Section 78 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 78 lets the Central Registrar inquire into the constitution, working and financial condition of a multi-State co-operative society, on a request from specified persons and after fifteen days' notice. It gives him wide powers during the inquiry, including the power to call a general meeting. The 2023 Amendment Act added two routes that do not need a request: an inquiry where a society's business is carried on for a fraudulent or unlawful purpose, and a periodic inquiry at intervals the Central Government determines. This article states the section as per the Ministry of Cooperation copy of the Act read with the Multi-State Co-operative Societies (Amendment) Act, 2023.
On a request from a federal co-operative to which the society is affiliated, a creditor, not less than one-third of the members of the board, or not less than one-fifth of the total members, the Central Registrar may hold an inquiry, after a notice of not less than fifteen days. New sub-section (1A) lets him act where he is satisfied the business is carried on for a fraudulent or unlawful purpose; new sub-section (1B) requires an inquiry once in such period as the Central Government determines. He must communicate the report within three months of receiving it.
Section 78(1): inquiry on request
"The Central Registrar may, on a request from a federal cooperative to which a multi-state cooperative society is affiliated or a creditor or not less than one-third of the members of the board or not less than one-fifth of the total number of members of a multi-state cooperative society hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a multi-state cooperative society".
| Who may request | Threshold |
|---|---|
| A federal co-operative | One to which the society is affiliated |
| A creditor | No threshold stated |
| Members of the board | Not less than one-third |
| Members of the society | Not less than one-fifth of the total number of members |
The word is "may", so the Central Registrar has a discretion; the request does not oblige him. The proviso adds: "no inquiry under this sub-section shall be held unless a notice of not less than fifteen days has been given to the multi-state cooperative society." For members or creditors who want to start the process, our legal dispute resolution team can help assemble the request and the supporting facts.
The inquiry covers three heads: "constitution, working and financial condition". The Act does not define them in this section.
Section 78(1A): fraud or unlawful purpose (inserted 2023)
The 2023 Amendment Act (Act 11 of 2023, in force from 3 August 2023 by notification S.O. 3493(E)) adds sub-section (1A): "If the Central Registrar is satisfied on the basis of information available with him or furnished to him by a Government agency, that the business of a multi-State co-operative society is being carried on for a fraudulent or unlawful purpose, he may, after informing the multi-State co-operative society of the allegations made against it, by a written order, call on the multi-State co-operative society to furnish in writing any information or explanation, with the endorsement of the board of the society, on matters contained in such order within the time specified therein".
The steps are:
- the Central Registrar is satisfied, on information available to him or furnished by a Government agency, that the business is being carried on for a fraudulent or unlawful purpose;
- he informs the society of the allegations;
- by a written order he calls for information or an explanation, with the endorsement of the board, within the time specified.
The proviso: "if the Central Registrar is not satisfied with the explanation of the society, he shall either himself or through an office or agency authorised by him, conduct inquiry into the constitution, working and financial condition of the society." The proviso uses "shall", so once he is not satisfied the inquiry is mandatory. The word "office" is printed for "officer"; we flag it as printed. Nothing in this sub-section requires a request or a fifteen days' notice, and the Act does not say whether the notice proviso to sub-section (1) applies to an inquiry under the proviso to (1A). We state both and do not reconcile them.
Section 78(1B): periodic inquiry (inserted 2023)
"Notwithstanding anything contained in this Act, the Central Registrar shall, either suo motu or through an officer or agency authorised by him, conduct inquiry into the constitution, working and financial condition of any multi-State co-operative society, once in such period as may be determined by the Central Government."
This is a duty ("shall"), it applies to "any" multi-State co-operative society, it can be done on his own motion, and the interval is whatever the Central Government determines. The Act gives no interval, and the sources contain no determination; we give none and assert nothing about whether one has been made. The opening words, "Notwithstanding anything contained in this Act", override the request requirement in sub-section (1).
Section 78(2): powers during the inquiry
The Central Registrar, or the person authorised by him, has the following powers:
| Clause | Power |
|---|---|
| (a) | at all reasonable times, full access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society, and to summon any person in possession or responsible for their custody to produce them at any place he specifies |
| (b) | despite any bye-law on notice, to require the officers to call a general meeting on not less than seven days' notice, at the headquarters, to consider matters he directs; and if they refuse or fail, to call it himself |
| (c) | to summon any person reasonably believed by him to have knowledge of the society's affairs to appear before him at the headquarters or any branch, and to examine that person on oath |
Section 78(3) and (4): the meeting and the report
Sub-section (3): a meeting called under clause (b) "shall have all the powers of a general meeting of the society called under the bye-laws of the society and its proceedings shall be regulated by such bye-laws."
Sub-section (4): the Central Registrar "shall, within a period of three months of the date of receipt of the report, communicate the report of inquiry to the multi-state cooperative society, the financial institutions, if any, to which the society is affiliated, and to the person or authority, if any, at whose instance the inquiry is made." The three months run from receipt of the report. Costs of an inquiry are dealt with in section 81; see our note on costs of inquiry, recovery and repayment order.
A practical example
Not less than one-fifth of the members of Chandan Multi-State Co-operative Society sign a request to the Central Registrar, alleging that loans have been given to insiders. The Central Registrar gives the society a notice of not less than fifteen days and holds an inquiry. Using his power under clause (b), he requires the officers to call a general meeting on seven days' notice, and when they fail to do so he calls it himself. He communicates the report to the society and to the members' representative within three months of receipt. Separately, if a Government agency gave him information that the society's business was being carried on for an unlawful purpose, he could, under sub-section (1A), inform the society of the allegations and call for an explanation endorsed by the board.
What the 2023 Amendment Act changed
| Provision | Before | After |
|---|---|---|
| s.78(1A) | Not present | Inquiry route where business appears carried on for a fraudulent or unlawful purpose, starting with a written order calling for an explanation |
| s.78(1B) | Not present | Duty to conduct an inquiry once in such period as the Central Government determines |
| s.78(1), (2), (3), (4) | As printed above | Unchanged |
Sections 79 and 80, on inspection, are covered in our note on inspection of societies and of books of indebted societies.
Need help with an inquiry?
A society facing an inquiry, or members and creditors who want to ask for one, should start from the text of section 78 and the facts. Our legal dispute resolution team can help you prepare the request, the response or the explanation that the board must endorse.
Key takeaways
- A federal co-operative, a creditor, one-third of the board or one-fifth of the members can request an inquiry, with fifteen days' notice to the society.
- Since 2023 the Central Registrar can also act where information shows the business is carried on for a fraudulent or unlawful purpose.
- He must also conduct an inquiry once in such period as the Central Government determines; the Act gives no figure.
- During an inquiry he has full access to records at all reasonable times, can call a general meeting on seven days' notice and can examine persons on oath.
- The report must be communicated within three months of receipt.
Read next
- Inspection of societies and of books of indebted societies (sections 79 and 80)
- Costs of inquiry, recovery and repayment order (sections 81 to 83)
- Special audit directed by the Central Government (section 77)
- Multi-State Co-operative Societies Act, 2002: complete guide
Disclaimer: Based on the Ministry of Cooperation copy of the Multi-State Co-operative Societies Act, 2002 read with the Multi-State Co-operative Societies (Amendment) Act, 2023 (in force from 3 August 2023), as consulted on 2 October 2026. The Multi-State Co-operative Societies Rules, 2002 as amended, later notifications and later amendments are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.