Authority: Calcutta High Court (Division Bench)

Order Date: 16 September 2026

Case Overview

  • The appellants, Sri Bhaskar Mukherjee and another, are members of Pranabananda Cooperative Bank Ltd (originally Pranabananda Cooperative Credit Society, founded April 1985). The society was listed as a primary cooperative bank by RBI on 17 April 1996 and renamed Pranabananda Cooperative Bank Ltd, Burdwan.
  • The bank applied for a licence under Section 22 of the Banking Regulation Act, 1949 on 1 March 1997. RBI issued a show‑cause notice on 24 June 2000 and, on 25 January 2001, rejected the licence application (Order No. UBD.CO.BSD III/2167/12.03.1542/2000‑2001) citing severe financial irregularities, erosion of assets, inability to meet depositor claims, chronic default in statutory returns, and violations of SLR, interest‑payment guidelines, loan appraisal, asset classification and other provisions.
  • RBI also requisitioned the Registrar of Cooperative Societies, West Bengal (RCS) to wind up the bank under Sections 99, 100 and 145 of the West Bengal Cooperative Societies Act, 1983 and Section 13D(1) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (Order No. UBD.BSD III/2166/12.03.1542/2000‑2001, 25 January 2001).
  • Acting on RBI’s requisition, the RCS issued a winding‑up order (No. 6884) on 6 August 2002 and appointed a liquidator under Section 100.
  • The winding‑up order was challenged in multiple proceedings. The West Bengal Cooperative Tribunal set aside the RCS order on 7 July 2006, calling it arbitrary, illegal and violative of natural justice.
  • The State Government and RBI filed writ petitions (W.P. 22474/2006, W.P. 6139/2007) questioning the Tribunal’s decision. The Calcutta High Court, on 5 May 2009, remanded the appeal back to the Tribunal for fresh consideration and allowed the State’s writ petitions.
  • The Tribunal again considered the appeal and, on 4 October 2016, dismissed it, affirming the 2002 winding‑up order.
  • The appellants filed W.P. 140/2017 seeking a mandamus to rescind the winding‑up order and to have all records produced. The Single Judge dismissed the petition on 4 June 2018, holding that the RBI’s recommendation was final, that the Registrar was entitled to act on RBI’s direction, and that the winding‑up order precluded any further proceedings by the society.
  • The appellants appealed (FMA 898 of 2020) alleging that the RCS had not complied with Section 92 inspection‑report requirements, had not served the report to the appellants, and had denied them a hearing, thereby violating principles of natural justice under Articles 14 and 21 of the Constitution.
  • The Court, on 14 July 2026, directed the State to furnish information on (a) whether an inspection under Section 92 was made before the winding‑up order, (b) whether a report was prepared and served, (c) whether the appellants were heard, and (d) the present status of assets and liabilities.
  • The State’s report (dated 14 August 2026) confirmed that an inspection under Section 92 was carried out on 29 July 1999 (Order No. 6003 dated 29.07.1999). However, it admitted that no inspection report had been served on the appellants before the 6 August 2002 winding‑up order.
  • The Court found that the RCS acted without providing the mandatory report and without affording a hearing, constituting a breach of natural‑justice principles and rendering the winding‑up order ultra vires.

Final Outcome

  • The Court quashes the winding‑up order dated 6 August 2002 and the appointment of the liquidator.
  • The Tribunal’s order of 4 October 2016 and the Single Judge’s order of 4 June 2018 are set aside.
  • The society is ordered to revive as a cooperative credit society and may not carry on banking business as a cooperative bank.
  • The liquidator must hand over all assets to the members; the RCS shall supervise the hand‑over.
  • No prejudice is caused to any other authority’s proceedings.
  • The appeal is allowed in the above terms.

Topics: Banking Regulation, Cooperative Societies, Natural Justice