Corporate veil and consumer liability in cooperative societies: office bearers are usually not service providers, unless fraud is proved.

A registered cooperative credit society has a separate legal identity, so service is ordinarily rendered by the society itself and ex-Secretary, ex-President and other office bearers do not become service providers merely by holding office, because they lack privity of contract with depositors. Where the society is used as a cloak for fraud, illegality or misfeasance, the corporate veil may be lifted and personal liability may be fastened on the office bearers on the facts proved. The operative distinction is therefore between ordinary corporate immunity for office bearers and exceptional personal responsibility where deceitful conduct is established.

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Issues: Whether the ex-Secretary, ex-President or other office bearers of a cooperative credit society ordinarily fall within the category of service providers under the Consumer Protection Act, and whether personal liability can arise where the society is used as a cloak for fraud or misfeasance.

Analysis: A cooperative society registered under the relevant cooperative societies legislation is a body corporate with a distinct legal identity. In the ordinary course, the service is rendered by the society itself, and its office bearers do not have privity of contract with depositors so as to be treated as service providers merely by reason of holding office. However, where individuals use the corporate form of the society to commit illegality, defraud depositors, or indulge in misfeasance under the cloak of the society, the corporate veil can be lifted and personal responsibility may be fastened on such office bearers on the facts proved.

Conclusion: Ordinarily, ex-Secretary, ex-President and other office bearers of a cooperative credit society are not service providers. If fraudulent or deceitful conduct under the cloak of the society is established, they may be treated as service providers and held liable for deficiency in service.

Final Conclusion: The reference was answered by drawing a distinction between the normal corporate identity of the society and exceptional cases of fraud, and the matter was directed to proceed before the appropriate Benches on that basis.

Ratio Decidendi: Office bearers of a registered cooperative credit society are not personally liable as service providers in the ordinary course, but the corporate veil may be lifted where the society is used as an instrument of fraud or misfeasance.

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