In a significant ruling touching the integrity of Delhi's cooperative banking sector, the Delhi High Court has intervened to address a glaring regulatory gap that allowed a man convicted of fraud and corruption, and sentenced to seven years in prison, to quietly assume the top executive post of a thrift and credit cooperative society, handling the deposits and loans of ordinary citizens.
The controversy began when a member of the Delhi Co-operative Urban Thrift and Credit Society, Bhikam Singh Colony, Shahdara, knocked on the doors of the High Court after discovering that Parshu Ram Gupta, convicted by a Special CBI Court in 2013 under Sections 420, 467, 468, and 471 of the IPC read with Section 13(1)(d) of the Prevention of Corruption Act, and sentenced to seven years' imprisonment, had been appointed CEO of the Society as far back as 2016.
The petitioner alleged that the Managing Committee that installed him was packed with his own family and friends, and sought not only Gupta's removal but a systemic fix: mandatory rules to prevent tainted individuals from ever holding managerial posts in cooperative societies again.
The Court noted that while Respondent had already been restrained from functioning as CEO by an earlier order dated 30th July, 2024, and had subsequently stepped down, the deeper question could not be allowed to die with his departure. Pointing to analogous protections already embedded in Rule 83 of the UP Co-operative Societies Employee Service Regulations, 1975, which mandates dismissal of employees convicted of offences involving moral turpitude, and Section 10 of the Banking Regulation Act, 1949, which explicitly prohibits banking companies from employing persons convicted of such offences, the bench observed pointedly, "a person bearing tainted antecedents, particularly one culminating in a criminal conviction, in serious offences, ought not to be permitted to serve in managerial capacity in such co-operative Societies."
Declining to legislate from the bench, the Court directed the Chief Secretary, GNCTD to initiate the process of framing appropriate rules under the Delhi Co-operative Societies Act, 2003 and the Delhi Co-operative Societies Rules, 2007, with full stakeholder consultation, and set a firm deadline of 30th September, 2026 for completion, with a compliance report due before the Court on 15th October, 2026. The petition was accordingly disposed of.
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