
demonstrated from the record that the last audit of
the Society was conducted in the year 2022-2023.
6. Thereafter, the report of inquiry depicts that the
financial position of the Society got adversely
affected, and perhaps it has crept into a ‘lossmaking
society’.
18. In view of the above, the Court was of the view that the Central
Registrar ought to have taken appropriate steps under the MSCS Act to ensure
the financial stability of the Respondent Society.
III. Financial Audit of the Respondent Society
th
19. Thereafter, vide order dated 25 September, 2025, considering the
necessity to ascertain the exact financial position of the Respondent Society
to satisfy the dues of the Petitioners, a forensic audit was directed by this
Court, in the following terms:
“7. The fact remains that the even if the
provisions of Section 86 of the Act of 2002 are read,
winding up can be taken recourse to, only after an
audit has been conducted or a special audit has
been conducted, or an inquiry or inspection has
been held pursuant to provisions of Sections 70, 77,
78 & 79 of the Act of 2002 respectively.
8. At this stage, counsel for the Central
Registrar of Cooperative Societies, on instructions
from the Deputy Commissioner from the office of
Central Registrar of Cooperative Societies , assures
this Court that forthwith the forensic audit of
respondent no.4/Society shall be initiated and
every endeavour shall be made to complete the
same within a period of four weeks from today.
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 18 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
9. It is assured that the forensic audit report
shall be placed on record of this Court, in any case
by 30th October 2025, with recommendations of the
Central Registrar of Cooperative Societies on
affidavit.
10. We accept the aforesaid statement as an
undertaking to this Court since the same is coming
out from an authority.
11. We further direct the Central Registrar of
Cooperative Societies to file his own affidavit on the
aspects of the forensic audit and the action proposed
in the matter, including whether, if so, a chance of
revival can be granted to the newly elected office
bearers.
12. The Central Registrar of Cooperative
Societies in his affidavit shall also deal with the
action whether can be initiated under Section 104 of
the Act of 2002 against the defaulting
directors/officers and if so, what action is proposed
against the officers, including that of recovery of the
defalcated amounts.
13. Interim directions issued against
respondent no.4/Society shall continue till further
orders.
14. We defer the hearing of these petitions for
consideration on 06th November, 2025. ”
20. The forensic audit was conducted and a report dated 30th October, 2025
th
was placed on record by way of an affidavit dated 4 November, 2025. The
said audit report shows that there are several immovable properties in the form
of lands, holiday homes etc., which belong to the Respondent Society.
However, the audit report itself claims that there is a net deficit of Rs.
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 19 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
3,64,84,03,714.
nd
21. In the light of the said audit report, this Court had, vide order dated 2
April, 2026 directed the Respondent Society and the then Chairman - Mr.
Amitava Sarkar, to file an affidavit containing the following information:-
“3. Mr. Amitava Sarkar, Chairman of the Society,
who has filed the counter affidavit on behalf of the
Society, shall remain present physically before the
Court on the next date of hearing. He shall produce
before the Court the following information.
(i) Details of all the bank accounts of the Society
along with present bank balances.
(ii) Details of all the immovable assets of the Society
and their current status.
(iii) Details of other movable assets of the Society
including any deposits, mutual funds, debentures,
other investments, any financial instruments etc.
and their value.
(iv) The expenses incurred by the Society in the last
three years shall also be presented before the Court
in the form of a statement.
(iv) Details of the proceedings, which are stated to
be initiated by the Deputy Superintendent of Police,
Directorate of Economic Offence Wing,
Government of West Bengal.
4. The above information shall be produced by way
of an affidavit before the Court on the next date of
hearing.
5. In order to have correct information relating to
the proceedings, which have been initiated against
the Society, the Deputy Superintendent of Police,
Directorate of Economic Offence Wing,
Government of West Bengal is impleaded as
Respondent No.5 in the lead matter i.e., W.P.(C)
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 20 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
5699/2025 titled Mrityunjay Kumar vs. Union of
India & Ors .
22. Pursuant thereto, an affidavit dated 27th April, 2026 has been handed
over to the Court today, which has not yet been filed. The said affidavit is
taken on record. The affidavit discloses the following details of bank balances,
investments, immovable properties etc.:
“ 4. That in compliance of the order passed by this
Hon’ble Court dated 02.04.2026, the particulars of the
immovable assets of the Society, along with their present
status and approximate valuation, are set out
hereinbelow:
SI.
