Costs for inquiries must be assigned based on final adjudications; imposing costs on those exonerated lacks legal justification and contradicts fair process principles.

JUDGMENT:

AMIT BORKAR, J.

1. By the present writ petition, the petitioners question the legality and validity of the order passed by respondent No.1, whereby the order dated 22 April 2020 was set aside and the levy of costs under Section 85 of the Maharashtra Cooperative Societies Act, 1960 was confirmed in relation to an inquiry conducted under Section 83 of the said Act.

2. The background facts are these. The petitioners are former and existing members of the Managing Committee of respondent No.4 society. On the support and instance of respondent Nos.12 to 15, the petitioners came to be elected to the Managing Committee for the terms 2017 to 2022 and 2022 to 2027.

3. On a complaint lodged by respondent Nos.12 to 15, an Authorised Officer was appointed to conduct an inquiry under Section 83 of the MCS Act. The Authorised Officer submitted his report on 31 March 2018. In the said report, he recorded a prima facie finding that the petitioners were responsible for delay in securing the compensation amount from HDFC Insurance Company Limited under the HDFC Grameen Savings Scheme. On that basis, the Authorised Officer held the petitioners liable for expenses quantified at Rs.25,000 under . By communication dated 11 April 2018, the Authorised Officer addressed respondent No.3 and called upon recovery of an amount of Rs.25,000 from respondent No.4 Bank as expenses under Section 85 of the MCS Act. Thereafter, the Deputy Registrar again exercised powers under . After hearing the parties, he observed that the inquiry under stood concluded, that an inquiry under Section 88 was pending, and that proceedings under were independent in nature. He accordingly assessed the responsibility of the petitioners for recovery of expenses and by order dated 1 November 2018 directed recovery of Rs.25,000 from the petitioners under of the MCS Act.

4. Out of twelve persons held responsible, nine persons, including the present petitioners, challenged the said order by filing an appeal before respondent No.2. Respondent No.2, after hearing all concerned, allowed the appeal by order dated 22 April 2020 and set aside the order dated 1 November 2018 passed by the District Deputy Registrar, Cooperative Societies, Nashik.

5. Being dissatisfied with the appellate order, respondent Nos.12 to 15 preferred Revision Application No.148 of 2022 before respondent No.1. During pendency of the revision, the Bank appeared and filed its reply. The Bank supported the appellate order and contended that in the inquiry under Section 88 the petitioners had been exonerated and, therefore, no liability could be fastened upon them to pay costs under Section 85 . Respondent No.1, however, by the impugned order dated 12 April 2023 allowed the revision. He held that under , expenses of an inquiry under Section 83 must be recovered from the persons held guilty in such inquiry. On that reasoning, recovery of costs was directed. Aggrieved thereby, the petitioners have approached this Court by the present writ petition.

6. Mr. Motkari, learned Advocate appearing for the petitioners, submitted that a conjoint reading of Sections 83 and 85 of the Maharashtra Cooperative Societies Act shows that the burden of costs and expenses of an inquiry under Section 83 falls on those who seek such inquiry or inspection, and not on the persons who are merely held prima facie responsible in the inquiry report. He urged that a report under is only tentative in nature and does not finally establish guilt. He pointed out that in the s