Rajasthan HC Sets Aside Appointment of Retired CJI Sanjiv Khanna as One-Man Commission in Adarsh Cooperative Liquidation Dispute

A Division Bench at Jodhpur found the Single Judge's order appointing a retired Chief Justice of India to adjudicate claims inconsistent with the statutory scheme under the Multi State Cooperative Societies Act, 2002.

A Division Bench of the High Court of Judicature for Rajasthan at Jodhpur, comprising Justice Munnuri Laxman and Justice Sangeeta Sharma, on 18 August 2026 set aside a Single Judge order that had constituted a Special Committee headed by retired Chief Justice of India Justice Sanjiv Khanna to adjudicate competing claims in the liquidation of Adarsh Credit Co-operative Society Limited. The Bench held that such an appointment could not be sustained because the Multi State Cooperative Societies Act, 2002 prescribes its own mechanisms for realising a defunct society's assets, and those statutory forums cannot be bypassed by judicial appointment of a one-man commission. The attachment orders on disputed properties, and the status quo on those properties as it stood on 9 July 2026, were left undisturbed pending final adjudication by the Single Judge.

The Dispute Before the Division Bench

Four Special Appeal Writs — D.B. Special Appeal Writ Nos. 898, 900, 902 and 838 of 2026 — were filed by Smt. Megha Tak of Udaipur and Mahesh Kumar Tak of Sirohi, both challenging interim orders passed at various stages of writ petitions pending before a learned Single Judge. Those writ petitions themselves challenged orders of attachment over properties claimed to belong to the appellants.

The attachment had been effected by the liquidator of Adarsh Credit Co-operative Society Limited, a multi-state cooperative society that had become defunct. The liquidator's position was that the properties in question were purchased from the society's funds and therefore formed part of the society's assets that vested in the liquidator upon appointment.

The appellants are third parties who disputed the liquidator's authority to attach their properties. In the course of proceedings before the Single Judge, two interim directions were issued: first, a status quo order over the attached properties; and second, an order dated 28 July 2026 constituting a Special Committee headed by retired Chief Justice of India Justice Sanjiv Khanna to adjudicate the claims and counter-claims of the parties.

It was specifically this second order — the appointment of Justice Sanjiv Khanna as a one-man commission — that drew the primary challenge before the Division Bench.

Arguments on the Liquidator's Power and the Statutory Scheme

Senior Counsel Mr. Ravi Bhansali, assisted by Mr. Sandeep Singh Shekhawat, Mr. Vipul Dharnia, and Mr. Ankur Mathur, argued for the appellants that a liquidator under the Multi State Cooperative Societies Act, 2002 has no power to attach third-party properties. He pointed to a judgment of a learned Single Judge of the same Court sitting at Jaipur in Kala Chauhan v. State of Rajasthan & Ors. and connected matters in S.B. Civil Writ Petition No. 723/2026, where it was held that the liquidator's power of attachment does not extend to properties of third parties.

On the commission appointment, Senior Counsel submitted that the order of 28 July 2026 violated the statutory scheme of the Act of 2002, which prescribes its own forums for resolution of disputes arising from the realisation of a defunct society's assets. Conferring adjudicatory authority on a retired Chief Justice of India, he argued, circumvented that scheme.

Appearing for the respondents through video conferencing, Assistant Solicitor General Mr. Bharat Vyas, with Mr. Vaibhav Bhansali, took a narrower position. He submitted that the special appeals were directed only against interim orders, that final adjudication was yet to take place, and that the Kala Chauhan judgment did not apply to the specific facts of these writ petitions. He also contended that the status quo should not be disturbed at this stage, as it was necessary to preserve the properties pending final adjudication. Regarding the appointment of the retired Chief Justice, the ASG submitted that it was a consensus order agreed to by the parties.

Senior Counsel for the appellants disputed that characterisation, contending that the appointment was an exercise of the Single Judge's discretion, not a product of consensus.

How the Division Bench Reasoned

The Division Bench examined the impugned order dated 28 July 2026 and found that it did not refer to any specific agreement between the parties for the appointment of a retired Chief Justice of India to adjudicate the disputes. This factual finding directly undercut the respondents' submission that the order rested on consensus.

On the substantive challenge to the commission appointment, the Bench accepted that the Act of 2002 prescribes its own mechanism for the realisation of assets of a society that has become defunct, and for the custody and administration of those assets by the liquidator. The Bench held that this statutory scheme meant that adjudicatory power over the competing claims could not be conferred on a retired Chief Justice of India, as doing so would violate the statutory framework.

The Bench was careful, however, not to express any view on whether the liquidator actually had the authority to attach the disputed properties. That question — which was the central issue in the writ petitions — remained pending before the Single Judge. The Division Bench declined to pre-empt that adjudication.

On the status quo and attachment orders, the Bench took the view that interference was not warranted at the appellate stage. Since the sustainability of the attachment orders was yet to be decided, preserving the properties in the interim served a protective purpose. The Bench accordingly left those directions undisturbed.

The Bench did, however, address a specific grievance arising from the interim proceedings: the liquidator had been given a direction to change the name of the owner of the properties by way of an interim order. The Bench held that such a direction ought not to have been given, and directed that status quo as on 9 July 2026 shall continue.

The Multi State Cooperative Societies Act, 2002 and the Liquidator's Role

The Multi State Cooperative Societies Act, 2002 governs cooperative societies that operate across more than one State. The Act contains provisions for the appointment of a liquidator when a society becomes defunct, and for the vesting of the society's assets in the liquidator. The Act also prescribes forums and procedures for adjudication of disputes relating to the realisation and distribution of those assets.

The core controversy in the underlying writ petitions — whether the liquidator's power of attachment extends to properties held by third parties who were not members of the society — falls directly within the scope of this statutory framework. The Division Bench noted the Single Judge's ruling in Kala Chauhan on this point but refrained from expressing any opinion on it, leaving the matter for the Single Judge hearing these writ petitions.

Order

The Division Bench allowed the four special appeal writs to the limited extent of setting aside the order appointing retired Chief Justice of India Justice Sanjiv Khanna as a one-man commission to adjudicate the claims and counter-claims of the parties.

The attachment orders and the status quo order granted by the Single Judge were not disturbed. The Bench directed that status quo as on 9 July 2026 shall continue, and specifically held that the liquidator ought not to have been directed to change the name of the owner by way of an interim direction.

The matters were remitted to the learned Single Judge with a request to hear and decide the writ petitions. All pending applications in the appeals were disposed of.