F. I. REBELLO, J. :- Rule. Heard forthwith.

The petitioners have averred that they are the depositors and shareholders of respondent No.1 a Co-operative Bank, registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as "MCS Act") and now under liquidation. The Bank was registered in the year 1968 and commenced business of banking under the provisions of the Banking Regulation Act, since 1968. It has membership of 8300 persons and number of depositors is around 4,000 and deposits to the tune of Rs. 1 Crore, 38 lakhs. The respondent No.4 was on the Board of Directors of the bank since its inception. In the year 1992, the Bank was declared a weak bank by the Reserve Bank of India. The Reserve Bank of India on 4-2~2003 cancelled the Banking licence of respondent No. 1. On 5-3-2003, the Commissioner for Co-operative and Registrar of Cooperative Societies, Maharashtra State, Pune on the recommendations of the Reserve Bank of India issued an order under section 110A(ii) of the M.C.S. Act, 1960 and appointed Liquidator. Respondent No.4 who is Ex Chairman had filed Writ Petition No. 861 of 2003, challenging the order of cancellation of the Banking Licence. No stay was granted to the impugned order. The Liquidator was however, directed not to sell the property and amalgamate the Bank and further granted liberty to the respondent No.4 to file appeal challenging the order of cancelling the banking licence before the Appellate Authority. The Petition was disposed of with those directions. The respondent No.4 preferred an appeal against the order of cancellation of Banking Licence by RB.I. The appeal was dismissed by RB.I.

2. Aggrieved by the order of dismissal of the appeal challenging the order of cancellation of Banking Licence, respondent No. 4 filed writ petition challenging the order of the appellate authority dated 3-2-2004. That petition was disposed of with liberty to respondent No.4 to make application to RB.I. seeking permission to convert respondent No. 1 bank into credit society. By communication of 10-9-2004, the RBI rejected the said representation giving its reasons and pointing out that as on March 31, 2001, the accumulated losses were to the tune of Rs.116.60 lacs. The RB.I. also noted that the proposal to convert the bank into credit society will not improve the financial health of the bank since the Bank's net worth was negative and the interest of the small depositors would be adversely affected as DICGC insurance will not be available to depositors. To complete the narration it may be pointed out that the RBI by their further communication dated 30-5-2006 informed respondent No.4 that the proposal to convert a DCB into co-operative society can be agreed to, if the DCB has repaid or has made provision for repayment of all deposits accepted by it and the DCB should sent notices to all the non-member depositors for obtaining payment of balance standing to their credit and that the RBI should be satisfied that the bank is in a position to pay its non-members and members as well. It was pointed out that the Bank was taken into liquidation on account of its negative net worth of Rs. 18.66 lakh and erosion of deposits to the extent of 3.8% with reference to its position as on December 31, 2001 and therefore, RBI was not in a position to accede to the bank's request to allow it to convert itself into a co-operative society. As the affairs of a bank in liquidation are under the overall control of the liquidator, the Liquidator has to satisfy the RBI that the Bank has adequate resources to pay the depositors to consider the proposal.

Respondent No.4 had filed Petition being Writ Petition (L) No. 3060 of 2004 challenging the order passed by the Commissioner, appointing Liquidator dated 5-3-2003, the order passed by the RB.I. cancelling Banking licence dated 4-2-2003 and the order passed by the RBI rejecting the permission to convert the respondent No.1 bank into cre