G. Srinivasa Rao, vs The State Of Andhra Pradesh
2024 Latest Caselaw 9922 AP

Andhra Pradesh High Court - Amravati

G. Srinivasa Rao, vs The State Of Andhra Pradesh on 6 November, 2024

     THE HON'BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

     WRIT PETITION Nos.13829, 23152, 13841, 14124, 14126, 14131,
              14134, 14136, 14138, 15186, 15189, 17577,
               17579, 17582, 20253 AND 20264 OF 2023

COMMON ORDER:

The present Writ Petitions are filed under Article 226 of the

Constitution of India and since the issue in all the Writ Petitions is

similar, they are being disposed of by this common order.

2. The batch of Writ Petitions are filed to issue a writ order or

direction more particularly one in the nature of writ of mandamus to

declare the inquiry conducted under Section 51 of the Andhra Pradesh

Cooperative Societies Act, 1964 (for short, „the Act 1964‟) by the

respondent No.8, i.e., Inquiry Officer/Assistant Registrar, Office of the

Sub-Divisional Cooperative Officer, in the affairs of the Primary

Agricultural Cooperative Society, and the consequential proceedings

Rc.No.706/2022-C dated 05.06.2023, as illegal, arbitrary and against

the principles of natural justice and also contrary to the provisions of the

Andhra Pradesh Cooperative Societies Act, 1964 (for short, „the Act

1964‟), and also in violation of Articles 14, 21 and 300A of the

Constitution of India and, consequently, prayed to set aside the

instructions given by the respondent No.4 to the respondents 5 and 6 to

initiate criminal, civil and disciplinary proceedings against the petitioner.

CONTENTS OF INQUIRY REPORT:

3. An enquiry under Section 51 of the Act 1964 was conducted into

the affairs of Reddypalem Primary Agricultural Cooperative Society and

other Primary Agricultural Cooperative Societies. As seen from the

impugned order dated 31.05.2023, the Deputy Registrar of Cooperative

Societies and Divisional Cooperative Officer, who conducted periodical

inspection of the Primary Agricultural Cooperative Society (PACS) for

the period from 01.04.2021 to 30.09.2021, and observed that fake loans

were granted and submitted preliminary report stating that they have

identified certain irregular loans issued by the petitioners and

recommended for inquiry under Section 51 of the Act 1964.

4. Accordingly, the 4th respondent-District Cooperative Officer,

Guntur, ordered an inquiry under Section 51 of the Act 1964 into the

affairs of the Reddypalem PACS and other PACSs.

5. As seen from the inquiry report, which is impugned in the present

Writ Petition that it conveys or transpires or communicate that the Chief

Executive Officer of the Society recorded in the minutes that the

petitioners herein have granted membership, as if the meeting was

conducted for issuance of the membership and on the same day, loans

were granted to the said members and the committee members have

not signed on the minutes, but at the same time, the three member

Managing Committee signed on the loan filed which are quite irregular.

And out of granting loans to 55 members, only 50 members taken CC &

KCC to a tune of Rs.2,99,00,000/- leaving 5 fake members as balance

and the said loans were granted contrary to the circulars issued by the

Administrative Office, while sanctioning loans without identifying the

members by way of field inspection by the Manager, Supervisor and

Chief Executive Officer of the Society and after conducting the field

inspection, a certificate shall be appended to the loan file, then only the

petitioners have to sanction the loan amount and the same was

deviated by the Managers, Supervisors and Chief Executive Officer.

6. It is also asserted in the inquiry report that the bank officials also

opened the SB accounts to the fake members without verifying the

Aadhar and PAN cards which resulted the misappropriation of funds

towards benami loans. More so, the Bank Managers as well as

Supervisors, CEOs have not followed the cash credit circulars issued by

the Administrative Office and the Inquiry Officer also opined that if the

bank officials followed the circular issued by the Administrative Office,

they can also stop payments, but in this aspect, they were colluded with

the delinquents.

7. In this connection, the revenue officials are also mainly colluded

with the fake members for exhibiting and uploading fake mutations with

RSR does not follow the guidelines of the Chief Commissioner of the

Land Administration in which CCLA‟s Circular No.LR.II/ROR2/7128/

2016 dated and G.O.Ms.No.271 of Revenue Department dated

01.07.2016, where the Government of Andhra Pradesh issued to all the

Tahsildars and District Collectors and all the connected persons those

who are authorized to conduct mutations in connection with the sale,

gift, partition, etc. And out of 50 cases of benami loans, 45 cases were

relating to Machavaram Mandal and the rest of 5 cases relating to

Bellamkonda Mandal uploading directly the names of fake members into

the web land without having survey numbers and extent and the dates

of uploading and deletion, if any, those who caused for the above

lapses.

