Functus Officio of Authorised Officers under Section 88 of the Maharashtra Co‑operative Societies Act: Commentary on Nainesh Sanghvi & Ors v. State of Maharashtra & Ors

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1. Introduction

The judgment in Nainesh Sanghvi and Others v. State of Maharashtra and Others (Bombay High Court, 28 November 2025, per Amit Borkar J.) establishes a clear and important rule about the cessation of authority of an Authorised Officer appointed under Section 88 of the Maharashtra Co‑operative Societies Act, 1960 (“MCS Act”).

The core question before the Court was:

Whether an Authorised Officer, who has been replaced by another Authorised Officer after the enquiry under Section 88 has been closed for preparation of the report, can nonetheless validly submit a report merely because he was unaware of the order of his replacement.

The Court’s answer is unequivocal: no. Once the Registrar replaces an Authorised Officer, the earlier officer becomes functus officio — his statutory authority ends, and any subsequent report submitted by him is void, irrespective of his knowledge or ignorance of the replacement order. A recovery certificate under Section 98 founded on such a void report is equally unsustainable.

In addition, the Court reiterates and applies its earlier ruling that an enquiry report under Section 83 is not a “decision” and is not, by itself, an order determining rights or imposing liability. It is merely material for further statutory action.

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2. Factual Background and Procedural History

2.1 Parties

• Petitioners: Former or current members of the Managing Committee of Amit Darshan Co‑operative Housing Society Ltd. (Respondent No.4), mostly residents/office bearers, including chartered accountants, businessmen and retired persons.
• Respondent No.1–3: The State of Maharashtra and co-operative department authorities – notably the Divisional Joint Registrar (Respondent No.2) and Deputy Registrar, Co-operative Societies (Respondent No.3).
• Respondent No.4: Amit Darshan Co‑operative Housing Society Ltd., the concerned housing society.
• Respondent No.5: Enquiry Officer appointed under Section 83 of the MCS Act.
• Respondent No.6: Authorised Officer appointed under Section 88 of the MCS Act to conduct a liability enquiry.

2.2 Chronology of Events

1. Section 83 Enquiry (Initial fact-finding)
   • 30 October 2018: Deputy Registrar (R3) initiates suo motu enquiry under Section 83(1) into the affairs of the Society for the years 2012–2016, appointing Respondent No.5 as Enquiry Officer.
   • 1 December 2018: Scope of the Section 83 enquiry extended up to 30 October 2018.
   • 15 February 2019: Respondent No.5 issues notice to Managing Committee members seeking their response.
   • 6 March 2019: Society files its reply.
   • 1 August 2019: Enquiry Officer submits his Section 83(1) report, noting alleged financial losses and legal lapses.
2. Section 88 Enquiry (Fixing liability)
   • 7 October 2019: Based on the Section 83 report, the Deputy Registrar appoints Respondent No.6 as Authorised Officer under Section 88 to conduct an enquiry to fix responsibility for the alleged losses.
   • Respondent No.6 issues notices to concerned Managing Committee members; replies are filed.
   • 31 May 2021: Charges are framed under Rule 72(3) of the Maharashtra Co-operative Societies Rules, 1961.
   • 20 September 2021: Some petitioners submit their replies to the charges.
3. Replacement of Authorised Officer
   • 14 February 2022: Due to delay in completing the enquiry, the Deputy Registrar passes an order replacing Respondent No.6 and appointing Mr. Sunil Khochre as the new Authorised Officer under Section 88.
4. Report by the Replaced Officer
   • 28 February 2022: Despite having been replaced, Respondent No.6 proceeds to prepare a report under Section 88.
   • 1 March 2022: He submits this report to the Deputy Registrar.
5. Recovery Certificate under Section 98
   • 13 October 2022: Relying on the report submitted by Respondent No.6, Respondent No.3 issues a recovery certificate under Section 98 of the MCS Act, holding the Managing Committee members (including the petitioners) liable for ₹49,45,673.
6. Revisional/Appeal Proceedings
   • The petitioners file:
     • Revision Application No.35 of 2023 challenging the orders under Section 83 (30 October 2018, 1 December 2018) and the Section 83 report (1 August 2019).
     • Revision Application No.36 of 2023 challenging the Section 98 recovery certificate (13 October 2022).
     • Appeal No.27 of 2023 challenging the Section 88 report dated 28 February/1 March 2022 (with a delay condonation application).
   • 29 January 2024: Divisional Joint Registrar (Respondent No.2) dismisses Revision Applications 35 & 36 of 2023 and Appeal 27 of 2023, allegedly without adequate hearing.
7. Writ Petitions before the High Court
   • Multiple writ petitions, including:
     • Writ Petition No.3531 of 2024
     • Writ Petition (St.) No.11749 of 2024
     • Writ Petition No.15827 of 2024
   • The petitioners challenge, inter alia, the legality of:
     • The Section 88 report submitted by a replaced officer.
     • The Section 98 recovery certificate founded on that report.
     • The revisional and appellate orders dated 29 January 2024.

