An affidavit submitted by the district registrar to a Gujarat High Court division bench comprising Chief Justice K Sreedharan and Justice A R Dave stated that criminal cases have been filed against the erring persons while effective steps had been initiated against the bank for breach of provisions under sections 71 (1) and 147 (8) of the Act.

The petitioner, Bharatkumar J. Pandya, a share-holder and member of the bank who filed a public interest litigation in February this year, had urged the court through his counsel Prakash K Jani that the bank authorities invested huge amount of about Rs 1.35 crore with CRB Capital Markets Limited by violating the provisions of the Cooperatives Act. He had submitted that CRB had crashed and the amount was unlikely to be recovered. Therefore, the board of directors of the bank in complete violation of the act incurred heavy loss to the bank.

The petitioner had further prayed the court to issue a writ of mandamus directing the registrar, cooperative societies to take appropriate action against the chairman and managing director of the bank for recovering the loss caused to the bank on account of their illegal action in investing the amount with CRB Limited.

The petitioner later joined the state government, registrar cooperative Societies, district registrar and deputy general manager of Reserve Bank of India (RBI) in the petition seeking directions.

The petitioner prayed that action under Section 81 of the Act be initiated by which the present board being superseded.

The court had issued notices to all the respondents returnable on March 2. Later the hearing was fixed on April 17 as, the district registrar was directed to file an affidavit. The court on Monday observed that action against such cooperative banks were delayed on account of challenge made by certain banks on the constitutional validity of Section 71 of the Act, which the court had upheld by a judgment dated April 16, 1998.

The court further ruled that the affidavit filed on behalf of district registrar showed that all possible legal steps have been initiated against the bank and its erring officials thus there was no reason to issue any further direction in the Special Civil Application. Thus, the application has become infructuous and was accordingly dismissed, the court ruled.