Mumbai: Bombay HC scraps probe, recovery proceedings against 19 bank employees, officials

The Bombay High Court passed the 103-page order on January 17. File pic

The Bombay High Court gave relief to former employees and directors of Bhandari District Co-operative Bank on January 17, setting aside an official liquidator probe and recovery proceedings carried out under Section 88 of the Maharashtra Co-operative Societies (MCS) Act, 1960.

The alleged irregularities had been probed since 2011, and the bank's former chairman and directors were also placed under arrest. Some office-bearers, including the director, expired while the investigation was ongoing and requests by their next of kin to the then-state minister of co-operation to intervene went unheeded.

Worst of all, most of those named in the case were left in the lurch to face severe financial restraints for over a decade as all their emoluments, including salary and retirement benefits, were seized. Their flats were also symbolically seized by the official liquidator and in the case of those who had expired, the onus for their recovery was on their next of kin.

Vishwajeet Raut, 62, a resident of Borivli East and a former employee of Bhandari District Co-operative Bank, has been struggling to even meet daily family expenses. His 500-sq-ft flat was symbolically seized and in the custody of the official liquidator. mid-day in a January 16, 2020 report, ‘High court stays house attachment of former Bhandari Bank employee,' highlighted his plight.

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Raut had been advised by a cardiac specialist to get a pacemaker fixed urgently, as his heart is able to pump only twenty per cent of blood. Raut has not done so as he cannot afford the Rs 6 lakh expense nor he is meeting the doctor, to save on the Rs 2,500 consultancy charges.

Raut said, "I had few years of service left, my salary and retirement benefits were all seized to recover Rs 27.50 lakh with 12 per cent interest, which today amounts to double the due amount. I was only holding a temporary profile of the Goregaon branch manager with a monthly salary of Rs 25,000 when the case was opened. Like me, there are many who are facing serious health issues and financial restraints."

"I am thankful to Bombay High Court and to Justice Milind Jadhav for having gone through the mammoth petition and for giving justice to people like me, who have done no wrong," said Raut. He is hopeful that all his financial difficulties will come to an end, once the authorities release their payments and clear the emoluments. Raut was represented by advocate Rajeshwar Panchal in the high court.

Flashback

The petitioner in the case alleges that in the special auditor's report, it came to light that officers, directors, the chief executive officer and manager of the bank had committed illegalities in the disbursement of auto-rickshaw and housing loans given to BEST employees.

Accordingly, the deputy director sent his report to the commissioner for co-operation and registrar of co-operative societies, Maharashtra. The commissioner subsequently appointed an administrator. Later, the banking licence came to be cancelled and a liquidator was appointed for the bank. The commissioner then ordered the inquiry against the directors and officers.

Writ petitions filed

Nineteen identical writ petitions were filed before the high court challenging the inquiry report dated September 25, 2018, indicting them for causing financial loss, passed under Section 88 of the MCS Act, and the order dated September 20, 2019, passed by the state minister of co-operation in appellate proceeding under Section 152 of the Act, upholding the September 25, 2018 order.

Massive outstanding loans

By virtue of common order dated September 25, 2018, the authorized officer indicted and held 27 persons liable for committing fraud on the Bhandari Co-operative Bank, holding them culpable for causing financial loss due to non-recovery of outstanding rickshaw and housing loans disbursed by the bank to the tune of R13.91 crore and Rs 6.88 crore respectively from 2007 to 2009. Nineteen out of the 27 indicted filed an identical writ petition before the high court.

The order

After hearing all the parties concerned, Justice Milind Jadhav passed a 103-page order, wherein he concluded that the liability of the petitioners for the amounts arrived at for causing financial fraud to the bank could not be sustained. "The inquiry report/order under Section 88 merely reiterates the loan policy (in the Marathi language) for all petitioners verbatim and is an arithmetical exercise carried out foisting liability on petitioners without taking any cogent steps against the perpetrators of the real fraud ie the loan agents who were the recipients of the rickshaw loan. Insofar as the housing loan fraud is concerned, it has come on record that all 69 cases were sub judice/some were to be filed in court at the then time," the order read.

It further stated, "The appellate authority while passing identical impugned order in all cases has also committed the same error without giving findings on the principles of inquiry under Section 88 of the said Act. Both the orders namely the common order/inquiry report dated September 25, 2018, under Section 88 and individual orders, all dated September 20, 2019, passed in appeal under Section 152 and all consequential actions taken thereafter against petitioners call for interference of this court for not following the statutory due process of law as discussed in the findings herein above and are therefore quashed and set aside."

Advocate speak

Advocate Panchal said, "The report of Inquiry conducted by the registrar of societies, holding my client liable for around 27.5 lakh, has been set aside. It is a huge relief to my client who had to undergo heart surgery due to stress and tension caused by his indictment. My client was an accountant who was given temporary charge as branch manager. He had no authority to oppose the disbursement of loans sanctioned by the committee established in the bank for the purpose." He concluded, "Pursuant to the inquiry report holding him responsible and dismissal of his appeal by the minister of co-operation, his house was symbolically attached. The honourable high court has given a huge relief to all similarly placed other employees of the bank, besides its directors. The probe was conducted not in the manner prescribed by Section 88 of the Act. No role was fixed before embarking upon the inquiry."

27
No of people indicted originally