The Gujarat high court has directed the state government to take immediate action against the then directors of the Veraval People's Co-operative Bank.
The Gujarat high court has directed the state government to take immediate action against the then directors of the Veraval People's Co-operative Bank during whose tenure the bank invested Rs15 crore in the Madhavpura Mercantile Co-operative Bank, violating the norms of the Gujarat State Co-operative Societies Act.
The direction comes in the wake of a PIL filed in the high court by one Narandas Chandrani in 2007. The PIL raised the issue of investment of Rs15 crore by the Veravel bank in Madhavpura bank between 1993 and 2001 by violating Section 71 of the Gujarat State Co-operative Societies Act.
Chandrani stated in his petition that under Section 71 of the said act, Madhavpura bank was not included in the list of banks or financial institutions in which co-operative banks in the state could have invested their funds without prior permission of the registrar of the Gujarat Co-operative Society. The bank deposited funds even though permission was refused by the registrar, the petition said.
The petition, filed on behalf of more than 20,000 members and shareholders of the Veraval People's Co-op Bank, also said that the deposited amount was lost with the collapse of the Madhavpura bank in 2000-01. The latter could not be revived despite serious efforts spread over more than five years.
Chandrani further stated in the petition that many other co-operative banks of the state, too, had lost their deposits made with the Madhavpura bank illegally. "Under the revival package, some amount has been received back by the co-operative banks," including the Veraval People's Co-operative Bank. "However, illegal deposit has nothing to do with whether the amount is received back or not," the petition stated.
Appearing for the petitioner, advocate Anand Yagnik had submitted in the court that individual liability should be established in the matter and the lost amount should be recovered from the guilty. He also submitted that action should be taken against those officers of the state who were responsible for the aforesaid investment.
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