Cooperative societies may provide security services where bye-laws permit and RWAs lack necessary resources.

The Anand Niketan Cooperative Housing Society (“Society”), registered in 1956, has historically provided “Watch and Ward” (security) services funded by member contributions.

In 2016, following complaints by certain residents alleging financial irregularities, the Registrar of Co-operative Societies (“RCS”) issued a Show Cause Notice and appointed an Inquiry Officer.

The Society challenged these actions, leading to a revision petition before the Financial Commissioner which remained pending without an order for nearly two years.

Consequently, the Society filed W.P.(C) 927/2018 to quash the order dated October 30, 2017, which appointed a new Inquiry Officer to investigate security services, club accounts, and bye-law violations.

Conversely, resident-petitioners filed W.P.(C) 7396/2021 seeking to wind up the Society’s Managing Committee and hold fresh elections due to alleged audit malpractices.

During proceedings, the Resident Welfare Association (“ANRWA”) submitted a resolution stating it lacked the infrastructure and funds to manage colony security and requested the Society to continue its services.

1. Whether the order dated October 30, 2017, appointing an Inquiry Officer to investigate the Society’s "Watch and Ward" services and other management aspects, is legally sustainable in light of the RWA’s expressed inability to provide such services?

2. Whether the Society is authorized under its Bye-laws and the Delhi Co-operative Societies Act to collect charges for "Watch and Ward" services from residents and tenants?

3. Whether the complaints of a minority of members warrant the dissolution of the Managing Committee or the disruption of existing security arrangements?

The Court applied the Delhi Co-operative Societies Act, 2003, specifically Section 61 regarding the Registrar’s power to order an inquiry.

It also relied on the Society’s Bye-laws, specifically Bye-law 3(iv) (welfare activities) and Bye-law 10(e), which explicitly permit the creation of "Watch and Ward" and other project funds for the benefit of residents.

Furthermore, the Court referenced the Delhi Co-operative Societies Rules, 2007, regarding the necessity of appointing independent auditors.

The Court observed that the Society's Bye-laws expressly permit the mobilization of resources for "Watch and Ward" services.

It noted that the ANRWA, through its resolution dated May 20, 2025, admitted it was not in a position to handle security due to a lack of infrastructure and funds, and specifically requested the Society to continue this role.

The Court reasoned that directing the ANRWA to take over such services would be "practically unimplementable".

It further found that the ongoing inquiry into these services, initiated on the complaints of a few members, acted as an impediment to the Society's functioning and could cause serious prejudice to the majority of residents who rely on the existing security arrangement.

Regarding financial oversight, the Court determined that while the inquiry was unnecessary, the RCS maintains a statutory duty to supervise audit reports and ensure that auditors remain independent as per the 2007 Rules.

The Court held that the Society shall continue to manage "Watch and Ward" services in collaboration with the RWA.

It directed the RCS to monitor audit reports and supervise the Society’s functioning according to law, ensuring auditor independence under the Delhi Co-operative Societies Rules, 2007.

Additionally, the Court ordered the RWA to reinstate Petitioner Mr. W.S. Chona as a full member without further payment, conditional upon his maintenance of peace and harmony within the colony.