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3. Issues Before the Court

The Court identifies and addresses primarily one pivotal question (para 11):

Whether an Authorised Officer, who has been replaced by another Authorised Officer after the Section 88 enquiry has been closed for report, can still submit a valid report merely on the ground that he was unaware of his replacement.

Connected to this core issue, the following sub-issues arise:

• Whether the report dated 28 February/1 March 2022 prepared and submitted by Respondent No.6 under Section 88 is void due to lack of authority.
• Whether the Section 98 recovery certificate dated 13 October 2022, founded entirely on that report, is legally sustainable.
• What is the legal effect of the order dated 14 February 2022 appointing a new Authorised Officer: does the replaced officer become functus officio immediately, or only upon knowledge/communication?
• Whether the analogy drawn from Section 29A of the Arbitration and Conciliation Act, 1996 (relating to time limits for arbitral awards) is applicable.
• What is the scope of challenge to a Section 83 report in light of the Bombay High Court’s judgment in Sayajirao Narayan Takwane v. Divisional Joint Registrar, Co-operative Societies, 2025 SCC OnLine Bom 214.

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4. Summary of the Judgment

4.1 Core Holding on Authority of the Authorised Officer

The Court holds that:

• An Authorised Officer under Section 88 derives authority solely from the appointment order of the Registrar.
• When the Registrar passes an order replacing that officer (14 February 2022), the earlier officer becomes functus officio — his authority ceases immediately.
• The earlier officer cannot validly prepare or submit any report under Section 88 after the replacement order, even if he claims ignorance of that order.
• Any report prepared and submitted thereafter (here, on 28 February/1 March 2022) is without jurisdiction, void, and incapable of forming the basis of further statutory action.

4.2 Consequences for the Recovery Certificate

Since the Section 98 recovery certificate dated 13 October 2022 was based entirely on the invalid Section 88 report, the Court holds:

• The recovery certificate is unsustainable in law and is quashed and set aside (para 29(b)).

4.3 Principles Formulated by the Court

At para 26, the Court crystallizes the law in a set of principles:

1. Commencement and cessation of authority: The authority of an officer under Section 88 begins with appointment and ends with replacement. Any report prepared after replacement is void.
2. Effectiveness of administrative orders: Administrative orders take effect when issued by the competent authority; personal knowledge of the officer is irrelevant.
3. Invalid foundation vitiates consequential orders: Subsequent proceedings based on an invalid report cannot stand.
4. Duty of revisional authority: The Revisional Authority must examine whether the foundation of a recovery certificate is valid; failure to do so amounts to a denial of justice.
5. Individualised assessment of liability: Liability under Section 88 must be fixed only after proper appraisal of evidence relating to each member’s role.

4.4 Position on Section 83 Reports and Writ Petition No.15827/2024

Relying on its earlier judgment in Sayajirao Narayan Takwane, the Court reiterates that:

• A Section 83 report is only a fact-finding document; it is not a decision, does not itself determine rights or impose liability, and hence is not, in itself, an “order” capable of challenge (para 27).
• Therefore, Writ Petition No.15827 of 2024, which challenged the order passed in revision concerning the Section 83 report, does not survive; liberty is, however, reserved to the petitioner to challenge the report in appropriate legal proceedings (para 28).

