Meppayur Co-operative Town Bank Ltd and others v. Reserve Bank of India and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **MONDAY, THE 21[ST] DAY OF AUGUST 2023 / 30TH SRAVANA, 1945 CRL.MC NO. 1419 OF 2013** ## **CC 250/2004 OF JUDICIAL MAGISTRATE OF FIRST CLASS - II,** ## **PERAMBRA** ## **PETITIONER/S:** - 1 MEPPAYUR CO-OP. TOWN BANK LTD NO.F1497MEPPAYUR.P.O., KOZHIKODE-673524, REPRESENTED BY ITS SECRETARY. - 2 K.G.BIJU KUMARAGED 32 YEARSS/O.GOPALAN SECRETARY, MEPPAYUR CO-OP.TOWN BANK LTD.NO.F1497, MEPPAYUR P.O., KOZHIKODE-673524. - 3 P.P.RADHAKRISHNANAGED 42 YEARSS/O.KORAN, PARAPURATHU, MEPPAYUR P.O., KOZHIKODE DISTRICT. - 4 T.O.KUNJIRAMAN NAMBIARAGED 64 YEARSS/O.KRISHNAN NAIR, THAZHATHE OLAVIL, MEPPAYUR P.O., KOZHIKODE DISTRICT. - 5 C.KELAPPANAGED 61 YEARSS/O.CHATHU, CHERUVATHU, KOZHUKKALLUR P.O., MEPPAYUR VIA., KOZHIKODE DISTRICT. - 6 K.K.KUNJIMOIDEENAGED 62 YEARSS/O.IBRAYI, PUTHIYEDATHU MEETHAL, KOZHUKKALLUR P.O., KOZHIKODE DISTRICT. - 7 N.M.DAMODARANAGED 43 YEARSS/O.PACHER, NADUKKANDY MEETHAL, NARAKKODE, KEEZHARIYOOR.P.O., KOZHIKODE DISTRICT. - 8 MOHANAN.VAGED 37 YEARSS/O.KUNJIKELAPPAN, VADAKKAYIL, KOZHUKKALLUR P.O., KOZHIKODE DISTRICT. - 9 K.KUNJIKRISHNAN KIDAVUAGED 63 YEARSS/O.KUNJIKANARAN NAMBIRA, KANDOTHIDATHIL, IRINGATH, PAYYOLI, KOZHIKODE DISTRICT. - 10 P.K.SIVANANDANAGED 56 YEARSS/O.RAMUNNI KURUP, POTTANKANDY, MEPPAYUR P.O., KOZHIKODE DISTRICT. - 11 P.V.PREMAAGED 49 YEARSD/O.CHANDUKUTTY, PADINJARE VAYALIL, NIDUMPOYIL, KOZHUKKALLUR P.O., KOZHIKODE DISTRICT. - BY ADVS.SRI.M.M.MONAYESRI.DESI MATTHAISRI.M.PAUL VARGHESE ## **RESPONDENT/S:** - 1 THE RESERVE BANK OF INDIAAGED 58 YEARSBY AND THROUGH ITS AUTHORIZED OFFICER, Crl.M.C.No.1419 of 2013 -2- SRI.P.PANCHAPAGESAN, S/O.SRINIVASAN, DEPUTY GENERAL MANAGER, URBAN BANKS DEPARTMENT, RESERVE BANK OF INDIA, BAKERY JUNCTION, THIRUVANANTHAPURAM-695033. 2 STATE OF KERALAREPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. BY ADVS.SRI.MILLU DANDAPANISMT.SUMATHY DANDAPANI SR. ## **OTHER PRESENT:** PP M.C.ASHI **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARED ON** **04.07.2023, THE COURT ON 21.08.2023 PASSED THE FOLLOWING:** Crl.M.C.No.1419 of 2013 -3- ## **ORDER** Dated this the 21[st] day of August, 2023 The first petitioner Co-operative Society started functioning in the year 1951 under the name and style 'Meppayur Urban Co-operative Bank Ltd'. Petitioners 2 to 11 are the former Secretary, President and members of the Board of Directors of the first petitioner Society. The petitioners are arrayed as accused in C.C.No.250 of 2004 on the files of the Judicial First Class Magistrate-II, Perambra, based on Annexure A6 complaint filed by the Reserve Bank of India/first respondent alleging commission of offences under various provisions of the Banking Regulations Act, 1949, ('the Act' for short), as it then existed. The allegations in Annexure A6 are to the following effect; The first petitioner is a Primary Co- Crl.M.C.No.1419 of 2013 -4- operative Bank as defined in Clause ccv of Section 5 of the Act. Co-operative Societies are prohibited from using the word 'Bank' as part of their names by virtue of Section 7 of the Act. Further, no society can carry on banking business without obtaining the licence under Section 22 of the Act. The first petitioner's application for licence was rejected by the Reserve Bank by a speaking order dated 05.01.2000, despite which the petitioners carried on banking business unauthorisedly by accepting deposits from the public and permitting cheque transactions. Thereby, the first petitioner Society and its office bearers violated provisions of the Act, which entails penalty and imprisonment. 