1. Challenge to disqualification of housing society committee members under Section 75(5) MCS Act for non-compliance of AGM disclosure requirements. (Para 1 , 2 , 3 , 4 , 5 )
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HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE AMIT BORKAR
KAILASH MAHESHWARI AND ORS – Appellant
Versus
STATE OF MAHARASHTRA THR THE GOVERNMENT PLEADER AND ORS – Respondent
WP/10587/2025
1. Challenge to disqualification of housing society committee members under Section 75(5) MCS Act for non-compliance of AGM disclosure requirements. (Para 1 , 2 , 3 , 4 , 5 )
2. Whether partial non-compliance of ancillary disclosure requirements justifies disqualification of entire committee or only responsible officers. (Para 6 , 7 , 8 , 9 )
3. Impugned disqualification orders quashed; matter remitted to Registrar for fresh consideration applying correct legal tests. (Para 57 , 58 , 59 , 60 )
The default must be examined by distinguishing core compliance (e.g., audited accounts) from ancillary compliance (e.g., surplus disposal plan), and judged in the context of the society's business. (Para 20 , 26 , 27 , 36 , 37 , 48 , 49 , 50 , 51 )
Liability is limited to officers whose statutory or functional duty it was to comply; the Registrar must identify responsible individuals, not disqualify the entire committee indiscriminately. (Para 39 , 40 , 41 , 55 )
The Registrar must consider gravity, wilfulness, impact on members' rights, and whether directions can remedy; disqualification is reserved for grave defaults. (Para 38 , 42 , 43 , 51 )
No; the test is the quality and effect of non-compliance, not a headcount. Missing ancillary items may be curable without disqualification if core requirements are met. (Para 50 )
The importance of each compliance must be judged by the society's business; e.g., missing surplus plan for a housing society with no surplus is minor, but for a credit society it may be grave. (Para 20 , 46 , 47 , 48 )
JUDGMENT:
1. By this writ petition filed under Article 227 of the Constitution of India, the petitioners, who are Managing Committee members of a housing society, are challenging their disqualification under Section 75(5) of the Maharashtra Cooperative Societies Act, 1960 (“MCS Act” or “the said Act” for short). The disqualification has been imposed for alleged non-compliance of Sections 75(2) and 75(4) of the MCS Act.
2. Respondent Nos. 4 and 5 filed a complaint alleging that the petitioners failed to comply with sub-sections (2) and (4) of Section 75. On this complaint, respondent No.2 issued a show- cause notice dated 9 January 2025 calling upon the petitioners to explain why action under Section 75(5) should not be taken for failure to comply with sub-sections (2), (3), and (4) in respect of the Annual General Meetings for the years 2021-2022, 2022-2023, and 2023-2024.
3. The petitioners filed their reply denying the allegations. They contended that the Managing Committee had duly complied with all provisions of Section 75 of the said Act.
4. By order dated 29 April 2025, respondent No.2 disqualified the petitioners for a period of five years from continuing as Managing Committee members or being re-elected. The finding was that the petitioners failed to comply with clauses (iii), (vii), and (viii) of Section 75(2) and also with Section 75(4).
5. The petitioners challenged this order by filing Revision No. 240 of 2025. By order dated 14 July 2025, respondent No.3 dismissed the revision holding that the society had not placed before the general body its annual report of activities, audited profit and loss account, plan for disposal of surplus, rectification report of the earlier Committee, and annual budget for the next year. On this reasoning, the revisional authority concluded that the Managing Committee had failed to discharge its duties under the Act, Rules, and Bye-Laws. The petitioners have, therefore, approached this Court in the present writ petition.
6. Mr. Lohia, learned advocate for the petitioners, submitted that there was substantial compliance with Section 75. He argued that the absence of a specific plan for disposal of surplus and of an annual budget for the next year cannot by themselves attract such a harsh punishment, particularly when all members were aware of the society’s financial condition. He contended that it was the duty of the Registrar to determine precisely “whose duty it was to comply with Section 75(2) and 75(4).” He pointed out that except two complainants, the remaining 95 members supported the Managing Committee and no prejudice was caused to them. He also submitted that the rectification reports for the relevant years had already been submitted to the Registrar within the prescribed period. On these grounds, he prayed that the impugned orders be quashed and set aside.
7. In reply, Mr. Bhadrashete, learned advocate for respondent Nos.4 and 5, submitted that the petitioners failed to prove compliance with Section 75(2)(ii), (iii), (vii), and (viii), and were rightly disqualified. He submitted that no explanation was given before the Registrar for such non-compliance and that the rectification report of earlier audits was not placed before the Annual General Meeting.
8. Drawing attention to Section 75(2), he argued that the duty to comply rests on the entire Committee. According to him, Section 75(2) read with Section 75(5) makes the provisions mandatory, and failure to comply with any of them invites action against the whole Committee. He argued that the expression “whose duty it was” must be understood as applying to the entire Managing Committee. Similarly, the expression “who without any reasonable excuse failed to comply” must also be interpreted to mean the Committee as a whole. He submitted that even partial compliance is not enough; failure to comply with some items makes the entire Committee liable. On this basis, he submitted that the orders passed by the authorities below do not require
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