4.5 Final Operative Directions (Para 29)

The Court orders:

1. The report dated 28 February 2022 and its submission on 1 March 2022 by Respondent No.6 under Section 88 are declared illegal and without authority.
2. The recovery certificate dated 13 October 2022 under Section 98 is quashed and set aside.
3. The orders dated 29 January 2024 in Revision Applications No.36 of 2023 and Appeal No.27 of 2023 are quashed and set aside.
4. The matter is remitted to the competent authority for a fresh hearing under Section 88, to be conducted by the newly appointed Authorised Officer (or another duly appointed officer), who must:
   • Give due opportunity of oral hearing to all parties; and
   • Complete the proceedings on the basis of the material already on record within the prescribed time.
5. All contentions on merits are kept open.
6. No order as to costs.

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5. Detailed Analysis

5.1 Statutory Context: Sections 83, 88, 98 and Rule 72

5.1.1 Section 83 – Enquiry into Working of Societies

Section 83 empowers the Registrar to hold an enquiry into the constitution, working and financial condition of a co-operative society. It is primarily:

• Fact-finding in nature.
• Conducted through an Enquiry Officer (here, Respondent No.5) who examines records and files a report.

As clarified in Sayajirao Narayan Takwane (reiterated at para 27 of this judgment), such a report:

• Is not an adjudication of rights.
• Does not impose liability.
• Is not an “order” amenable to appeal or revision in isolation.

5.1.2 Section 88 – Inquiry into Responsibility for Loss (Fixing Liability)

Section 88 is the liability-fixing provision. Broadly:

• The Registrar may conduct an enquiry or authorise any person (Authorised Officer) to hold an enquiry into the conduct of individuals responsible for the management of a society.
• If the enquiry discloses that any person is guilty of misappropriation, fraud, breach of trust, or other misconduct causing loss to the society, the Registrar may direct such person to repay or restore the money or property with interest.

Crucially, the first proviso to Section 88(1) prescribes that:

• The enquiry is to be completed within one year from the date of the authorisation.
• Subsequent provisos allow for extensions, but the statutory design reflects a strong legislative emphasis on timeliness (para 13).

5.1.3 Rule 72(3) – Framing of Charges

Rule 72(3) of the Maharashtra Co-operative Societies Rules prescribes the procedure for framing charges against delinquent members/officers in such enquiries. In this case:

• Respondent No.6 framed charges under Rule 72(3) on 31 May 2021.
• The petitioners replied on 20 September 2021.

After this stage, the inquiry was substantially advanced and had been closed for report-writing, making the subsequent replacement of the officer particularly significant.

5.1.4 Section 98 – Recovery as Arrears of Land Revenue

Section 98 enables the issuance of a recovery certificate for amounts determined as payable to the society, permitting recovery as if it were an arrear of land revenue. In this case:

• Respondent No.3 issued a recovery certificate for ₹49,45,673 on 13 October 2022 entirely on the strength of the Section 88 report prepared by Respondent No.6, who had already been replaced.

5.2 Court’s Legal Reasoning

5.2.1 Source and Cessation of Authority

The Court emphasises a foundational administrative law principle (paras 12–16):

• An officer acting under a statute does not act in his personal capacity. His power is purely statutory.
• His authority:
  • Commences when the statute (or competent authority under the statute) grants it (here, the appointment order under Section 88).
  • Ends the moment that authority is withdrawn or replaced (here, the order of 14 February 2022 appointing a new Authorised Officer).
• Once withdrawn, the officer becomes functus officio and cannot lawfully continue to act in that capacity.

The Court deploys the Latin maxim qui dat potest auferre (he who gives may take away) to explain that:

• The Registrar’s power to authorise an officer under Section 88 necessarily includes the power to withdraw or replace that authorisation (para 14).
• The act of replacement is not a mere administrative formality; it has substantive legal consequences — it terminates the authority of the earlier officer and vests authority in the successor.

