P C MOHAN Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) W.P. Nos. 34813 and 35163 - 164/2009 pertain to suppression of Grain Merchants Co-operative Bank. Writ Petition Nos. 28148 and 28156/2009 pertain to suppression of Kannika Parameshwari Cooperative Bank. The above writ petitions involve common question of law and fact. Hence, heard together for common disposal.

(2.) The Reserve Bank of India (RBI) conducted periodical inspection of Grain Merchants Co-operative Bank and Kannika Parameshwari Co-operative Bank for the period ending with March 31st 2009. In the course of inspection, serious financial irregularities like grant of (1) loan to the relatives of the directors, (2) loan without proper securities, (3) loan to the fictitious persons and (4) missapplications of one time settlement scheme to the loan accounts not covered under the Schemes.

(3.) The RBI sent a copy of the inspection report granting four months time to the above Co-operative Banks to rectify the defects and to offer explanation for mis-fisiciance and mal-fisiciance. The RBI even before the above banks sent their compliance report, directed the Registrar to remove the Managing Committees of the above banks Under Section 30(5) of the KCS Act (for short 'Act'). The tenure of the elected committee of both the Banks was to expire by 31st March 2010. The supersession was recommended by the RBI 4 months prior to the expiry of the tenure.