CAN ANY CO-OP BANK MAKE LIABLE A CHIEF OFFICER,ALONGWITH OTHERS FOR LOSS INCURRED BY BANK DUE TO PROCEDURAL LACUNA IN THE SCHEME AND FAULT OF OTHER BANK.
The matter is as under: Cooperative Bank A ,in a city B, devised a scheme by mutual understanding with co-operative bankC in a village D, wherein cheques of account holders of former bank A when presented to bank C, it should honour it after undergoing following formalities.
Bank C should send fax of cheque to Bank A, who after verification if finds in order including available balance in the account Bank A will send by fax a confirmation to Bank C, to enable Bank C to make payment. Bank C will open an account in the name of Bank A, which will be debited by that amount, after making payment to account holder of Bank A. One daily statement of entries made during the day was to be sent to Bank A for proper reconciliation.
During audit, the auditor found three entries (entry dtd.17-6-06 for Rs 1,40,000/=,other dtd 15-5-06 for Rs 3,15,000/= and third one dtd 13-9-06 for Rs 90,000/-) aggregating to Rs.5,45,000/- was found unpaid by bank A to Bank C.
Under the circumstances,on 29.8.2017 inquiry officer & member of Board of Nominees RAJKOT,under Sec.93 of Guj.state Co-op.soc.Act 1961, ordered that CEO, the Officer/accountant, and Chairman of the bank should make good the amount jointly to Bank C, for the loss incurred to Bank C.
My friend happens to be the CEO of the C bank for the period from 1.7.06 to 16.6.08, during which period only one entry of Rs.90,000/- was transacted. Bank A had forgotten to debit their customer on the day ie. On13.9.06 and debited the account holder’s account on 20.2.2008 but did not passon the amount to Bank C, saying that since there was not sufficient balance in the account on 20.2.08, the account was running in debit and hence Bank A filed case against the said their account holder.
Bank C therefore filed case against Bank A and the recipient of the amount.
Bank A, in their plaint against their borrower, interalia other matters, also mentioned that Bank C had made payment on our behalf as per arrangement made between our banks.
Bank C holds the confirmation of Bank A also.
In view of foregoing, how my friend CEO of Bank C can be held liable to make good the loss suffered by Bank C, because My friend CEO of Bank C had not joined the bank during first two entries because he had joined bank on 1.7.06.
1) Bank C had made payment of Rs.90,000/-(which falls within tenure of his service but for which due care was taken to observe the procedure as agreed by both bank, and also after receiving confirmation from Bank A to allow payment of the cheque).
Recently two days back i.e on 18.7.2018, a notice dated 18.5.18 ( ie after about 10 months from the order of Member of Board of Nominees ) was pasted on the door,by Bank C, asking to make payment of Rs.5,45,000/-jointly,as per the order passed by the Member of Board of Nominees.
Under the circumstances, what steps my friend Ex-CEO of Bank C can take and where to approach for justice.