5.2.2 Application of the Doctrine of Functus Officio

The doctrine of functus officio (para 17) means that once an official has fully performed his function under a given power, he cannot act again in that capacity for that matter, unless expressly empowered by law.

Applied here:

• The Section 88 enquiry had already been closed for report after hearing the delinquents (para 17).
• The Registrar then replaced Respondent No.6 with a new Authorised Officer (14 February 2022).
• At that moment, Respondent No.6 became functus officio with respect to the Section 88 enquiry.
• He could not legally:
  • Prepare the report on 28 February 2022, or
  • Submit it on 1 March 2022.

The Court accepts that one might argue the officer who heard the parties is “best placed” to write the report, but stresses:

• The Legislature has entrusted the power of authorisation and replacement to the Registrar.
• Court interference in such replacement orders should be minimal, unless there is manifest illegality or violation of natural justice (para 18).

This underlines the Court’s deference to the statutory scheme and the primacy of the appointing authority’s order over administrative convenience.

5.2.3 The Maxim Cessante Ratione Legis Cessat Ipsa Lex

The Court invokes the maxim cessante ratione legis cessat ipsa lex (when the reason of the law ceases, the law itself ceases) (para 15).

Applied here:

• The “reason” for the Authorised Officer’s power is the Registrar’s appointment order under Section 88.
• Once the Registrar replaces him, that foundational reason ceases.
• Consequently, the authority itself must also cease.
• Any act done thereafter, such as submitting a report, “loses legal force” (para 15).

This consolidates the conclusion that statutory authority cannot be divorced from the continuing existence of the legal basis that created it.

5.2.4 Irrelevance of the Officer’s Knowledge

At the heart of the respondents’ defence was the claim that Respondent No.6 had no knowledge of the replacement order when he submitted his report. They contended that:

• The order was not served on him.
• He purportedly continued in good faith to complete the enquiry.

The Court rejects this argument in categorical terms (paras 19–21, 24):

• Ignorance of an order cannot revive a power that has already come to an end (para 19).
• Acts done without authority do not bind the appointing authority, even if done in good faith or in ignorance (para 19).
• Allowing validity to depend on the officer’s alleged knowledge would inject uncertainty and undermine the predictability of statutory proceedings (para 20).
• The critical factor is the existence of the replacement order, not its communication to the officer (para 24).

In short, the Court makes a bright-line rule:

The existence of the Registrar’s replacement order, not the officer’s knowledge of it, determines the cessation of power.

5.2.5 Role of the Successor Officer

The Court clarifies the procedural implications for the newly appointed Authorised Officer (para 22):

• The successor need not start the enquiry afresh.
• He takes over the existing record, including:
  • Evidence,
  • Documents,
  • Replies,
  • Charges framed by the predecessor.
• He must:
  • Grant a further oral hearing, if necessary; and
  • Apply his own mind to the material on record.
• The final report must, however, be prepared and submitted only by the officer who holds valid authority on the date of submission (para 22).

Thus, the Court balances:

• The need for continuity and efficiency, with
• The imperative that the ultimate quasi-judicial determination flows from a person who is legally authorised at that time.

5.2.6 Consequences for the Section 98 Recovery Certificate

Once the Court holds the Section 88 report invalid (para 23), it characterises the Section 98 certificate as a structure built on a defective foundation:

• A recovery certificate that is entirely founded on a void report under Section 88 cannot stand (paras 23, 26(iii)).
• Accordingly, it is quashed and set aside (para 29(b)).

5.2.7 Duty of the Revisional Authority

The Court is critical of the Revisional Authority’s failure to:

• Examine the validity of the Section 88 report as the foundation of the recovery certificate (para 26(iv)).
• Address the fundamental issue of the Authorised Officer’s lack of jurisdiction at the time of report submission.

By merely upholding the Section 98 certificate and the Section 88 report without addressing their legal basis, the Revisional Authority committed a “denial of justice” (para 26(iv)).

5.3 Precedents and Authorities Considered

5.3.1 Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., 2024 SCC OnLine SC 2494

Respondents relied on this Supreme Court judgment, which interpreted Section 29A of the Arbitration and Conciliation Act, 1996 (relating to the time limit for arbitral awards). It was argued (para 9) that:

• Under Section 29A(4)–(5), arbitral proceedings do not automatically terminate due to delay.
• By analogy, delay or procedural lapses in the Section 88 enquiry should not automatically nullify the enquiry or the officer’s authority.