No.
Name of Asset Location Present Status Approx.
Valuation (Rs.)
1 Ispat
Cooperative
Kalikapur,
Operational
(Basic Medical
Facilities Only,
58,04,95,548/-
Sonarpur,
Hospital
Kolkata
Talks of Joint
Venture
Ongoing)
2 Puri Holiday
Swargadwar,
Temporarily
1,66,87,527/-
Home
Puri
Closed
3 Digha Holiday
New Digha Temporarily
4,50,85,064/-
Home
Closed
4 Ispat Co-
Operative
House/Kolkata
12, Charu
Chandra Place
(East), Kolkata
Holiday Home is
7,72,96,901/-
Temporarily
closed
Holiday Home
5 Delhi Holiday
Delhi Closed (requires
3,14,84,450/-
Home
renovation)
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 21 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
a) Ispat Cooperative Hospital: I state that Ispat
Cooperative Hospital, situated at Kalikapur, Sonarpur,
Kolkata - 743330, was established in the year 2014 and
its Indoor Patient Department services commenced on
15.04.2015. I further state that the land and building of
the said hospital are owned by a trust in the name and
style of ISPAT Cooperative Foundation and were
mortgaged to The West Bengal State Co-operative Bank
Ltd., Kolkata Main Branch in March 2024 for securing a
loan of approximately Rs. 45 Crore. I state that the trust,
namely Ispat Cooperative Foundation, was illegally
constituted in the year 2011 by the then Board members,
with Mr. Jyotirmoy Chakraborty acting as Chairman and
settlor of the Trust and through this Trust over Rs. 100
Crores were diverted from the accounts of the Society and
thereby although the cost for the entire project was borne
by the Society, the Trust was illegally and obliquely
placed in charge of the same. I further state that under
the provisions of the MSCS Act, 2002, the Society was not
authorized to establish such a hospital and no approval
was obtained from the Central Registrar of Co-operative
Societies. I further state that the said Trust had availed
financial assistance, which includes a loan from Bajaj
Finance for procurement of a Cath Lab machine, in
respect whereof proceedings have been initiated
including filing of a caveat restricting sale of the hospital,
and that a further sum of approximately Rs. 50 lakh
remains payable to SI Surgical, a medical equipment
supplier in West Bengal. I state that, at present, only
basic medical services are provided at the said Hospital
and talks of Joint Ventures/Partnerships are ongoing
with reputed Hospitals in West Bengal.
b) Puri Holiday Home: I state that the said property
situated at Swargadwar, Puri, is presently non-
operational and has been temporarily closed with effect
from 13.03.2026, as the bank accounts of the Society were
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 22 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
frozen by the Economic Offences Wing, West Bengal,
resulting in acute financial constraints and inability to
run the said Holiday Home.
c) Digha Holiday Home: I state that the said property
situated at New Digha, West Bengal is presently non-
operational and has been temporarily closed as the bank
accounts of the Society were frozen by the Economic
Offences Wing, West Bengal, resulting in acute financial
constraints and inability to run the said Holiday Home.
d) Kolkata Holiday Home / Ispat Cooperative House: I
state that the property known as Ispat Cooperative
House, being the head office of the SAIL Co-operative
Society in Kolkata and also used as a Holiday Home, is
situated at 12, Charu Chandra Place (East), Kolkata -
700033, and was constructed in the year 2009. I further
state that the first two floors of the said premises are
utilized as the registered office of the Society, while the
upper two floors are used for running the Holiday Home.
I state that the said property stands mortgaged to The
West Bengal State Co-operative Bank Ltd. along with the
hospital for securing a loan of Rs. 45 Crore. I further
state that the Holiday Home is presently non-operational
due to paucity of funds, consequent upon freezing of the
Society's bank accounts by the Economic Offences Wing,
West Bengal.
e) Delhi Holiday Home: I say that the said property
located in Delhi has remained non-operational for a
considerable period and requires substantial repairs and
renovation before it can be put to use.
f) I state that the valuations stated hereinabove are based
on the last audited financial statements of the Society i.e.
2023-2024 and are true and correct to the best of my
knowledge and belief as audits for subsequent financial
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 23 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
years were not conducted by the erstwhile Board of
Directors and have yet not been able to be completed in
view of supervening circumstances beyond the control of
the society.
