By the Court.—Heard Shri Vipin Sinha, learned Counsel for the petitioners and Shri M.K. Gupta for the respondent No. 1 Co-operative Society. Learned Standing Counsel appears for respondent No. 3. With the consent of the parties, this writ petition is being finally decided at the admission stage.

2. The petitioner has prayed for setting aside the order passed by the Joint Registrar, Cooperative Societies, U.P., Agra Division, Agra dated March 3rd, 2008 made under Section 40 (3) of the U.P. Cooperative Societies Act, 1965 directing that the amount of Rs. 2,04,065/- (Rupees two lacs four thousand sixty five only) be recovered from Shri Kanhaiya Lal Agarwal-petitioner No. 2, the then Branch Manager of the State Bank of India, Industrial Estate Branch, Nunhai, Agra.

3. Brief facts giving rise to this writ petition are that one Shri Ashok Kumar-respondent No. 2, an employee of the bank and a member of the Indian Bank Employees (Salary Earners) Cooperative Credit and Thrift Society Ltd., Agra, the earlier society, and a member of Agra Vanijiyik Bank Karamchari (Vetan Bhogi) Sahkari Rin Evam Sakh Samiti Ltd. took a loan from the Cooperative Society to be repaid by him in installments from his salary. The repayment of the loan was assured by Shri Kanhaiya Lal Agarwal, the then Branch Manager on behalf of the Bank under an agreement with the society. Before the entire loan could be repaid, Shri Ashok Kumar applied for acceptance of his retirement under the Voluntary Retirement Scheme of the bank. His request was processed by the management of the bank and that he was allowed voluntary retirement and the ex-gratia payment was released to him without deducting the amount of loan.

4. The Cooperative Society approached the Registrar, Cooperative Societies for an order for payment of the loan against the employer under sub-section (3) of Section 40 of the U.P. Cooperative Societies Act, 1965. The Joint Registrar, Cooperative Societies, Agra Region, Agra issued notice to the bank and the Branch Manager and after giving opportunities of hearing to the bank passed an order directing unpaid amount of the loan to be recovered from Shri Kanhaiya Lal Agrawal, the then Branch Manager, State Bank of India, SSI Branch, Industrial Estate, Nunhai, Agra with the findings that the entire amount of ex-gratia payment was paid to the employee in terms of Voluntary Retirement Scheme and that employee was relieved, without ensuring payment of the unpaid loan. The Joint Registrar also found that the cheque of Rs. 1,40,000/- given by Shri Ashok Kumar on 4.10.2007 towards part payment of the loan was returned unpaid on the ground that the account has been closed, whereas Shri Ashok Kumar had made transactions from this account subsequent to the date of return of the cheque.

5. Shri Vipin Sinha, learned Counsel appearing for the petitioners submits that the management of the State Bank of India processing the VRS application did not have knowledge about the deduction of the installments or the unpaid loan and that Shri Kanhaiya Lal Agarwal-petitioner No. 2 was not posted as Branch Manager in the concerned branch in the period, when the ex-gratia payment was made to Shri Ashok Kumar. He submits that bank had shown sufficient cause in failing to make deductions in terms of sub-section (2) of Section 40 of the Act, and that in any case Shri Kanhaiya Lal Agarwal could not be held responsible as he was not posted as Branch Manager of the bank on the relevant date. His collusion has been wrongly assumed by the Joint Registrar, Cooperative Societies.

6. Shri M.K. Gupta on the other hand submits that the bank had approved the loan and had given an undertaking to recover the installments every month from the salary of the employee. The directions given by the Chief General Manager of the bank with regard to repayment of the loan assured by the bank, clearly provided that the bank as an employer is duty bound, as and when requested by the society, by requisition in writi