The main legal point established in the judgment is that the power to remove the CEO is vested with the RBI as per Section 36AA of the Banking Regulation Act, 1949.

JUDGMENT :

The question involved in the present writ petition is whether the impugned order dated 09.11.2021 (Ext.P8) issued by the 2nd respondent to the petitioner suspending him from the post of CEO would be valid in law in the absence of concurrence of the Reserve Bank of India as per the provisions of Banking Regulation Act, 1949 as amended. The genesis of the case as spelled out from the pleadings and arguments are that Part V of the Banking Regulations Act, 1949 was though made applicable to the Cooperative Societies subject to the modification, but a non-obstante clause vide notification No.39/2020 was inserted with effect from 01.04.2021 making it clear that the provisions of the Act particularly Part II-A prescribing the control of the RBI over the management and its power as envisaged under Section 36AA to remove Chairman, Director or Chief Executive Officer (CEO) or other Officers or Employees, vest only with RBI.

2. The facts in brief are that the petitioner on 22.07.2021 was appointed as Chief Executive Officer (CEO) of the respondent-Thiruvalla East Co-operative Bank for a period of two years effective from 01.08.2021. On cessation of the tenure of the Board of Management on 04.11.2021, respondent No.2 was appointed as Part-time Administrator vide order dated 03.11.2021 (Ext.P4).

3. Petitioner received a communication dated 05.11.2021 Ext.P5 from the 2nd respondent pertaining to two employees and senior clerks in respect of their working ie., handing over the keys as well as of not arranging staff, on the basis of some complaint alleged to have been made by the staffs.

4. Apprehending that the respondent No.2 would impede the working of the petitioner regarding conduct of the business much less allocation and de-allocation of the work, a W.P. (C)No.25400/2021 was filed in this Court alleging that the CEO of the bank was not obliged to comply with the directions of the Part-time Administrator. Vide order dated 12.11.2021, this Court, while issuing notice to the Senior Government Pleader, issued certain directions permitting the petitioner to function as per law without being physically obstructed or threatened or intimidated by respondent No.2, who was arrayed as respondent No.4 in the aforementioned writ petition, with a rider that if the conduct of the petitioner invited legal consequences, the competent authority without causing any physical obstruction or threat could do so under the provisions of the law.

5. During the pendency of the writ petition, petitioner was served with the impugned order dated 09.11.2021 Ext.P8 whereby she was suspended. Sri.Santhosh Mathew with Sri.Arjun Raghavan, learned counsel appearing on behalf of the petitioner submitted that the impugned order suffers from illegality, travesty much less fallacity on the following legal points:

1) Section 36AA of Part-II A of Banking Regulation Act, 1949 dealing with the control over the management clearly specifies that RBI has the power to remove the managerial and other persons from the office and no other person.

2) There would not have been any impediment for the Administrator-respondent No.2 to act as per the provisions of the Act but after obtaining the concurrence of the RBI.

3) Though Ext.P8 reveals that a formal intimation had been sent to the RBI but in the absence of any concurrence, the order ex-facie is wholly unsustainable much less atrocious.

6. After this Court had interdicted in the order impugned vide order dated 12.11.2021, certain subsequent events had taken place which would demonstrate intimidative and deliberate rancor nursed by respondent No.2 in as much as that vide communication dated 15.11.2021 (Ext.P15) as an eye-wash in compliance of the interim order, was purported by re-inducting as CEO of the society but without any duties and powers.

7. On 15.11.2021 circular was issued to all employees to report the newly appointed CEO, who was the General Manager. In other words all the powers of the Managing Director were vested with