8. The Inquiry Officer also reported that in connection with the Sub

Registrar‟s Office, out of 50 fake members, the mortgage registration

was done in favour of the fake members only 40 members and SROs

found the said survey numbers in the web land at that time, but in

respect of 10 fake loans, Piduguralla Sub-Registrar informed that the

mortgage registrations as well as encumbrance certificates were

registered in favour of fake lonees and found to be fake mortgaged

bonds and fake encumbrance certificates.

9. Basing upon the inquiry report, the Joint Registrar, District

Cooperative Officer, vide proceedings in Rc.No.706/2022-C dated

05.06.2023, has directed to initiate civil, criminal and disciplinary

proceedings against the petitioners herein.

CONTENTIONS OF THE WRIT PETITIONERS AS PER THE AFFIDAVIT:

10. Assailing the said inquiry report dated 31.05.2023 under Section

51 of the Act 1964 and the proceedings of the Joint Registrar dated

05.06.2023, directing to initiate civil, criminal and disciplinary action

against the petitioners, the present Writ Petition are filed on the ground

that the petitioners are not the employees of the respective PACSs and

the petitioners are not responsible for the loss caused to the said

societies and the petitioner did not violate any rules in force and the 4 th

respondent-District Cooperative Officer has no power or authority or

jurisdiction to give instructions to the Deputy Registrar of Cooperative

Societies and Divisional Cooperative Officer, who is arrayed as 5th

respondent, and the Chief Executive Officer, Guntur District Cooperative

Central Bank Limited, who is arrayed as 6th respondent, to initiate civil,

criminal and disciplinary action against the petitioners and the finding of

the inquiry officer that the bank officials colluded with the Management,

Chief Executive Officer of the respective societies is false and baseless

and the finding of inquiry officer that the petitioner is not able to

technically check-up Aadhar and PAN cards is nothing but violation of

circulars issued by the Reserve Bank of India from time to time and the

petitioner has not preferred to check-up in the nearest mee-seva

kendram is misconceived, unreasonable and based on no evidence.

11. And further contended that in fact, e-KYC is not available with the

bank and there is no circular in force which imposes an obligation on the

Manager to conduct field inspection of the agricultural land which is

mortgaged to PACS before disbursing the amount, which has been

sanctioned and granted by the concerned PACS in favour of the

members and there is no obligation cast upon the officials of the bank

for physical verification of the land which was mortgaged in favour of the

respective societies for the loan granted by the PACS and the

surcharge proceedings issued against the employees of the bank in

pursuant to the report submitted by the inquiry officer under Section 51

of the Act 1964 is without jurisdiction, as per the orders in

W.P.Nos.22815, 22828 and 228209 of 2009 of the common High Court

and the conjoint reading of relief of Sections 59 and 60 of the Act 1964

makes it clear that the surcharge proceedings cannot be taken against

non-employees, non-office bearers or non-members of the society and

the action taken against the employees of the bank or held to be without

jurisdiction. In order to attract Section 60 of the Act 1964, there must be

a loss caused to the bank and the loss caused go the society cannot be

a cause of action for proceeding against the employees of the bank.

12. Though the employees of the bank are connected with the

process of sanctioning loans and the bank itself is a society, no action

can be taken against the employee of the another society „Bank‟ in

respect of irregularities committed in a society. Managers of the

respective branches have verified the title deeds, passbooks, 1-B, E.C.,

Adangal and also the mortgage deed executed by the member of the

society in favour of the society and then only the loans were disbursed.

The allegation against the petitioner and other persons who obtained

loans from the PACSs have colluded with the CEOs and Managing

Committees of the respective PACSs is false, baseless and

misconceived. Hence, prayed to set aside the impugned enquiry under

Section 51 of the Act 1964 dated 31.05.2023 and the consequential

order for initiating civil, criminal and disciplinary proceedings dated

05.06.2023.

13. To substantiate their contentions raised in the affidavits filed in

support of the Writ Petitions, learned counsel appearing for the

petitioners in all the Writ Petitions, relied on the following judgments:

(1) K.Satyanarayana and others v. A.P. Co-operative Tribunal Visakhapatnam, Visakhapatnam and others1, for the proposition that though the employees of the bank are connected in the process of sanction of the loans and the bank itself is a society, no action can be taken against the employees of another Society, "Bank" in respect of the irregularities committed in a Society.