5. That in compliance of the order passed by this Hon'ble
Court dated 02.04.2026, the particulars of the movable
assets of the Society, along with their present status and
approximate valuation, are set out hereinbelow along
with a tabulated compilation of the same:
i) Fixed Deposits:
(a) Fixed Deposit with The West Bengal State Co-
operative Bank Ltd., Kolkata Main Branch amounting to
Rs. 64,00,000/-(Rupees Sixty Four Lakhs only- Face
Value), which has been earmarked as a Reserve Fund by
the West Bengal State Co-operative Bank Ltd.
(b) Fixed Deposit with Bank of Baroda, Charu Market
Branch amounting to Rs. 55,44,000/- (Rupees Fifty Five
Lakh Forty Four Thousand only- face value), out of which
a sum of Rs. 10,81,000/- (Rupees Ten Lakh Eighty One
Thousand Only) is under lien as a bank guarantee in
favour of The West Bengal State Electricity Distribution
Company Ltd. for supply of electricity to Ispat
Cooperative Hospital.
ii) Mutual Fund Investments:
(a) Investment through Eastern Financiaries Securities in
Canara Robeco Large and Mid Cap Fund since April
2020, having a present approximate valuation of Rs.
24,00,000/-(Rupees Twenty Four Lakh Only)
(b) Investment through IndusInd Bank (erstwhile
Reliance Securities) in various mutual funds including
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 24 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
Canara Robeco and Mirae Asset, having an approximate
value of Rs. 5,00,00,000/- (Rupees Five Crore Only)
I further state that Section 64 of the MSCS Act, 2002
prohibits the undertaking of such market investments by
the Society
iii) Equity Investments:
(a) I state that the Society has invested in equity shares
through Prabhudas Lilladher, having an approximate
value of Rs. 65,00,000/-(Rupees Sixty Five Lakhs Only),
including investments in companies such as Ashok
Leyland, Balrampur Chini Mills, BHEL, SAIL, Jindal
Steel and United Spirits.
iv) Other Financial Assets:
(a) Loan to members: I state that the Society has extended
loans to its members and the net figure for the same
stands at approximately Rs. 31,00,00,000 (Rupees Thirty-
One Crore) at this present date. I further state that, being
an employees' co-operative credit society, such loans are
sanctioned only to permanent employees of SAIL/CMO
and employees posted at SAIL/CCSO, Dhanbad;
SAIL/EMD, Kolkata; SAIL/Growth Division, Kulti, as
well as employees of the Society, who are shareholder
members thereof. I state that the loan instalments are
regularly recovered by way of deduction from the salaries
of the member-employees. I further state that such loans
are tenure-based, recoverable from salary, and are not
secured by any collateral or other securities.
(b) Gold Loans: I further state that the Society under the
erstwhile Secretary/Chairman, Mr. Jyotirmoy
Chakraborty had also illegally sanctioned gold loans
which have a present value of approximately Rs.
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 25 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
26,00,000/- (Rupees Twenty Six Lakhs Only) against
pledged gold by its members. I state that certain
irregularities have arisen in respect of custody of the
pledged gold, inasmuch as Mr. Jyotirmoy Chakraborty,
had handed over the keys to one goldsmith namely
Manabendra Karmakar in a wholly illegal and erroneous
transaction, and in this regard an FIR has been lodged at
Charu Market Police Station and a case under Section
175(3) BNSS has also been initiated before the court of
the Learned Chief Judicial Magistrate at Alipore,
Kolkata.
v) I state that it is respectfully submitted that in reference
to the averments made by the Learned Counsel for the
Central Registrar of Co-operative Societies, during the
proceedings dated 02.04.2026 regarding the forensic
audit report dated 25.09.2025 conducted by the Central
Registrar of Co-operative Societies, that the position of
the Society's assets requires proper contextual
appreciation. I state that as per Page No. 104 read with
Content No. viii under the heading "Current Position of
Net Assets" of the said Forensic Audit Report, the assets-
liability position of the Society reflects a net deficit of
approximately Rs. 365 crores. I further state that this
position stands corroborated by the counter affidavit filed
on behalf of the Society, wherein a defalcation of
approximately Rs. 455 crores has been pointed out, and
the report of the Central Registrar also records
substantial financial defalcation. I state that the Society
comprises approximately 12,500 members and the total
deposit exposure is approximately Rs. 430 crores.
