Division Bench Upholds Writ Court's Directions for Criminal Investigation and Interim Management in Alleged Misappropriation Case
In a significant judgment, the Division Bench of the Allahabad High Court has directed a thorough investigation into alleged fraudulent activities within the Bahujan Nirbal Varg Sahkari Grih Nirman Samiti Ltd., a cooperative society in Lucknow. The court has upheld the writ court's interim order dated August 20, 2025, which called for a criminal investigation into the alleged misappropriation of funds and fraudulent sale of properties by the society's former office bearers.
The case arose from a writ petition filed by the newly elected members of the cooperative society, challenging an interim order passed by the Sub-Divisional Magistrate, who had restrained them from functioning as office bearers, following arbitration proceedings initiated by the former members under Section 70 of the U.P. Cooperative Societies Act, 1965. The writ petition alleged that despite being elected in March 2023, the new office bearers were unable to assume their roles due to the arbitration proceedings, which they claimed were initiated to cover up fraudulent activities conducted by the previous office bearers.
The court noted that the writ petition highlighted serious allegations of fraud, including the execution of 98 sale deeds by the former office bearers, who allegedly siphoned off significant funds from the society. It was revealed that a substantial portion of the society's land was sold to individuals not belonging to the Scheduled Castes, contrary to the society's bylaws. Despite an inquiry conducted by seven officers of the Lucknow Development Authority, no action was taken, prompting the court's intervention.
In its judgment, the Division Bench clarified that the High Court, under Article 226 of the Constitution, possesses the power to mould reliefs to ensure justice, even if such reliefs are not explicitly prayed for. The court emphasized that the principle of "moulding of relief" empowers the judiciary to grant effective relief to address fraud and injustice, thereby ensuring that justice is not rendered illusory.
The court further directed the State authorities to conduct a land audit of the society, examine the sale deeds executed over the past decade, and investigate the inclusion of new members in the society. It also ordered that the investigation be supervised by an officer of the rank of Superintendent of Police, ensuring a fair and impartial inquiry.
The judgment underscores the judiciary's role as a sentinel on the qui vive, tasked with meting out justice wherever it is found and addressing corruption and fraud, especially within cooperative societies. The Division Bench has scheduled further hearings on January 7, 2026, to monitor the progress of the investigation and ensure accountability.
Bottom Line:
Scope of writ jurisdiction under Article 226 of the Constitution of India - High Court can mould reliefs to ensure justice, even if not explicitly prayed for. Fraudulent activities in cooperative societies can be subjected to investigation, and directions for criminal investigation can be issued by the High Court in appropriate cases.
Statutory provision(s): Article 226 of the Constitution of India, U.P. Cooperative Societies Act, 1965, Prevention of Money Laundering Act