(2) Dr. V.K. John v. G.Vasantha Pai and another2, to explain the meaning of "Circular".

(3) Co-operative Marketing Society, Anakapalle v. Pentakotla Sriramulu3, for the proposition that in order to attract its applicability, it is necessary that either an audit under Section 37 or an inquiry under Section 38 or an inspection under

2018 (1) ALD 555

AIR 1957 Madras 320

1960 (1) ALT 102 (D.B.)

Section 39 should disclose that persons in management have misappropriated funds, then only the persons concerned would be surcharged under this Section.

(4) S.Balappa v. Co-operative Tribunal, Hyderabad and others4, for the proposition that to bring a case within the scope of Section 60, it should appear that any person who has taken part in the management of the society or any past or present officer of the society has misappropriated or fraudulently retained any money or other property or has been guilty of breach of trust in relation to the society and it must also appear in the course of the audit or enquiry or in an inspection or on the winding up of a society, the said amount had fallen due to be recovered from the concerned person.

CONTENTIONS OF GOVERNMENT PLEADER FOR R1 TO R3 AND R5 AS PER THE COUNTER:

14. Repelling the contentions raised by the writ petitioners,

respondents 1, 2, 3 and 5, through the learned Government Pleader,

filed their counter and stated that the Chief Executive Officers of the

respective PACSs had issued irregular loans to the persons who are not

holding agricultural land in the area of operation of the PACSs by

violating bye-law No.6 of the society and Section 19 of the Act 1964, as

2005 (2) ALT 137 (S.B.)

such, an inquiry was ordered under Section 51 of the Act 1964 into the

affairs of the PACS to conduct a detailed inquiry and to fix-up the

responsibility.

15. The 5th respondent-Deputy Registrar of Cooperative Societies

and Divisional Cooperative Officer recommended to order an inquiry

under Section 51 of the Act 1964 basing on the findings of the

Inspection Officer/Senior Inspector, Periodical Inspection Officer, Office

of the Sub Divisional Cooperative Officer, Guntur, the Chief Executive

Officer, Perecherla PACS Limited, the four members had sanctioned

eight benami KCC and CC loans for Rs.18,00,000/-, the Manager and

Supervisor opened SB accounts in the branch concerned in favour of

the fake borrowers without following the KYC norms and without

insisting about the evidence produced, i.e., Aadhar and PAN cards) is

quite irregular. And the petitioners have not acted as per the guidelines/

circular instructions issued by the GDCC Bank Limited, Guntur, for

sanction and disbursement of loans.

16. Learned Government Pleader would further submit that Circular

No.BKG/KYC/F.No.269/2021-22 dated 03.12.2021 on the KYC

Guidelines is issued to protect the financial system against threat of

money laundering/terror financing and frauds. Circular instructions in

ADM.F.No.1111/2019-20 dated 31.05.2019 point No.8 says that "in

case of disbursement of loans to new members, supervisor has to visit

the residence of the member and assess his capacity to repay the loan

amount, then only he has to recommend for sanction of the loan.

Further in case of sanction loan more than Rs.1,00,000/-, the Branch

Supervisor, Branch Manager has to conduct field inspection along with

the Chief Executive Officer of the Society."

17. Hence, the contention of the petitioner that he has not violated the

prevailing guidelines in disbursement of loans and the findings of the

Inquiry Officer that the bank officials colluded with the Management,

Chief Executive Officer of the respective societies is false and baseless

is not correct.

18. And it is also stated that as per the G.O.Ms.No.34, Food and

Agriculture (Coop.IV) dated 16.01.1989, the appointment of the Inquiry

Officer under Section 51 of the Act 1964 in respect of PACS has been

delegated to the District Cooperative Officer. Accordingly, he District

Cooperative Officer, Guntur ordered inquiry under Section 51 of the Act

1964 into the affairs of the Reddypalem PACS and Perecherla through

proceeding Rc.No.704/2022-C, dated 16.03.2022 and Rc.No.706/2022-

C dated 16.03.2022 respectively on the recommendations of the

Divisional Cooperative Officer, Guntur.

19. It is also stated that there are similar misappropriation cases

including this, in 17 PACSs have been happened and inquiries under

Section 51 of the Act 1964 were conducted and inquiry reports

submitted by the Inquiry Officer revealed that sanctioned and disbursed

for an amount of Rs10.68 crores of benami loans to 184 fake members

by opening SB accounts in branches by 25 bank employees. Hence,

prayed to dismiss all the Writ Petitions.