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 26 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
6. I state that in compliance with the directions of this
Hon'ble Court, the expenses incurred by the Society for
the last three fiscal years are set out hereinbelow in a
tabulated form:
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 27 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
(a) I state that the aforesaid figures pertaining to the
financial years 2021-2022, 2022-2023, 2023-2024 are
audited and that the figures reflected for the FY 2024-
2025 are unaudited, as the statutory audit for the said
financial year could not be completed owing to the
supervening circumstances beyond the control of the
Society and have been extrapolated and are based on
estimation.
(b) I further state that the figures for the subsequent
financial year 2025-2026 have not been included, as the
audit for the said year has not yet been able to be
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 28 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
undertaken due to several supervening circumstances
beyond the control of the Society and further no
substantial expenditure or financial decision has been
made in the Society during such time in view of the orders
passed by the Hon'ble High Court at Calcutta in W.P. No.
10411 of 2025 in May 2025, as well as by this Hon'ble
Court vide orders dated 11.08.2025 and 22.08.2025,
whereby it has been inter-alia directed that no major
policy or financial decisions shall be undertaken by the
newly elected office bearers of the Respondent No.
4/Society, except routine day-to-day expenses. ”
23. In addition, the affidavit also reveals that relevant proceedings have
been initiated by the Directorate of the Economic Offences, Government of
West Bengal under various provisions and FIRs have also been registered in
respect of the same. The details of the same are as under:
“ I state that in compliance with the directions of this
Hon’ble Court, the particulars of the proceedings
initiated by the Directorate of Economic Offences,
Government of West Bengal, in relation to the affairs
of the Society, are being set out hereinbelow for the
kind consideration of this Hon’ble Court:
i) I state that on 06.02.2026, the Directorate of
Economic Offences, Government of West Bengal,
vide Memo No. 155, issued a communication
referring to six cases registered at Charu Market
Police Station, particulars whereof are set out
hereinbelow:
a. Charu Market P.S. Case No. 05 dated 09.01.2025
under Sections 61(2)/316(2)/316(5)/318(4) of the
Bharatiya Nyaya Sanhita, with Section 3 of the West
Bengal Protection of Interest of Depositors In
Financial Establishments Act, 2013 (Special Case
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 29 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
No. 30/2025);
b. Charu Market P.S. Case No. 06 dated 10.01.2025
under Sections 61(2)/316(2)/316(5) BNS read with
Section 3 of the West Bengal Protection of Interest of
Depositors In Financial Establishments Act, 2013
(Special Case No. 45/2025);
c. Charu Market P.S. Case No. 08 dated 14.01.2025
under Sections 61(2)/316(2)/316(5) BNS read with
Section 3 of the West Bengal Protection of Interest of
Depositors In Financial Establishments Act, 2013
(Special Case No. 49/2025);
d. Charu Market P.S. Case No. 20 dated 05.02.2025
under Sections 61(2)/316(2)/316(5) BNS read with
Section 3 of the West Bengal Protection of Interest of
Depositors In Financial Establishments Act, 2013
(Special Case No. 44/2025);
e. Charu Market P.S. Case No. 21 dated 05.02.2025
under Sections 61(2)/316(2)/316(5) BNS read with
Section 3 of the West Bengal Protection of Interest of
Depositors In Financial Establishments Act, 2013
(Special Case No. 43/2025); and
f. Charu Market P.S. Case No. 54 dated 22.04.2025
under Sections 61(2)/316(2)/316(5)/318(4) BNS read
with Section 3 of the West Bengal Protection of
Interest of Depositors In Financial Establishments
Act, 2013 (Special Case No. 42/2025).
ii) I further state that by way of the aforesaid
communication, the Society was called upon to
furnish information and documents for the purposes
of investigation. I further state that subsequently, on
24.03.2026, the Directorate of Economic Offences,
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W.P.(C) 5699/2025 & connected matters Page 30 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
Government of West Bengal, vide Memo No. 374,
issued a further communication calling upon the
Society to furnish additional documents and
information in connection with the aforesaid cases.
