Cooperative society may provide security services if authorized by bye-laws and RWA lacks necessary infrastructure.

In brief

The question

1. Whether the appointment of an Inquiry Officer to investigate "Watch and Ward" services and Society accounts was valid given the RWA’s inability to provide such services and the Society’s Bye-laws

The court held

The Court allowed W.P.(C) 927/2018 and disposed of W.P.(C) 7396/2021. It quashed the inquiry order dated October 30, 2017, and set aside the recommendations of the inquiry officer

It also directed

The Court held that the Society shall continue managing "Watch and Ward" services in collaboration with the ANRWA

The RCS was directed to supervise the Society’s functioning and audit reports in accordance with law, but prohibited from taking action based on the 2017 inquiry report

Additionally, the Court ordered the RWA to reinstate the membership of resident Mr. W.S. Chona as a full member without further payment, conditional upon maintaining peace and harmony

01Facts

The Anand Niketan Cooperative Housing Society Ltd. ("Society"), registered in 1956, provides "Watch and Ward" (security) services to its members, funded through subscriptions approved in various Annual General Meetings (AGMs) since 1993

pp. 2-3

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

p. 3, para 5

The Society's challenge to these proceedings led to a revision before the Financial Commissioner, which remained pending for years without an order

p. 4, para 6

Despite this, a subsequent order dated October 30, 2017, appointed a new Inquiry Officer to investigate security services, club accounts, and bye-law violations

p. 5, para 8

Cross-petitions were filed: the Society sought to quash the inquiry order

p. 2, para 3

residents sought the winding up of the Managing Committee and fresh elections

p. 2, para 4

During proceedings, the Anand Niketan Residents Welfare Association (ANRWA) passed a resolution in 2025 stating it lacked the infrastructure and funds to manage security and requested the Society to continue providing those services

pp. 9-10, para 21

02Issues

i.1. Whether the appointment of an Inquiry Officer to investigate "Watch and Ward" services and Society accounts was valid given the RWA’s inability to provide such services and the Society’s Bye-laws

pp. 5, 9-10

ii.2. Whether the "Watch and Ward" charges constitute valid Society dues under the regulatory framework

p. 7, para 12

iii.3. Whether the Managing Committee should be wound up based on the complaints of irregularities

p. 2, 5

03Law Applied

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

p. 8, para 15

It interpreted the Society’s Bye-laws, specifically Bye-law 3(iv) (welfare activities) and Bye-law 10(e) (maintenance of "Watch and Ward" funds)

p. 6, para 11

The Court also relied on the Delhi Co-operative Societies Rules, 2007 regarding the requirement for independent auditors

p. 11, para 26

Provisions in the judgment · 3

Bombay Co-operative Societies Act, 1925 Section 61Section 112Section 116

04Reasoning

The Court observed that the Society’s Bye-laws explicitly permit the collection of funds for "Watch and Ward" services and welfare activities

p. 6, para 11

It noted that the RCS had clarified as early as 2000 that such charges constitute "Society’s dues"

p. 7, para 12

The Court emphasized that the ANRWA had formally resolved its inability to handle colony security due to financial and infrastructural constraints, requesting the Society to continue its services

p. 10, para 21

The Court reasoned that the impugned inquiry order was practically unimplementable and would cause "serious prejudice" to residents by disturbing a long-standing arrangement supported by the majority and the RWA

pp. 10-11, para 23

It held that the complaints of a few members should not disrupt the functioning of the entire colony

p. 10, para 23

However, the Court mandated that the RCS must continue to monitor audit reports to ensure transparency and that the Society must employ independent auditors as per the 2007 Rules

pp. 11, para 25-26

05Holding

The Court allowed W.P.(C) 927/2018 and disposed of W.P.(C) 7396/2021. It quashed the inquiry order dated October 30, 2017, and set aside the recommendations of the inquiry officer

pp. 11, para 23-27

The Court held that the Society shall continue managing "Watch and Ward" services in collaboration with the ANRWA

p. 11, para 24

The RCS was directed to supervise the Society’s functioning and audit reports in accordance with law, but prohibited from taking action based on the 2017 inquiry report

p. 11, para 25, 27

Additionally, the Court ordered the RWA to reinstate the membership of resident Mr. W.S. Chona as a full member without further payment, conditional upon maintaining peace and harmony

p. 11, para 28

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