Bombay HC Quashes Disqualification Of Housing Society Committee, Says Liability Cannot Be Imposed On All Members

Mumbai: The Bombay High Court has quashed the disqualification of the managing committee of Jal Ratan Deep CHS Ltd., Bangur Nagar, Goregaon (West), holding that liability under the Maharashtra Cooperative Societies (MCS) Act, 1960 cannot be mechanically imposed on the entire committee without identifying individual responsibility.

The petitioners, members of the society’s managing committee, had challenged their disqualification for five years under Section 75(5) of the MCS Act.

Registrar’s orders under challenge

On April 29, deputy registrar passed an order disqualifying them holding that the committee failed to comply with several clauses under the Act relating to disclosures at Annual General Meetings (AGMs). Their revision was dismissed on July 14, 2025.

The disqualification followed complaints by two society members who alleged that the committee had not placed before the AGM several mandatory items, including the annual report of activities, audited profit and loss account, rectification reports of earlier audits, and the annual budget for the following year, for 2021-22, 2022-23, and 2023-24.

Petitioners’ defence of compliance

Petitioners’ advocate argued that there was “substantial compliance” with Section 75 and that minor lapses could not justify such “a harsh punishment”.

He pointed out that “except two complainants, the remaining 95 members supported the managing committee and no prejudice was caused”. He also said the rectification reports had been duly submitted to the Registrar within the prescribed period.

Respondents argue partial compliance not enough

On the other hand, advocate for the complainants submitted that “partial compliance is not enough; failure to comply with some items makes the entire committee liable”. The assistant government pleader supported the argument contending that registrar had rightly exercised powers under Section 75(5).

Court finds registrar’s approach flawed

The court, however, found fault with the registrar’s approach. It observed that all omissions were treated at par “without distinguishing between grave and technical lapses”.

Importantly, it emphasised that Section 75(5) uses the phrase “whose duty it was”, which requires the authority to determine which office bearers — such as the secretary, treasurer, or chairman — were responsible for specific compliances.

“Ordinary members, who had no direct role in preparing or placing audited accounts, rectification reports, or budgets, cannot be disqualified without evidence of complicity,” the court said.

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Matter remitted for reconsideration

Setting aside both the April and July 2025 orders, the bench remitted the matter to the registrar for fresh consideration. The Registrar has been directed to apply the correct legal tests and complete the re-examination “within a reasonable period.” The petition was disposed of accordingly.

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