iii) I further state that the Directorate of Economic
Offences carried out seizures in connection with
Charu Market Police Station Case No. 57 dated
26.04.2025 under Sections 61(2), 316(2), 316(5) and
318(4) of the Bharatiya Nyaya Sanhita read with
Section 3 of the WBPIDFE Act, 2013 (Special Case
No. 50/2025), further, seizure were carried out in
connection with Charu Market Police Station Case
No. 05 dated 09.01.2025 under Sections 61(2),
316(2), 316(5) and 318(4) of the Bharatiya Nyaya
Sanhita read with Section 3 of the WBPIDFE Act,
2013 (Special Case No. 30/2025).
iv) I further state that, in or about mid-February
2026, the Directorate of Economic Offences
proceeded to freeze all bank accounts of the Society
across various banks, which has had a substantial
impact on its functioning and day-to-day operations.
v) I further state that, I was informed that the
erstwhile Chairman/Secretary was arrested by the
Directorate of Economic Offences sometime towards
the end of February, 2026. ”
24. It is also stated that the Respondent Society has a membership of 12,520
members and the amount payable to depositors and members is approximately
Rs.430 crores. Allegations have also been made against Mr. Jyotirmoy
Chakraborty who was stated to be the Chairperson of the erstwhile Board of
the Respondent Society.
IV. Analysis
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 31 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
25. The Court has heard the ld. Counsels for the parties and has also
perused the documents placed on record, including the inquiry report of IPAI
and the forensic audit report. It is clear from the record that the Respondent
Society has substantial assets, however, due to financial mismanagement the
liabilities have overshadowed the same. Further, the affidavit of the
Respondent Society dated 27th April, 2026, shows that there is already a
freezing order in respect of all the assets of the Respondent Society, pursuant
to the actions taken by the Directorate of Economic Offences, West Bengal.
26. The Petitioners herein are persons who had put their hard earned
earnings into the Respondent Society in the form of Fixed Deposits and
despite favourable orders of the Cooperative Ombudsman, the amounts have
not been paid back to them till date.
27. It is also possible that there may be other such members who may have
sought foreclosure or who may have deposited amounts with the Respondent
Society. The said persons’ interest would be paramount as they cannot be
punished for no fault of theirs.
Statutory Scheme qua Cooperative Ombudsman
28. One of the peculiar issues highlighted in these proceedings is that the
Petitioners have been struggling to seek implementation of orders passed by
the Cooperative Ombudsman, directing the Respondent Society to repay the
dues with interest. As noted by this Court earlier, there appears to be a lacuna
in the MSCS Act in respect of any provision for implementing the orders
passed by the Cooperative Ombudsman, especially in the event of non-
compliance of the same by Societies.
29. At this stage, it would be necessary to briefly consider the statutory
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 32 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
scheme governing the Cooperative Ombudsman. The Multi-State Co-
Operative Societies (Amendment) Act, 2023, inter alia, introduced Chapter
IXA titled Redressal of Complaints containing Section 85A mandating
appointment of Cooperative Ombudsman by the Central Government. The
Section 85A of the MSCS Act reads as under:
“CHAPTER IXA
REDRESSAL OF COMPLAINTS
85A. Co-operative Ombudsman.— (1) The Central
Government shall appoint, one or more Co-operative
Ombudsman with territorial jurisdiction for inquiring
into the complaints made by any member of the multi-
State co-operative societies regarding their deposits ,
equitable benefits of society’s functioning or any other
issue affecting the individual rights of the concerned
member, in such manner, as may be prescribed.
(2) The Co-operative Ombudsman shall, on receipt of a
complaint, complete the process of inquiry and
adjudicate within a period of three months from the date
of receipt of the complaint and may issue necessary
directions to the society during the course of inquiry and
the society shall be bound to comply with the same
within a period of one month from the date of issuance
of such directions .
(3) The multi-State co-operative society aggrieved by
any directions of the Ombudsman may file an appeal in
such manner as may be prescribed, within a period of
one month before the Central Registrar who shall
decide the appeal within a period of forty-five days and
the decision of the Central Registrar shall be final and
binding:
Provided that the Central Registrar may entertain the
appeal after the expiry of said period of one month, if he
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 33 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
is satisfied that the society was prevented by sufficient
cause from preferring the appeal in time.
(4) The Ombudsman shall submit periodic reports to the
Central Registrar of Co-operative Societies.