20. Learned Government Pleader appearing for respondents 1, 2, 3

and 5 relied on the following judgments:

(1) L.N.Peta Primary Agricultural Cooperative Society v. The Government of Andhra Pradesh, rep. by its Principal Secretary, Cooperative Societies Department, Secretariat Buildings, Hyderabad and others5, for the proposition that the Court in exercise of discretionary jurisdiction under Article 226 of the Constitution of India shall not prevent an inquiry intended to be held for unearthing fraud, if any, allegedly committed in disbursement of pubic money and the same cannot be allowed to be kept based on technicalities.

(2015) 1 ALD 253

(2) Araja Narasimha Rao v. District Cooperative Officer/Joint Registrar Krishna District, Machilipatnam6.

(3) Order of this Court in W.P.No.40847 of 2015 dated 28.08.2024.

CONTENTIONS OF 6TH RESPONDENT BANK AS PER THE COUNTER:

21. The 6th respondent filed counter through their counsel

Ms. K.N.Vijaya Lakshmi, and relied on the circular ADM.F.No.1111/

2019-20 dated 31.05.2019. Clause-8 of the circular that

communicate/transmit that without allotment from administrative office,

the PACS should not disburse loans to new members or enhance the

loan amount to existing borrowers. Without special permission from

administrative office, the PACS should not disburse loan amount above

Rs.1,00,000/- to new members. While disbursing loans to new

members, the Supervisor should visit the residence of the applicant and

scrutinize the loan repayment capacity of the applicant, only then the

Supervisor should recommend the sanctioning of the loan. And while

disbursing loan amount above Rs.1,00,000/- the Branch Supervisor and

Manager should conduct field inspection along with CEO of the PACS.

2007 (5) ALD 698

The same should be kept in loan file. The PACS should not change

more than 7% on these loans.

22. It is also stated that it is the duty of the sanctioning authority, i.e.,

the Manager, Supervisor & CEOs to verify the KYC (know your

customer) of the proposed loanee/borrower and to verify the revenue

records of the proposed agricultural land offered to be mortgaged to the

PACS namely, Adangal, ROR-1B, Pattadar Passbook-cum-Title deeds

in the title of the proposed loanee/borrower and also to verify the

Encumbrance Certificate to find whether any third party interests

created over the proposed agricultural land offered to be mortgaged to

the PACS as security towards the proposed loan amount to be

sanctioned and also to physically visit the proposed agricultural land

offered as security and record a field inspection report verifying the

actual land in parity with the submitted revenue records namely

Adangal, ROR-1B, Pattadar Passbook-cum-Title deeds and the same

shall be maintained and filed in the bank records along with the SAO

loan application before disbursement of any loan amount to the

borrower.

23. It is also stated that none of the conditions stated supra have not

been followed by the petitioner, as such, the respondents passed the

impugned order in Rc.No.704/2022-C dated 31.05.2023 and

Rc.No.706/2022-C dated 05.06.2023 was right and appropriate as the

employees vested with the duties of field inspection and sanctioning

authority were negligent and committed dereliction of their individual

respective duties which caused misappropriation to the funds of the

bank.

24. Learned counsel for the 6th respondent relied on judgment of the

Hon‟ble Apex Court in Chairman & Managing Director, United

Commercial Bank v. P.C.Kakkar7, for the proposition that a bank is

dependent upon each of its officers and officers acting and operating

within their allotted sphere and acting beyond one‟s authority is by itself

a breach of discipline and is a misconduct. Hence, prayed to dismiss

the Writ Petitions.

CONSIDERATION OF BOTH PARTIES BRIEFLY:

25. Heard Sri Prabhu Nath Vasireddy, learned counsel for the writ

petitioner, Sri Ramakrishna Naik, learned Government Pleader for

Cooperation, appearing for respondent Nos.1, 2, 3 and 5 and Ms.K.N.

Vijaya Lakshmi, learned counsel for respondent No.6.

(2003) 4 SCC 364

26. Learned counsel for the petitioners argues that the primary

responsibility for the irregularities committed in the affairs of the society

rests on the office bearers of the society and the employees working

herein. Though the employees of the bank are connected in the

process of sanction of the loans and the bank itself is a society, no

action can be taken against the employees of another society, "Bank" in

respect of the irregularities committed in a society. In any event, the

joint and several liability cannot be mulcted on the petitioners.

