High Court Adjudicates Writ Petitions Filed by Former Cooperative Bank Managers Against Orders Holding Them Liable for Financial Losses. Petitioners Contend Proceedings Violated Natural Justice and They Were Not 'Officers' Under Section 2(20) of the MCS Act.

Writ petitions under Articles 226 and 227 of the Constitution challenging orders passed under Section 152 of the MCS Act confirming liability under Section 88.

Petitioners (former managers of Rupee Cooperative Bank) seek to quash and set aside the orders holding them liable for financial losses, and for a declaration that proceedings under Section 88 are not maintainable against them.

The Appellate Authority dismissed appeals and confirmed the Authorized Officer's report under Section 88, holding petitioners responsible for losses, allegedly in violation of natural justice and without proper findings.

The Authorized Officer under Section 88 issued final report on 2 February 2016 holding employees liable. The petitioners' appeals under Section 152 were dismissed by the Additional Chief Secretary on 29 December 2021.

Whether employees such as Branch Managers and Joint General Managers are “officers” as defined under Section 2(20) of the MCS Act, and whether proceedings under Section 88 can be initiated against them. Whether the proceedings under Section 88 were conducted in accordance with the mandatory procedure under Rule 72 of the MCS Rules and principles of natural justice. Whether the Authorized Officer and Appellate Authority considered the evidence and provided reasoned findings on individual liability, rather than general conclusions.

Petitioners argued that no act of misfeasance or breach of trust was established as required under Section 88; they did not sanction loans, only made recommendations. The orders failed to consider cross-examination and evidence; no specific findings were given for each petitioner’s role. Petitioners contended they were not “officers” under Section 2(20) and the Bank’s circular relied upon did not cover the relevant period. The proceedings violated Rule 72 of MCS Rules as proper notice and charge-sheets were not served on all employees. Reliance placed on Shriram Dhonduji Raut vs. Bahu Uddesiyab Sahakari Sanstha Virsi & Ors. and M.L. Kalra vs. Union of India & Anr.

All these petitions are filed by managers of the respondent, Rupee Cooperative Bank Limited. the Authorized Officer issued his final report under Section 88, holding the employees, along with the Board of Directors, responsible for losses allegedly caused to the Bank on account of their participation in its business and management. The petitioners never sanctioned any loans; at most, their role was to make recommendations such as “renewal may be considered”, which does not amount to fresh disbursement.

In February 2002, the Registrar for Cooperation superseded the Board of Directors under Section 110A. On 14 February 2002, an inquiry under Section 83 was ordered based on the RBI inspection report. The Inquiry Officer submitted a report on 31 October 2002. On 12 November 2002, the Registrar authorized the same officer to assess losses under Section 88. On 10 June 2003, a show-cause notice under Rule 72(2) was issued to the Managing Committee and CEO. On 20 October 2003, a charge-sheet under Rule 72(3) was issued. Managing Committee members and one Prakash Kulkarni appealed; on 4 March 2004, the Appellate Authority allowed the appeals, set aside the charge-sheet, and directed fresh action after supplying documents. On 11 July 2007, a new officer was appointed under Section 88. On 25 January 2008, a fresh notice was issued to the Board, CEO, and employees (Branch Manager to Joint General Manager). Petitioners replied on 17 May 2008. On 20 August 2008, maintainability objection was raised and rejected. On 27 May 2009, a second show-cause notice regarding interest remission was issued. A charge-sheet under Rule 72(3) was issued on 5 October 2009. On 1 February 2010, this Court admitted Writ Petition No. 710 of 2010 challenging the rejection. On 25 May 2010, petitioners replied to the charge-sheet. On 25 January 2016, this Court permitted the Authorized Officer to issue a final order. On 2 February 2016, the final report under Section 88 was issued. Petitioners filed appeals under Section 152 on 21 March 2016; interim stay was granted. On 6 March 2018, powers were delegated to the Additional Chief Secretary. Appeals were heard on 21 January 2020 and reserved for judgment. On 29 December 2021, the Additional Chief Secretary dismissed the appeals. The present writ petitions were filed in July 2022.

• Maharashtra Cooperative Societies Act, 1960: 2(20), 83, 88, 110A, 152
• Maharashtra Cooperative Societies Rules, 1961: 72(2), 72(3)