Return status of `cd` is always 0
The reason may be that cd is not a shell builtin as usual but
- a shell function
- or an alias
This can be checked with type cd.
(I make the comment an answer so that the question can be "closed".)
My stupidity!
As suggested by HaukeLaging, I did type cd. It turned out the cd was aliased to some bash function which was logging the user cd activity on the server.
I aliased cd back to cd and the script started working fine. I had the fleeting temptation to delete the question altogether first the I thought I should answer it here. I might be useful for someone else.