The Bombay High Court quashed the orders passed by the Additional Chief Secretary, Government of Maharashtra, and the Authorized Officer under Section 88 of the Maharashtra Cooperative Societies (MCS) Act, 1960. The case involved multiple writ petitions filed by former managers of Rupee Cooperative Bank Ltd., Pune, who were held personally liable for financial losses allegedly caused to the bank during its operation from 1997 to 2002.
The Court ruled that the previous findings against the managers suffered from serious procedural and evidentiary lapses. It observed that both the Authorized Officer and the Appellate Authority had failed to establish any specific acts of misfeasance or breach of trust linking individual petitioners to the financial loss suffered by the bank. The Court noted that the conclusions were vague and lacked reasoning, treating all petitioners equally without assessing their distinct roles and responsibilities.
Justice Borkar, after an extensive review of Sections 88 and 220 of the MCS Act, along with Rule 72 of the Maharashtra Cooperative Societies Rules, 1961, emphasized that liability under Section 88 can only be fixed on persons proven to have caused loss through misfeasance, negligence, or breach of trust. The Court observed that mere participation in management or recommendation of loan proposals does not automatically amount to personal liability unless specific and direct culpability is demonstrated.
Calling the previous inquiry “procedurally defective and non-reasoned,” the court remanded the matter back to the Authorized Officer for fresh adjudication, directing that it be conducted strictly in accordance with Rule 72. The new inquiry must ensure that each petitioner’s individual role, evidence, and defence are properly examined. The process is to be completed within six months.
Appearances:
Mr. R.M. Haridas with Mr. Pratik B. Rahade for the petitioner in WP/11957/2022.
Mr. Shrivallabh Panchpor with Ms. Apeksha Jadhav for the petitioner in WP/9990/2022, WP (St.) Nos. 16609/2022, 16764/2022, 16765/2022, 16998/2022, 10750/2022, 18786/2022, 18855/2022, 18860/2022, 11142/2022, 11228/2022. 11233/2022 11234/2022, 11235/2022, 11139/2022 & IA (St.) No.30861/2024.
Mr. Ratan L. Adhe for the petitioner in WP/11143/2022 (Not on board).
Smt. V.R. Raje, AGP for State in WP/19750/2022 & 9990/2022.
Smt. S.D. Chipade, AGP for State in Wpst/11957/2022.
Ms. Savina R. Crasto, AGP for State in WPSt/16609/2022.
Mr. P.V. Nelson Rajan, AGP for State in WPSt/16764/2022.
Smt. M.S. Srivastava, AGP for State in WPSt/16765/2022.
Mrs. V.S. Nimbalkar, AGP for the State in WP St.18322/ 2022, St.18466/2022, & WP/2876/2024.
Mr. Pramod N. Patil with Mr. Ajit Hon, Mr. Atharva Deshmukh, & Ms. Mamta Pande i/by PNP & Associates for Rupee Bank & Special Recovery Officer.
Mr. Madhukant Garad, Liquidator for Bank, is present.
Mr. Sharad Raskar, Officer, Rupee Cooperative Bank, is present.