2. Adv.M.M.Monaye, learned Counsel appearing for the petitioners submitted that, earlier, Crl.M.C No.4320 of 2005 was filed seeking to quash Annexure A6 and further proceedings based on the complaint. That Crl.M.C Crl.M.C.No.1419 of 2013 -5- was dismissed granting liberty to the petitioners to file a petition under Section 258 Cr.P.C before the trial court with a prayer to stop all further proceedings in the case. Accordingly, the petitioners preferred CMP No.3814 of 2012. The trial court dismissed the petition on the premise that the petitioner did not produce requisite materials to substantiate their contentions. 3. It is submitted that after dismissal of the application for licence submitted by the first petitioner _vide_ Annexure A3 dated 27.12.1999, the bylaws of the Society were amended, changing the Society's classification to Primary Credit Society with effect from 09.06.2000. By virtue of the change, the interdictions under the Act was no longer applicable to the Society. Despite to this fact, the first respondent initiated action against the Society and caused issuance of Annexure A5 public notice stating that the Society's registration as ## Crl.M.C.No.1419 of 2013 -6- an insured bank is cancelled with effect from 27.12.1999. Although first petitioner preferred Annexure A7 representation against publication of notice and the proposed further action, the competent authority failed to consider the representation. Hence, the petitioners filed W.P.(C) No.32214 of 2005. That writ petition was disposed of by Annexure A10 judgment, directing the first respondent to consider and take a decision on the representation, after affording an opportunity of hearing to the petitioners. Based on the direction, the representation was considered and rejected by Annexure A11 order dated 29.09.2011. Petitioners challenged Annexure A11 in W.P.(C) No.29606 of 2011 and this Court passed Annexure A12 interim order staying all further proceedings pursuant to Annexure A11. The writ petition was finally disposed of by judgment dated 23.07.2021, finding the order to have been passed without affording the Crl.M.C.No.1419 of 2013 -7- opportunity of hearing, as directed in Annexure A10 judgment. In the meanwhile, the bylaws of the Society was amended once more and the Society was classified as a Primary Agricultural Credit Society. Consequent to the direction in Annexure A10 judgment, the Society's representation was considered and an order passed, advising the Society to drop the word 'bank' from its name, if it desires to continue as a Primary Agricultural Credit Society. It is submitted that if the above crucial developments are taken into consideration, the learned Magistrate will have to allow the prayer for stopping the proceedings. 4. Adv.Millu Dandapani, learned Standing Counsel appearing for the first respondent submitted that, no valid ground for causing this Court to interfere with Annexure A15 order in exercise of the inherent jurisdiction under Section 482 is raised by the petitioners. It is contended that, even going by the admitted facts, Crl.M.C.No.1419 of 2013 -8- the petitioners have violated various provisions of the Act and their remedy is to contest the criminal case on merits and to prove their innocence, if possible. 5. Even though the contentions raised on behalf of the petitioners, based on the amendments brought about to the bylaws of the Society and consequential change of classification appears impressive at first blush, those contentions cannot be considered, as the petition under Section 258 Cr.P.C itself is not maintainable. In this context, it is essential to scrutinise Section 258 extracted hereunder; **“** _258. Power to stop proceedings in certain cases- In any summons- case instituted otherwise than upon complaint, a Magistrate of the first class or, with the previous sanction of the Chief Judicial Magistrate, any other Judicial Magistrate, may, for reasons to be recorded by him, stop the proceedings at any stage without pronouncing any judgment and where such stoppage of proceedings is made after the_ Crl.M.C.No.1419 of 2013 -9- _evidence of the principal witnesses has been recorded, pronounce a judgment of acquittal, and in any other case, release the accused, and such release shall have the effect of discharge.”