SANDEEP K. SHINDE, J.

In exercise of the powers under Section 22(4) of the Banking Regulation Act, 1949 (hereinafter referred to as the BR Act), Reserve Bank of India vide order dated 30.12.2011 cancelled the Petitioner's licence to conduct banking business and issued mandate to stop “business of banking”, within the meaning of Section 5(b) of the BR Act with immediate effect. This order was carried in appeal under Section 22(5) of the said Act before the Appellate Authority, i.e., Ministry of Finance (Department of Financial Services) Government of India. Appellate Authority vide order dated 23.4.2013 upheld the order of the Reserve Bank of India and as such, the appeal was dismissed.

2. Aggrieved by the order passed in Appeal as aforesaid, this Writ Petition is preferred by the Bank through its Chairman Mr. Kolur and by the Cooperative Bank Employees' Union under Article 226 of the Constitution of India.

3. Initially, Petition was filed against the authorities under the said Act and Maharashtra Cooperative Societies Act. Later in terms of the order dated 16.1.2014, directors and the borrowers, who allegedly siphoned the funds of the bank were impleaded as respondents nos.10 to 101. Deposit Insurance and Credit Guarantee Corporation has been impleaded as Respondent No.102 in terms of the order dated 21.2.2014.

4. On 3.10.2011 Chief Manager of the bank lodged a complaint with the Andheri Police Station, Mumbai and reported that financial position of the bank has worsened since many CC loan accounts of the huge amount were classified as NPA. He reported particulars of several irregularities committed while sanctioning loan. He further reported that Branch Manager Mr. Kadoli and Board of Directors in collusion with each other violated regulations of CC Limit and, misused their powers and disbursed loans without following rules. He reported 59 loan holders of Andheri Branch, Branch Manager Mr. Kadoli and officers of the Board in collusion with each other disbursed the loan of Rs.575020936 by forging the documents which resulted in huge loss to the bank. He reported act of cheating and misappropriation of funds by the Branch Manager and Members of Board. It resulted in registration of C.R. No.92 of 2011 under Sections 420, 409, 465, 467, 120B of the Indian Penal Code, 1860.

5. Commissioner for Cooperation, vide order dated 3.1.2012, appointed Board of Liquidators for winding up of affairs of the Petitioner-Bank, under Section 110A (ii) of the Maharashtra Cooperative Societies Act, 1960 and directed Board of Liquidators to submit quarterly progress report to him, under the intimation to Deposit Insurance and Credit Guarantee Corporation.

6. Before dealing with the contentions raised by the petitioner-Bank, facts relevant for the present case to be stated are as under :

(i) On 22.8.1973, Petitioner-Bank was registered as Cooperative Society under the Maharashtra Cooperative Societies Act, 1960 (hereinafter referred to as the 'MCS Act, 1960');

(ii) On 26.3.1974, a licence was granted under Section 22 of the BR Act;

(iii) On 31.3.2006, 31.3.2007 and 31.3.2008, the Reserve Bank of India conducted statutory inspection of the bank with reference to its financial position. Pursuant to the said statutory inspection, Bank was advised not to extend area of operation; not to open new branches, not to declare dividend and also advised to refrain from paying interest, etc. Bank was advised to set up recovery efforts and maintain CD ratio at sustainable levels. Bank was also advised to explore the possibility of merger with sound bank.

(iv) Statutory audit with respect to financial position of the said bank as on 31.3.2009 was also conducted and was advised on 29.10.2009 not to resort to borrowings or allow premature withdrawals of deposit;

(v) On 8.2.2010 Enquiry Officer under Section 83 of the MCS Act reported that the bank had disbursed loans having insufficient mortgage security and lack of repayment capacity of borrowers (76 Loan Account) wi