P.A.INAMDAR Vs. STATE OF MAHARASHTRA
HIGH COURT OF BOMBAY (AT: AURANGABAD)
STATE OF MAHARASHTRA
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C. V. Bhadang, J. -
(1.) Heard. Rule. Rule is made returnable forthwith. Learned counsel for the respective respondents waive service. Heard finally by consent of parties.
(2.) The challenge in this petition is to the order dated 18th April 2019 passed by the respondent No.2, Commissioner of Co-operation under Section 78A(1) of the Maharashtra Cooperative Societies Act, 1960 ('Act' for short) which order has been confirmed by the Appellate Authority on 28th August 2019. By the impugned order the petitioner has been removed as a member / Director of the Board of Directors of the Muslim Cooperative Bank Ltd., Pune and has been barred for the next tenure of the Board of Directors, from being elected, co-opted, nominated as a member/director of the said bank.
(3.) The brief facts necessary for the disposal of the petition may be stated thus :-
(i) That the petitioner is a shareholder and a member of the Board of Directors of the said bank. The last election for the Board of Directors was held on 6th April 2015. The petitioner is presently the Chairman of the said Bank.(ii) On 19th July 2017 the respondent Nos.5 to 7 made a complaint to the Commissioner of Co-operation (Respondent No. 3) alleging several irregularities against the petitioner. It appears that the Commissioner for Co-operation forwarded the complaint to the District Deputy Registrar, Pune (for short "DDR") for investigation and report. The DDR in turn assigned the inquiry to the Dy. Registrar. This was followed by yet another complaint by the respondent Nos. 5 to 7 on 11th October 2017 raising grievance about several employees transfering certain amount in favour of Crescent India Medical Education Trust (for short the "said Trust") by crossed account payee cheque each year in the month of August/September. It was alleged that by adopting such a modus operandi the petitioner was collecting donations from the employee in favour of the said Trust in violation of the Act and the Banking Regulation Act.(iii) On 13th October 2017 the Deputy Registrar submitted his report to the District Deputy Registrar. Issue No.3 and 4 considered by the Deputy Registrar are relevant for the present purpose. Issue No. 3 pertained to the alleged transfer of the funds to the said Trust, while Issue No. 4 was regarding a contract for purchase/maintenance of computers awarded to Ontogo Technologies, a firm in which the son of petitioner is having a 30% stake.(iv) The Deputy Registrar in his report dated 13th October, 2017 exonerated the petitioner on both counts. It was found that there was no irregularity in the matter of transfer of funds to the said Trust. Insofar as Issue No. 4 is concerned, with which we are principally concerned in this petition, it was found that there was no fraud in the matter of award of the contract for purchase/maintenance of the computers to Ontogo Technologies.(v) It appears that on 24th October 2017 the DDR forwarded the report to the Commissioner of Cooperation. On 3/5th November 2017 the respondent No.5 filed yet another complaint alleging irregularities and illegalities and fraud by the Directors and Chairman of the said Bank.(vi) On 20th November 2017 the Commissioner of Cooperation issued an order under Section 81(3)(c) of the Act appointing Shri. B. H. Bodke, District Special Auditor ('DSA' for short), to undertake the test audit in respect of he 9 items disclosed in the said order. The learned Commissioner observed that there are irregularities in the audit report and looking to the nature of the serious allegations made a test audit was necessary. It appears that the said order was passed on the recommendation of the Assistant Registrar who found that the report dated 13th October 2019 by the Deputy Registrar, exonerating the petitioner is a preliminary report and the Deputy Registrar had not examined the bank record and other documents.(vii) On 20th November 2017 by vitrue of a further order under Section 81(3)(c), two more items, were entrusted to DSA Mr. Bodhke for inquiry. In his report dated 10th August, 2018, the DSA found that the transfer of amount from employee's account to the Trust is suspicious and against the Prevention of Money Laundering Act ('PMLA Act' for short) and recommended an order of disqualification of the petitioner. Insofar as the issue of award of contract to Ontogo Technologies is concerned, it was held that the petitioner had influence while granting the said contract to Ontogo Technologies in which his son had a stake.(viii) On 4th September 2018 on the basis of the inquiry report from the DSA, the Commissioner of Co-operation, issued a show cause notice to the petitioner under Section 78A r/w Rule 57 of the Maharashtra Co-operative Societies Rules, 1961 ('Rules' for short). The said show cause notice only pertained to the aforesaid two items (out of the total 11 items entrusted to the DSA) namely the donations to the said Trust, and award of contract to Ontogo Technologies Ltd.(ix) It appears that the matter was referred to the Federal Society and on 15th September 2018 the Federal Society wrote to the Commissioner of Co-operation, leaving it to the Commissioner, to pass appropriate orders after hearing parties. There are two subsequent letters from the Federal Society dated 20th March 2018 and 24th April 2019 in respect of which there is certain dispute as to whether they were manipulated by the petitioner. I propose to deal with the said aspect a little later.(x) It is a matter of record that the petitioner sought the documents namely annexures 'A' to 'O' which were annexed to the original complaint, from the Commissioner of cooperation. On more than one occasion, there were requests made by the petitioner for furnishing of various documents and certain documents have indeed been furnished to the petitioner on 11th April 2019. However, according to the Petitioner, the material documents were never furnished, as a result of which the petitioner could not file his reply and effectively contest the show cause notice. Eventually, the impugned order dated 18th April 2019 was served on the Petitioner. A perusal of the said order discloses that the Commissioner did not act on the issue pertaining to the donation to the said Trust, since, the Enforcement Directorate (for short "ED") and the Income Tax Authorities, were seized of the matter. The impugned action is based only on the issue of award of contract for purchase/maintenance of the computers to Ontogo Technologies.(xi) The petitioner unsuccesfuly challenged the said order before the Appellate Authority when the appeal was dismissed on 28th August 2019. The Appellate Authority has inter alia found that the bank had awarded the contract to Ontogo Technologies, in which son of the Petitioner had 30% stake, without inviting tenders and an amount of Rs.65 lakhs was paid to the said firm in a span of three years, which prima facie showed the Petitioner's interest in the transaction.;
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