Coop bank case closure: Court says irregularities don’t amount to criminal offences

The special court in Mumbai has closed the probe into the Rs 25,000 crore Maharashtra State Cooperative Bank case, ruling that mere irregularities or lapses do not constitute criminal offenses. The court accepted the closure report filed by the Economic Offences Wing (EOW), granting relief to those under spotlight including late deputy chief minister Ajit Pawar and companies linked to his kin.

The EOW had begun a probe following directions of the Bombay High Court in 2019, with allegations that the cooperative banks in the state had disbursed large amounts of loans from 2007 to 2011, to sugar companies, without government guarantees and collateral securities, even after they turned non-performing assets, and that they were then sold to companies linked to the directors of the banks, at low prices, causing losses to the government.

The court said that the violation of any conditions by the bank or its employees is certainly covered into the civil wrong. There is no prior meeting of minds or agreement between the directors to do an illegal action by illegal means. Mere irregularity or lapses cannot be converted to offences. There is absence of dishonest or fraudulent intention on the part of the accused.

The court also said that the documentary evidence, statements of witnesses, and official statutory reports, did not demonstrate any cognizable offence. Various protest petitions filed in the case had opposed the EOW’s clean chit to those probed, stating that the directors in the banks also held important portfolios in state ministries, like Ajit Pawar, and yet no government guarantee was taken on the loans given by the banks, claiming it showed their intent to cheat, and violate existing rules under Reserve Bank of India and National Bank for Agriculture and Rural Development (NABARD), despite irregularities flagged by the latter.

The court said that it was dealing with transactions of various sugar factories and said they revealed that no wrongful gain was acquired by any of the directors, employees and the factories have not sustained any wrongful loss. It also said that in the transaction related to Baramati Agro, which is linked to NCP (SP) leader and MLA Rohit Pawar, in a separate case filed by the Enforcement Directorate, no evidence of any illegality is found. Rohit has sought discharge in the ED case following this court’s order.

The court also said that the contention of the protest petitioners on the sale of the factories at a lower price cannot be accepted as it was done as per the SARFAESI Act.