The Bombay High Court has ordered the Board of Directors of the Raghuwanshi Cooperative Bank to deposit Rs 5.41 crore if they wish to run the affairs of the bank. Justice Rajan Kochar in his July 9, 2002 order has directed the money to be deposited within eight weeks to the Deputy Registrar of Cooperatives, who has been appointed administrator of the bank. The judge said in case the money is deposited the administrator’s appointment will be cancelled and the Board can take over the administration of the bank. Failure to do so, the directors will be permanently debarred from contesting elections in the bank, besides all other cooperative banks and institutes, the judge said. Justice Kochar was hearing a petition filed by seven directors challenging the dismissal of the board of directors and supercession. Justice Kochar also ordered the Registrar of Cooperatives to expeditiously complete an inquiry under Sections 77 and 88 of the Cooperatives Societies Act. The bank came in the red following disclosures of the Home Trade scam. In February 2002 the directors decided to invest Rs 5.41 crore in government securities and gave the same to broker Home Trade. However the latter did not hand over physical delivery of the securities or returned the money. On April 30, 2002 a complaint was lodged with the police against Home Trade. The subsequent disclosures of the scam led to Reserve Bank of India superseding the bank and appointing an administrator. He observed that the bank was careless and should have followed the guidelines of RBI while investing in government securities.
