Calcutta HC Quashes Pranabananda Cooperative Bank Winding-Up, Says Liquidator Can't Judge Own Cause

On 16 September, the Calcutta High Court held that requiring appellants to challenge the appointment of a liquidator through the liquidator himself would amount to an “appeal from Caesar to Caesar's wife”, as it would require the liquidator to act as a judge in his own cause.

A Division Bench of Justices Shampa Sarkar and Arjun Ray Mukherjee set aside the winding-up of Pranabananda Cooperative Bank Limited, as well as the orders of the West Bengal Cooperative Tribunal and Single Judge upholding the winding-up, and directed revival of the society as a cooperative credit society. The judges held:

“In any event, to require the appellants to challenge the appointment of the liquidator through the liquidator himself, as suggested by the learned Single Judge, is like an 'appeal from Caesar to Caesar's wife'. Asking the liquidator to challenge his appointment amounts to asking him to be a judge in his own cause.”

Pranabananda Cooperative Bank Limited originated as a cooperative credit society founded around April 1985 and was included by the Reserve Bank of India (RBI) in the list of primary cooperative banks on 17 April 1996.

The RBI recommended appointment of a liquidator on 25 January 2001. The Registrar of Cooperative Societies, West Bengal then passed a winding-up order on 6 August 2002 under Section 99 of the West Bengal Cooperative Societies Act, 1983 and appointed a liquidator.

The appellants challenged the winding-up before the Cooperative Tribunal. After the High Court remanded the matter, the Tribunal on 4 October 2016 confirmed the Registrar's order.

The Single Judge dismissed the writ petition on 4 June 2018 and upheld the Tribunal's decision, holding that the Registrar could rely on the RBI's enquiry and that the RBI's 25 January 2001 recommendation had attained finality as it had not been challenged.

The Division Bench found that the RBI recommendation dated 25 January 2001 and the winding-up order dated 6 August 2002 had been passed “behind the back of the appellants” and that the Registrar had acted arbitrarily without recording reasons. It observed:

“Therefore, it appears that not only the orders dated January 25, 2001 and order of winding up dated August 6, 2002 were passed behind the back of the appellants, but a series of illegal actions were also taken and decisions were made in an orchestrated manner, in gross violation of the statutory provisions and the settled principles of natural justice.”

The Bench further held that the RBI's enquiry could not substitute compliance with the statutory requirements under the West Bengal Cooperative Societies Act, 1983. It also noted that nearly 24 years had passed since the winding-up order and rejected the Single Judge's suggestion that the appellants challenge the liquidator's appointment through the liquidator himself.

Accordingly, the High Court set aside the Tribunal's 4 October 2016 order, the Single Judge's 4 June 2018 order and the Registrar's 6 August 2002 winding-up order. It directed the revival of the society as a cooperative credit society and ordered the liquidator to hand over the assets to the members under the supervision of the Registrar of Cooperative Societies.

For Appellant: Shyamal Kumar Mukherjee, Sr. Adv., Sattwik Bhattacharyya, Aashutosh Bhattacharyya, Aritra Roy

For State: Susmita Saha Dutta, AGP, Tanusree Ghosh, Dipjyoti Chakraborty,