27. On the touchstone of the aforesaid principle which was laid in

K.SSatyanarayana's case (1 supra), learned counsel appearing for the

petitioners would submit that if at all, the responsibility is only on the

society not on the bank, though the employees of the bank are

connected with and the bank itself is a society, no action can be taken

against the employees of the another society. Therefore, learned

counsel appearing for the petitioners voiced that it is a fit case to allow

all the Writ Petitions and set aside the impugned proceedings dated

31.05.2023 and 05.06.2023.

28. It is also contended by the learned counsel for the petitioners that

the circular issued by the DCCBs is not a law or a statute or rule and it

is not binding and there is no need to follow the circular and also stated

that the circular was not circulated to the respective PACSs and not

following the circular is not a ground to conduct an inquiry or for

initiating civil, criminal and disciplinary proceedings against the

petitioners herein. And also contended that there is no such willful

negligence on the part of the petitioners in disbursing the loan amount

and also stated that the e-KYC is not available with the bank and no

circular in force which imposes an obligation on the Manager to conduct

field inspection of the agricultural land which is mortgaged to PACS

before disbursing the amount, as such, the petitioner did not commit any

misconduct and therefore the petitioners are not liable to any civil,

criminal or disciplinary action. Hence, prayed to allow the Writ Petitions

by setting aside the impugned enquiry dated 31.05.2023 and the

consequential initiation of civil, criminal and disciplinary proceedings

dated 05.06.2023.

29. The respondents would submit that the petitioners have not

conducted inquiry as contemplated under the circular and they have not

conducted field inspection before granting loans, as the amount is more

than Rs.1,00,000/- and the petitioners have entered benami members

into the society as per the information furnished by Piduguralla Sub

Registrar Office and the mortgage registrations as well as encumbrance

certificates are not registered in favour of the fake loanees and found to

be fake encumbrance certificates and the petitioners have not followed

the cash credit circulars issued by the administrative office, if they would

have been followed the circulars issued by the administrative office,

,they can prevent the payments or stop the payments. As they were

colluded, they have not followed the circular issued by the

administrative office, on seeing these allegations, the judgments relied

on by the petitioners are not applicable to the present facts of the case,

as the society is not responsible for the irregularities committed by the

petitioners and the society has not accepted any loan applications.

COURT‟S CONCLUSION:

30. The proposition laid in the judgment in K.Satyanarayana's case (1

supra) is that: The bank itself is a society, no action can be taken

against the employees of the bank in respect of the irregularities

committed in the society. The said proposition is not applicable to the

present facts of the case, as the society has not sanctioned or

recommended for, any loan and the petitioners herein have deviated the

circulars issued and in collusion with the revenue officials have created

fake SB accounts and without field inspection, they have disbursed the

loan amount. Therefore, on the touchstone of the judgment in

K.Satyanarayana‟s case (1 supra), the petitioners cannot agitate to

quash the inquiry under Section 51 of the Act 1964 and ordering of civil,

criminal and disciplinary action dated 05.06.2023.

31. The judgment of the Madras High Court relied on by the learned

counsel for the petitioners relating to the circular in Dr. V.K. John v.

G.Vasantha Pai and another (2 supra) at paragraph No.5, it is asserted

that:

"According to the meaning given in the Concise Oxford Dictionary, "circular" is something addressed to a circle of persons and the meaning of "circular letter" or "circular" is given as notice, advertisement etc. reproduced for distribution. Obviously, the material letters were such circular letters printed for distribution among the voters. We therefore accept the finding of fact that the petitioner, Dr. John, was guilty of the illegal practice mentioned in S.125(3) of the Act."

32. On a reference made by a Bench of Three Judges of the Hon‟ble

Supreme Court in Commissioner of Central Excise v. Ratan Melting And

Wire Industries, Calcutta8, a Constitutional Bench in CCE v. Ratan

(2005) 3 SCC 57

Melting & Wire Industries9, held that: "The circulars and instructions

issued by the Board are no doubt binding in law on the authorities under

the respective statutes, but when the Supreme Court or the High Court

declares the law on the question arising for consideration, it would not

be appropriate for the Court to direct that the circular should be given

effect and not the view expressed in a decision of this Court or the High

Court. So far as the clarifications/circulars issued by the Central

Government and of the State Government are concerned they respect

merely their understanding of the statutory provisions."

33. It is other contention raised by the learned counsel for the

petitioner that e-KYC is not available in the bank.

34. Applicability of KYC is known as:

a) These Directions shall be called the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016.

b) These directions shall come into effect on the day they are placed on the official website of the Reserve Bank of India.