The High Court firmly rejects this analogy (para 25):

• The statutory scheme under Section 88 of the MCS Act is materially different from that under Section 29A of the Arbitration Act.
• In arbitration, the proceedings may continue unless terminated by a specific order; Section 29A provides a mechanism for extension of the arbitrator’s mandate.
• By contrast, under Section 88:
  • The Authorised Officer’s authority is entirely creature of the Registrar’s order.
  • Once the Registrar withdraws or replaces that officer, the source of authority is extinguished.

Thus, Rohan Builders is distinguished as operating within a dramatically different statutory framework and does not assist the Respondents.

5.3.2 State Of Punjab v. Amar Singh Harika, AIR 1966 SC 1313

The respondents cited Amar Singh Harika to argue that an order that is not communicated/served to the affected person does not operate against him (para 9).

The Bombay High Court:

• Does not accept the extension of this principle to the present context (paras 19–21, 24).
• Draws a clear distinction between:
  • Cases involving civil consequences to the officer (e.g., dismissal from service), where fairness may require communication before the order takes effect vis-à-vis the person affected; and
  • Cases like the present, where the question is the continuing authority of an officer to act on behalf of the State/statutory body.

Here, the Court holds that:

• The existence of the replacement order by the competent authority – not its communication to the replaced officer – determines the cessation of statutory authority (para 24).

5.3.3 Sayajirao Narayan Takwane v. Divisional Joint Registrar, Co-operative Societies, 2025 SCC OnLine Bom 214

This earlier judgment of the Bombay High Court is expressly followed (paras 27–28). The Court reiterates:

• A report under Section 83:
  • Is not a “decision”.
  • Does not determine rights or impose liabilities.
  • Is therefore not an “order” capable of being independently challenged.

Application to the present case:

• Writ Petition No.15827 of 2024, which essentially attacked the revisional order concerning the Section 83 report, was held not to survive (para 28).
• However, the Court preserves the petitioner’s ability to challenge the Section 83 report in appropriate legal proceedings – typically, by contesting any consequential action (e.g., Section 88 orders, Section 98 certificates) that relies on the report.

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6. Complex Concepts Simplified

6.1 Functus Officio

This Latin expression literally means “having performed his office.” In law, it refers to a situation where a decision-maker or officer has exhausted his mandate in relation to a particular matter, and therefore cannot re-open or re‑act upon it unless a statute explicitly permits.

In this case, once:

• The enquiry was closed for report; and
• The Registrar replaced Respondent No.6 with a new Authorised Officer,

Respondent No.6 became functus officio in relation to the Section 88 enquiry and thus had no legal authority to write or submit the report thereafter.

6.2 Cessante Ratione Legis Cessat Ipsa Lex

This maxim means: “When the reason for the law ceases, the law itself ceases.”

Applied here:

• The reason for the Authorised Officer’s power is the Registrar’s appointment order.
• When that appointment is withdrawn or replaced, the reason disappears.
• Therefore, the authority also ends – any action taken thereafter (like submitting a report) has no legal effect.

6.3 Qui Dat Potest Auferre

This maxim means “He who gives can take away.”

The Registrar, empowered to grant an authorisation under Section 88, also inherently holds the power to withdraw or replace that authorisation. Once he exercises this power, the earlier appointee’s authority ceases instantly.

6.4 Distinction between Section 83 and Section 88 Reports

• Section 83 report:
  • Fact-finding only.
  • No decision on rights or liabilities.
  • Not independently appealable/revisable as an “order”.
• Section 88 report:
  • Liability-fixing, quasi-judicial in nature.
  • Directly leads to financial consequences (e.g., recovery certificates).
  • Must be prepared by a person who holds valid authority at the time of report.

6.5 Administrative Order vs. Communication/Knowledge

An administrative order (like appointment or replacement of an officer) can raise two distinct questions:

1. When does the order become legally effective?
2. When does it start binding the person concerned (especially in terms of civil consequences like salary, dismissal, etc.)?