(5) The Co-operative Ombudsman while conducting the
inquiry under sub-section (1), shall exercise the same
powers as are vested in a civil court under the Code of
Civil Procedure, 1908, (5 of 1908)––
(a) for summoning and enforcing the attendance of
persons;
(b) examining them on oath;
(c) discovery and production of books of account
and other documents; and
(d) any other matter which may be prescribed.”
30. The Report of the Parliamentary Joint Committee on the Multi-State
Co-Operative Societies (Amendment) Bill, 2022, considered the above
provision and records the rationale for introduction of the same as under:
“ Rationale behind the amendment
2.266 “Strengthening Governance and Transparency
This newly proposed entity would address grievances of
members and ensure financial and operational
discipline through timely, expeditious and impartial
redressal of complaints of the members .”
31. A perusal of the provision in light of the above rationale would show
that the Co-operative Ombudsman was introduced for resolving grievances of
the members specifically regarding the deposits and any issue affecting the
individual rights of the members. The timelines for deciding the complaints
Signature Not Verified
W.P.(C) 5699/2025 & connected matters Page 34 of 43
Signed By:RENUKA
NEGI
Signing Date:25.05.2026
17:23:58
have been clearly mentioned. The inquiry and adjudication of the complaint
is to be completed within three months from the date of receipt of complaints.
Significantly, the necessary directions passed by the Cooperative
Ombudsman are binding on the Society and the same is required to be
complied with within one month from the date of issuance.
32. However, what stands out from a reading of the provision is that the
liberty to challenge an order of the Cooperative Ombudsman has been granted
only to the Society, and not to the members. Under the MSCS Act, there is no
provision for a member to seek enforcement of the orders passed under
Section 85A of the Act. Moreover, no adverse consequence has been
prescribed under the MSCS Act, especially in terms of Section 108 which
specifies offences and penalties, in the event the Society either fails to
implement the order under Section 85A within one month, or where the
Society blatantly refuses to comply with the same.
33. As is the unfortunate situation in the present case, despite favourable
orders directing the Respondent Society to pay the dues to the members, not
only has the Respondent Society not complied with the same, but has not even
responded to the same for a significant period. As an illustration, the order
dated 17th February, 2025, extracted hereinabove, passed by the Cooperative
Ombudsman in respect of few of the Petitioners, has still not been given effect
after over a year.
34. In the opinion of this Court, orders passed by the Cooperative
Ombudsman under Section 85A of the Act become mere `paper orders’ as the
provisions lack the teeth to enforce the same. The binding nature of the orders
of the Cooperative Ombudsman qua the Society is absolutely nullified by the
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absence of any adverse consequence flowing from non-compliance.
35. This being the position, the Central Registrar would have to proactively
take onus of resolving such adverse situations, considering that under Section
85A (4) the Cooperative Ombudsman has to submit periodic reports to the
Central Registrar. The Central Registrar cannot claim ignorance of non-
compliance of orders passed under Section 85A of the MSCS Act.
Winding Up of the Respondent Society
36. The Court has heard this batch of petitions on several dates and it has
noted the Petitioners’ anguish over being denied their hard earned money in
time of dire need. The Petitioners cannot be punished in such a manner for no
fault of their own, due to a lacuna in the law. Under the MSCS Act, the Central
Registrar is fully empowered to take steps in terms of Chapter X of the MSCS
Act to wind-up the Respondent Society and liquidate its assets.
37. In fact the Central Registrar has already issued a show cause notice
dated 28th November, 2025 to the Respondent Society, for initiating winding
up proceedings, in light of the inquiry report submitted by IPAI under Section
78 of the MSCS Act as also the forensic audit conducted pursuant to orders in
this batch. The relevant conclusion of the said notice reads as under:
“11. Perusal of inquiry report and forensic audit report
demonstrates financial mismanagement, violation of
statutory provisions, failure of fiduciary duties and
fraudulent transactions. Based on these findings, I am of
the opinion that the Society is not functioning as per the
provisions of MSCS Act, 2002, Rules framed thereunder
and has seized to function in accordance with the
Cooperative Principles .
