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

The Bombay High Court gave relief to former employees and directors of Bhandari District Cooperative Bank on January 17 setting aside an official liquidator probe and recovery proceedings carried out under Section 88 of the Maharashtra Cooperative Societies MCS Act 1960The alleged irregularities had been probed since 2011 and the bankrsquos former chairman and directors were also placed under arrest Some officebearers including the director expired while the investigation was ongoing and requests by their next of kin to the thenstate minister of cooperation to intervene went unheededWorst 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 kinVishwajeet Raut 62 a resident of Borivli East and a former employee of Bhandari District Cooperative Bank has been struggling to even meet daily family expenses His 500sqft flat was symbolically seized and in the custody of the official liquidator midday in a January 16 2020 report lsquoHigh court stays house attachment of former Bhandari Bank employeersquo highlighted his plightAlso read Mumbai Crime Karni Sena leader held for molesting harassing modelRaut 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 2500 consultancy chargesRaut said ldquoI had few years of service left my salary and retirement benefits were all seized to recover Rs 2750 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 25000 when the case was opened Like me there are many who are facing serious health issues and financial restraintsrdquoldquoI 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 wrongrdquo 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 courtFlashbackThe petitioner in the case alleges that in the special auditorrsquos report it came to light that officers directors the chief executive officer and manager of the bank had committed illegalities in the disbursement of autorickshaw and housing loans given to BEST employeesAccordingly the deputy director sent his report to the commissioner for cooperation and registrar of cooperative 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 officersWrit petitions filedNineteen 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 cooperation in appellate proceeding under Section 152 of the Act upholding the September 25 2018 orderMassive outstanding loansBy virtue of common order dated September 25 2018 the authorized officer indicted and held 27 persons liable for committing fraud on the Bhandari Cooperative Bank holding them culpable for causing financial loss due to nonrecovery of outstanding rickshaw and housing loans disbursed by the bank to the tune of R1391 crore and Rs 688 crore respectively from 2007 to 2009 Nineteen out of the 27 indicted filed an identical writ petition before the high courtThe orderAfter hearing all the parties concerned Justice Milind Jadhav passed a 103page 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 ldquoThe inquiry reportorder 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 judicesome were to be filed in court at the then time the order readIt further stated ldquoThe 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 orderinquiry 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 asiderdquoAdvocate speakAdvocate Panchal said ldquoThe report of Inquiry conducted by the registrar of societies holding my client liable for around 275 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 purposerdquo He concluded ldquoPursuant to the inquiry report holding him responsible and dismissal of his appeal by the minister of cooperation 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 inquiryrdquo27No of people indicted originally