Gaps In Findings

 

 

 

IN A bunch of identical writ petitions filed by, Sanjeev Bhaskar Pathak of Pune and several other former bank managers of M/s Rupee Co-operative Bank Ltd., Pune, decided on October 17, 2025, Justice Amit Borkar, at the Bombay High Court at Mumbai, has found it impossible to fix personal liability of each petitioner in these writ proceedings. The questions are mainly factual. They require close scrutiny of records, witness testimony and documentary proof. The Court cannot, on the paper now before it, decide what exact role each petitioner played. The HC has commented further, that it cannot say, which specific acts or omissions are proved against whom. The Court cannot say, how much of total loss, if any, is attributable to each person. These issues call for detailed fact-finding. Only such a detailed process can produce the credible evidence required to fasten individual liability under section 88 of the Maharashtra Co-operative Societies Act, 1060. Writ jurisdiction under Articles 226 and 227 is not the right forum for reappraisal of primary facts.

 

The High Court’s function in writ proceedings is to test legality, fairness and procedure. It is not to conduct a trial or reweigh evidence afresh. The material before the Court shows gaps in the earlier findings, absence of separate discussion of each charge, and want of proper evaluation of defences and documentary proof. Those defects go to heart of inquiry under section 88 and Rule 72. For these reasons, the matter was sent back to the competent authority- the Authorized Officer, Dr. Kishor Toshniwal, the then Divisional Joint Registrar for fresh inquiry and determination in accordance with law, after giving all concerned parties due opportunity of hearing and following the procedure prescribed under the Act and Rules. In each petition, the petitioners (former Managers of the respondent- Rupee Co-operative Bank Ltd.) challenged the judgment and order passed by the Appellate Authority exercising powers under section 152 of the MCS Act, confirming the order passed by the Authorised Officer under section 88 of the Act, holding the respective petitioner liable for the amounts mentioned against their names. In February, 2002, the Registrar for Co-operation superseded the Board of Directors of the respondent-Bank under section 110A.

 

In the present case, the order contains conclusions but no reasoning. It does not explain how the oral evidence of the bank’s witness or the documentary evidence proved against the petitioners establishes misfeasance, negligence or breach of trust. It also does not specify which part of the petitioner’s defence was rejected and why? The absence of such reasoning makes the findings purely conclusory and not judicially sustainable. Therefore, the omission of the Authorised Officer to analyse the evidence, to evaluate the credibility of the Bank’s witness, and to deal with the specific defences raised by the petitioners, renders the order defective in law. The findings thus recorded cannot be treated as a valid determination of liability under section 88.

 

The matter must, therefore, be reconsidered by the competent authority after a proper and reasoned evaluation of all oral and documentary evidence, and after addressing each defence specifically in accordance with law. In this case, the order of the appellate authority does not show how this connection was established. The order merely states that the petitioners “participated in management” or “processed proposals” which allegedly led to loss, but it does not explain how such participation caused that loss. There is no detailed computation or reasoning showing how the total loss was calculated, nor how much of that loss is attributable to the act of each petitioner. When a bank or Co-Operative Society suffers loss on account of loans turning bad, it is necessary to show that the loans were sanctioned due to a wrongful recommendation or negligence of a specific officer, that such act violated rules or bye-laws, and that but for such act, the loss would not have occurred. This causal link must be demonstrated through documents, minutes of meetings or audit reports.

 

Mere assumption that the officer’s involvement “must have” contributed to the loss is not enough. The order passed by the Appellate Authority also suffers from a clear lack of independent reasoning and proper application of mind. Instead of re-examining the findings of the Authorized Officer as required by law, the Appellate Authority has merely repeated same conclusions without any separate or independent analysis. The order reads more like an endorsement than an adjudication. Under section 152 of the Act, the Appellate Authority has a distinct and important duty. It is not expected to mechanically approve what the lower authority has done. Its role is to review the legality, propriety and correctness of the order under appeal, both on facts and on law.

 

The Appellate Authority must satisfy itself that the procedure prescribed under Rule 72 of the MCS Rules, 1961 has been strictly followed, that the findings of the Authorized Officer are supported by credible evidence and that the conclusions drawn are proportionate. In this case, there is no indication that such scrutiny was carried out. The Appellate Authority has not examined whether the Authorized Officer had framed specific charges as required under Rule 72, whether the petitioners were given full opportunity to defend themselves, or whether the evidence relied upon was sufficient and reliable. The appellate order is silent on these crucial procedural safeguards, which are the foundation of any valid inquiry under section 88. Another serious omission is the absence of discussion on proportionality of liability. Section 88 permits recovery only to the extent of loss by each person’s individual act. The Appellate Authority should have examined whether the liability fixed on each petitioner was proportionate to his role and responsibility. Instead, it accepted the findings of collective liability without considering whether all officers bore the same degree of fault or whether their functions were distinct.

 

This shows a complete absence of independent application of mind. By merely reproducing the reasoning of the Authorised Officer without engaging with the issues raised in appeal, the Authority failed to perform its statutory role. Such an approach defeats the very purpose of appellate scrutiny. In proceedings that impose personal financial liability, the Authority must act with great care and precision. The appellate order is incomplete, mechanical and devoid of reasoning. The absence of independent analysis renders the appellate decision unsustainable in law. Accordingly, the order dated December 29, 2001, passed by the Maharashtra Addl. Chief Secretary acting as Appellate Authority under section 152 of the MCS Act and the order of February 2, 2016 passed by the Authorised Officer under section 88 of the Act in all petitions have been quashed and set aside and the matter has been remanded to the Authorised Officer for fresh consideration and decision in accordance with law, within reasonable time within six months, following procedure strictly as laid down in the Rule 72 of the MCS Rules, 1961.