This judgment focuses on the authority of the officer to act on behalf of the State, holding that:

• For determining the extent of statutory authority, the operative moment is when the competent authority makes the order, not when the officer learns about it.

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7. Impact and Significance

7.1 Strengthening the Integrity of Section 88 Enquiries

The judgment has significant implications for how inquiries into management lapses and financial irregularities in co-operative societies are conducted:

• It ensures that only properly authorised officers may complete quasi-judicial tasks like preparing Section 88 reports.
• It prevents informal or ad hoc continuation of officers who have legally ceased to hold office for the purposes of a particular enquiry.
• It reinforces individualised assessment of each committee member’s role (para 26(v)), preventing blanket liability based merely on collective membership.

For managing committees, the decision is a safeguard:

• Liability for large sums (as in this case, ~₹50 lakhs) cannot be imposed on the basis of a report authored by a person without jurisdiction.

7.2 Administrative Law and the Principle of Jurisdiction

The judgment reasserts a classic principle of administrative law:

• Jurisdiction flows from law, not from the subjective understanding of the officer.
• Acts done after jurisdiction has ceased are nullities, irrespective of:
  • Good faith,
  • Efficiency, or
  • Alleged ignorance.

This promotes:

• Certainty and predictability in governance.
• Reduces scope for post facto rationalisation or manipulation through claims of non-service or lack of knowledge.

7.3 Time-bound Proceedings vs. Jurisdictional Compliance

By foregrounding the time limits in Section 88(1) (para 13) and simultaneously insisting that the enquiry must still be conducted by a properly authorised officer, the Court strikes an important balance:

• On one hand, it respects the Legislature’s mandate for speedy enquiries, given the impact on reputation and functioning of societies.
• On the other, it insists that speed cannot trump jurisdiction; an enquiry done quickly but by an unauthorised person is legally worthless.

7.4 Guidance for Revisional and Appellate Authorities under the MCS Act

The decision also clarifies what revisional and appellate authorities must do:

• They cannot treat a Section 88 report or Section 98 certificate as a fait accompli.
• They must interrogate the legality of the foundation:
  • Was the officer validly authorised?
  • Were statutory timelines and procedures broadly observed?
  • Was there due application of mind to each individual’s role?

Failure to engage with such jurisdictional questions, as in this case, will amount to denial of justice (para 26(iv)).

7.5 Limited Challenge to Section 83 Reports

The Court’s reaffirmation of Sayajirao Narayan Takwane has procedural implications:

• Stakeholders cannot treat a Section 83 report as if it were a final order capable of direct appeal or revision.
• Challenges to Section 83 findings must typically arise:
  • In the context of consequential actions (like Section 88 liability fixation or Section 98 certificates), or
  • Through other legally tenable fora or procedures as may be available.

This streamlines litigation and prevents the multiplication of proceedings at intermediate, non-decisional stages.

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8. Conclusion

The judgment in Nainesh Sanghvi & Ors v. State of Maharashtra & Ors lays down a clear and robust legal principle:

An Authorised Officer under Section 88 of the Maharashtra Co‑operative Societies Act holds authority only so long as the Registrar’s appointment order subsists. Once the Registrar replaces him, he becomes functus officio, and any report prepared or submitted thereafter is void, regardless of his knowledge of the replacement. A recovery certificate under Section 98 founded on such a void report cannot stand.

By grounding its reasoning in doctrines of functus officio, cessante ratione legis cessat ipsa lex and qui dat potest auferre, and by carefully distinguishing inapposite precedents under the Arbitration Act and service law, the Court:

• Strengthens procedural fairness and jurisdictional discipline in co-operative society enquiries.
• Clarifies the non-decisional character of Section 83 reports.
• Reaffirms the duty of revisional authorities to test the legality of the very foundation of recovery proceedings.

In the broader legal landscape, the decision will serve as a significant precedent on the limits of delegated statutory authority and the non-negotiable requirement that quasi-judicial acts be performed only by duly authorised functionaries.