Section 2: Applicability:

(a) The provisions of these Directions shall apply to every entity regulated by Reserve Bank of India, more specifically as defined in 3 (b)

(xiv) below, except where specifically mentioned otherwise.

(2008) 13 SCC 1

Regulated Entities" (REs) means:

All Scheduled Commercial Banks (SCBs)/ Regional Rural Banks (RRBs)/ Local Area Banks (LABs)/ All Primary (Urban) Co-operative Banks (UCBs)/State and Central Co-operative Banks (StCBs / CCBs) and any other entity which has been licenced under Section 22 of Banking Regulation Act, 1949, which as a group shall be referred as „banks‟ Section 23: Notwithstanding anything contained in Section 16 and as an alternative thereto, in case an individual who desires to open a bank account, banks shall open a „Small Account‟, which entails the following limitations:

(i) the aggregate of all credits in a financial year does not exceed rupees one lakh;

ii) xxx

iii) xxx

35. The purpose and purport of KYC stands for "Know Your

Customer." It is a due diligence process financial companies use to

verify customer identity and assess and monitor customer risk. KYC

ensures customers are who they say they are, and it prevents money

laundering, terrorism financing, and more fraudulent activities and

schemes. By verifying a customer‟s identity and intentions when the

account is opened and then monitoring transaction patterns, financial

institutions can more accurately pinpoint suspicious activities. As

mandated by the Reserve Bank's guidelines, all banks and financial

institutions are required to implement Know Your Customer (KYC)

procedures. Financial institutions cannot proceed with transactions if

KYC documentation is not available.

36. The Reserve Bank of India has power, to ensure a fair

enforcement of its provisions, by issuing circulars in exercise of its

statutory powers under Banking Regulations Act which are binding on

the authorities in the administration of the Act.

37. Once rules are gazetted and notified shall be deemed to have

been made under the said Act and shall continue to be in force unless

and until they are superseded by Rules made under the Act, they

typically come into effect and are considered legally binding. A

government body or authority cannot simply state that the rules are not

implemented if they have been officially published. The allegations in

the enquiry under Section 51 of Act indicate a preponderance of

probability that the petitioners intentionally committed misappropriation

of the bank funds.

38. The petitioners knowingly granted loans in collusion, ignoring

bank guidelines. Their actions were intentional, not negligent.

39. One of the decisions referred to in Words and Phrases

Permanent Edition, 28, viz., Smith v. Weber 16 N.W. 2d. 537, 539, 70

S.D. 232, gives the following definition: "Wilfulness'" and 'negligence'

are opposites, wilfulness signifying presence of intention, purpose or

design and negligence in their absence, arising from inattention,

thoughtlessness, or heedlessness, and there is a distinction between

negligence characterized by inadvertence-and wilful injury characterized

by 'advertence'.

40. Upon examination of the impugned enquiry report, it is evident

that the report did not contain any findings indicating that the society

directed or recommended the sanction of loans to benami beneficiaries.

Rather, it is the petitioners who fraudulently disbursed the loans.

Without any evidence of a direction or recommendation from the

society, the petitioners cannot reasonably claim that the involvement of

bank employees in the loan sanctioning process precludes

accountability. The fact that the bank operates as a society does not

exempt its employees from liability for irregularities that occur within its

operations. The bank, as a society, and its employees, who are

petitioners, cannot evade responsibility for any wrongdoing and can still

be held accountable for their actions. The petitioners who granted

loans fraudulently together and they want to punish society for

wrongdoings of the person which is unjust and unfair.

41. In view of the foregoing discussion, the principle laid down in the

judgment of the common High Court in K.Satyanarayana's case (1

supra) is not applicable to the facts of the present case, as the society

has not recommended or paid the loans to the fake members and the

petitioners therein have created bank accounts fraudulently and

disbursed the amounts fraudulent without following the circulars issued

by the Reserve Bank of India and DCCB. Hence, this Court found no

reasons to allow the Writ Petitions.

42. Accordingly, all the Writ Petitions are dismissed. There shall be

no order as to costs.

As a sequel thereto, Miscellaneous Petitions pending, if any, shall

stand closed.

__________________________________ JUSTICE TARLADA RAJASEKHAR RAO Date: 06.11.2024 Note: Issue cc by tomorrow B/o siva

THE HON'BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

WRIT PETITION Nos.13829, 23152, 13841, 14124, 14126, 14131, 14134, 14136, 14138, 15186, 15189, 17577, 17579, 17582, 20253 AND 20264 OF 2023

Date: 06.11.2024

siva