12. Therefore, after careful consideration of the facts
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and inter alia on the grounds mentioned above as well as
the forensic audit report, it has been decided to initiate
winding up proceedings of the Society under the
provisions of the MSCS Act, 2002 and Rules framed
thereunder. In case of any objection, the same may be
brought to the Notice of this authority within 15 days from
the date of uploading of this Notice on the official website
i.e., crcs.gov.in failing which it will be presumed that the
Society has nothing to say and further action would be
initiated for winding up of the Society under the
provisions of the MSCS Act, 2002 and rules made
thereunder.”
38. However, the present status of the winding up proceedings is not clear.
In terms of Section 86(1) of the MSCS Act after considering an inquiry under
Section 78 the Central Registrar is empowered to pass an order for winding
up the Society after giving a reasonable opportunity of making its
representation. The show cause notice had been issued on 28th November,
2025, providing for 15 days time to respond to the Respondent Society. No
response has been received to the same.
39. In view of the same it would be necessary to secure the interests of the
Petitioners herein. In the opinion of the Court, the Central Registrar ought to
pass an order under Section 86 for winding up and appoint a Liquidator under
Section 89 of the MSCS Act.
Procedure Qua Winding Up and Priority of Claims
40. At this stage it would apposite to refer to the decision of the Supreme
Court in Writers & Publishers (P) Ltd. v. Super Bazar Official Liquidator,
(2021) 13 SCC 279 . In the said decision the Supreme Court has had the
occasion to consider the statutory scheme of winding up under the MSCS Act,
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as also the priority of claims before the liquidator. The relevant extracts of the
decision of the Supreme Court are extracted here:
“Statutory scheme applicable to Super Bazar
45. Chapter X of the Multi-State Cooperative Societies
Act, 2002 deals with the winding up of multi-State
cooperative societies. Under sub-section (1) of Section
86, the Central Registrar is empowered to direct the
winding up of a multi-State cooperative society after an
audit, special audit or an inquiry or, as the case may be,
or an inspection under Sections 70, 77, 78 and 79
respectively. Sub-section 2(b) empowers the Central
Registrar of his own motion to direct the winding up of
a multi-State cooperative society which has ceased to
function in accordance with cooperative principles.
Section 89 provides for the appointment of a liquidator
while Section 90 provides for the powers of the
liquidator. Under Section 90(1), all the assets of a
multi-State cooperative society in respect of which an
order of winding up has been passed, vest in the
liquidator from the date on which the order takes effect.
The liquidator is entrusted with the power to realise
monies from the assets. Under clause (b) of sub-section
(2) of Section 90, the liquidator is empowered to
determine the contribution to be made or remaining to
be made by the members or past members or by officers
or former officers to the assets of the society. Under
clause (c) of sub-section (2) of Section 90, the
liquidator is empowered to investigate all claims
against the society and subject to the other provisions
of the statute, to decide questions of priority between
claimants. Under clause (d), the liquidator is
empowered to pay claims against the society, including
interest up to the date of winding up according to their
respective priorities in full or rateably, as the assets of
the society may permit. The surplus, if any that
remains, has to be applied in the payment of interest
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from the date of the order of winding up .
46. Rule 28 of the Multi-State Cooperative Societies
Rules, 2002 lays down the procedure to be adopted by
the liquidator. Rule 29 provides for the order of priority
in accordance with which the assets of a multi-State
cooperative society shall be applied in the payment of
liabilities. Rule 29 provides as follows:
“ 29. Application of assets of the multi-State
cooperative society .—The assets of the multi-
State cooperative society shall be applied in
order of priority as given below for payment of
the liabilities:
(1) Pro rata payment of all outside liabilities.
(2) Pro rata repayment of loans and deposits of
members .
(3) Pro rata refund of share capital.
(4) Pro rata payment of dividend on the share at
the rate not exceeding 6.25% per annum for the
period of liquidation.”
[...]
49. The above view which we have taken of the
interpretation of the order dated 29-3-2016 [Super
Bazar Karamchari Dalit Sangh v. Union of India,
(2019) 12 SCC 633] must also be juxtaposed in light of
the statutory provisions which govern an order of
winding up under Section 89 and other cognate
provisions of the Multi-State Cooperative Societies Act,
2002. The statute lays down the manner in which the
liquidator has to function upon taking charge. The
Multi-State Cooperative Societies Rules, 2002, in
particular, indicate the procedure to be adopted by the
liquidator and the manner in which the assets are to
be applied. The order of priority is spelt out. A pro rata
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refund of share capital appears third in the order of
priority. The last in the order of priorities is a pro rata
payment of dividend on share capital at a rate not
exceeding 6.25% for the period of liquidation. To allow
the claim of WPL to be refunded its entire investment
amount, the major part of which took place through the
subscription of share capital, would essentially place it
outside the purview of the winding-up proceedings.
