Bombay High Court sets aside loss-recovery order against Rupee Co-op Bank directors

The Bombay High Court on 8 October 2026 set aside a 2016 inquiry order that had held elected directors of Rupee Co-operative Bank Ltd, Pune, personally liable to repay losses the bank says it suffered. The court sent the matter back to the inquiry officer for a fresh decision and gave one year to complete it. The ruling covers petitions by directors and their relatives.

What Happened

An inquiry officer acting under Section 88 of the Maharashtra Co-operative Societies Act, 1960, passed a common order on 2 February 2016 apportioning the bank's alleged losses among its employees and directors for recovery. Section 88 allows personal liability to be fixed for losses caused to a co-operative society. The State Government upheld the order in appeal.

In a separate case filed by the bank's employees, the High Court on 17 October 2025 quashed that order and remanded it. The court held that the order did not record what specific act or omission by each person caused loss, and that liability under Section 88 is personal, not collective. The bank's review petitions were dismissed on 18 August 2026.

In the latest ruling, the court held that because the inquiry was a composite one covering both employees and directors, the 2016 order must be set aside for the directors too. The expert director, who says there is no personal liability in that role, may raise that point before the inquiry officer. Relatives whose properties were attached may apply to the competent authority for release, and that authority must decide keeping in mind that the 2016 order has been set aside. The inquiry officer must also decide whether legal heirs or third parties can be held liable under Section 88.

What It Means

For now, no order fixing personal liability on these directors stands; the question will be decided afresh. The court held that such an inquiry must follow Rule 72 of the Maharashtra Co-operative Societies Rules, 1961: specific charges for each person, copies of the evidence relied on, a chance to defend, and separate findings on each charge. No finding of liability has been made against any petitioner, and due process continues in the fresh inquiry.

Source: High Court judgment