Accepting the claim would enable it to take away
moneys overriding the order of priorities laid down by
the Multi-State Cooperative Societies Rules, 2002.
[...]
55. The liquidator shall evaluate the claim as
determined by the verification report by the CAG in
terms of the priorities for the payment of claims as
envisaged in the Multi-State Cooperative Societies Act,
2002 and the associated Rules. The liquidator is also
directed to treat the amount outstanding to the EPFO in
terms of the first priority which is created by the
provisions of Section 11(2) of the EPF Act. The
liquidator shall also consider the claim of the Union
Government. The liquidator is directed to consider the
auditor and the CAG's observations with respect to the
14,149 new members inducted during WPL's
management not being genuine. The liquidator shall, in
the process of winding up, be at liberty to consider all
other claims received and to make a determination in
accordance with law. In the event any further judicial
determinations are required to be made, the parties
shall be at liberty to approach the High Court of Delhi
and we request the Chief Justice of the High Court to
constitute an appropriate Bench to hear any matters
arising out of the liquidation of Super Bazar.”
41. It is clear from the above, that as per Rule 29 of the Multi-State
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Cooperative Societies Rules, 2002, (hereinafter “ MSCS Rules ”) the deposits
made by the Petitioners and other members would be given significant
priority.
V. Directions
42. Considering the above discussion, in exercise of its extraordinary writ
jurisdiction, this Court deems it fit and expedient to pass the following
directions:
th
(a) The Central Registrar shall pass an order by 15 June 2026, under
Section 86 for winding up of the Respondent Society and appoint a
Liquidator under Section 89 of the MSCS Act. The Liquidator shall
take charge of all the assets of the Respondent Society, including
bank accounts, moveable and immoveable properties, investments,
fixed deposits, mutual funds, etc in terms of the MSCS Act and
MSCS Rules. The details of the same have been extracted above as
per the affidavit handed over by the Respondent Society today.
(b) Both the present and past members of the Board of the Respondent
Society, including the Chairman and Secretary, shall cooperate
with the Liquidator and assist him/her in whatever capacity
necessary for securing the assets of the Respondent Society and
hand over all the records of the Society.
(c) All banks and other final institutions, or any other individual in
charge/having control of the assets of the Respondent Society shall
hand over the charge/control over the same to the Liquidator.
(d) The Liquidator is also free to make inquiries and if there are any
other moveable or immoveable assets other than those disclosed in
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the affidavit dated 27th April, 2026 by the Respondent Society, the
same shall also be taken over by the said Liquidator.
(e) Upon the Liquidator taking over all the assets, an account shall be
created in a nationalized bank by the Central Registrar. All amounts
lying in various bank accounts, investments, deposits, mutual funds
th
etc., shall be transferred to the said Bank Account by 15 July 2026.
The amounts received shall be retained in fixed deposits.
(f) The claims of the Petitioners and any other persons, who have been
awaiting for their amounts since several months after the orders of
the Ombudsman, shall be honoured in a time bound manner and in
th
any case, an endeavour shall be made to pay the said claims by 15
October 2026.
(h) In cases where there is no order passed by the cooperative
Ombudsman, the Liquidator shall examine the claims and decide
the same in accordance with law. After deciding the claims, the
amounts shall be paid expeditiously to the said depositors as well.
(i) The said Liquidator shall be entitled exercise all powers under
Section 90 of the MSCS Act in order to safeguard the interest of
the Respondent Society and its members.
43. It is clarified that the above directions shall not, in any manner, come
in the way of any criminal proceedings that may have been initiated or being
pursued in West Bengal by any police authorities or the Directorate of
Economic Offences, under any of the Central or the State Statutes. All the
criminal proceedings and any other proceedings against the previous
Management of the Society shall proceed as per law.
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44. The Petitions are disposed of in the above terms. Pending applications,
if any, are also disposed of.
PRATHIBA M. SINGH
JUDGE
MADHU JAIN
JUDGE
MAY 19, 2026/b/msh
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