_ Going by the provision, the power to stop the proceedings can be exercised only in summons cases instituted otherwise than upon a complaint. In the case at hand, the case is instituted upon a complaint and hence, the power cannot be exercised. This question needs no further deliberation in view of the categoric pronouncement in _**John Thomas v. Dr.Jagadeesan**_ _**[(2001) 6 SCC 30]**_ , paragraphs 8 and 9 of which reads as under; _“8. Summons cases are generally of two categories: those instituted upon complaints and those instituted otherwise than upon complaints. The latter category would include cases based on police reports. Section 258 of the Code is intended to cover those cases belonging to one category alone i.e. “summons cases instituted otherwise than upon complaints”. The segment separated at the last_ Crl.M.C.No.1419 of 2013 -10- _part of the section by the words “and in any other case” is only a sub-category or division consisting of “summons cases instituted otherwise than upon complaints”. That subcategory is not intended to cover all summons cases other than those instituted on police report. In fact, Section 258 vivisects only “summons cases instituted otherwise than on complaints” into two divisions. One division consists of cases in which no evidence of a material witness was recorded. The section permits the court to acquit the accused prematurely only in those summons cases instituted otherwise than on complaints wherein the evidence of material witnesses was recorded. But the power of the court to discharge an accused at midway stage is restricted to those cases instituted otherwise than on complaints wherein no material witness was examined at all._ _9. The upshot of the above is that Section 258 of the Code has no application to cases instituted upon complaints. The present is a case which was instituted on a complaint. Hence the endeavour made by the accused to find help from Section 258 of the Code is of no avail.”_ The alternative prayer to quash the complaint and further proceedings in the calendar case Crl.M.C.No.1419 of 2013 **==> picture [23 x 8] intentionally omitted <==** cannot also be entertained since the same prayer made in Crl.M.C No.4320 of 2005, stands rejected. This Criminal M.C.is hence dismissed, reserving the petitioners' right to raise all contentions before the trial court. Sd/- **V.G.ARUN JUDGE** Scl/ Crl.M.C.No.1419 of 2013 -12- PETITIONER ANNEXURES ANNEXURE-A1: TRUE COPY OF THE APPLICATION FOR REGISTRATION, ALONG WITH THE ENDORSEMENT SHOWING THE REGISTRATION ON 22.3.1951. ANNEXURE-A2: TRUE COPY OF THE LETTER DATED 29.12.1999 ISSUED BY THE DEPUTY GENERAL MANAGER OF RESERVE BANK OF INDIA, URBAN BANKS DEPARTMENT. ANNEXURE-A3: TRUE COPY OF THE ORDER DATED 27.12.1999 ISSUED BY THE EXECUTIVE DIRECTOR, RESERVE BANK OF INDIA. ANNEXURE-A4: TRUE COPY OF THE CERTIFICATE OF REGISTRATION DATED 9.6.2000, ISSUED BY THE JOINT REGISTRAR OF CO-OP. SOCIETIES, KOZHIKODE. ANNEXURE-A5: TRUE COPY OF THE NOTIFICATION DATED 14.5.2004 IN THE MATHRUBHOOMI DAILY DATED 21.5.2004. ANNEXURE-A6: TRUE CERTIFIED COPY OF THE C.C.NO.250/04 PENDING BEFORE THE JUDICIAL MAGISTRATE OF FIRST CLASSII, PERAMBRA. ANNEXURE-A7: TRUE COPY OF THE REPRESENTATION DATED 26.10.2005, SUBMITTED BY THE BANK. ANNEXURE-A8: TRUE COPY OF THE INTERIM ORDER DATED 18.11.2005 OF THIS HON'BLE COURT. ANNEXURE-A9: TRUE COPY OF THE FINAL ORDER DATED 18.1.2012 IN CRL.M.C.NO.4320/2005. ANNEXURE-A10: TRUE COPY OF THE JUDGMENT DATED 22.10.2008 IN W.P.(C) 32214/2005. ANNEXURE-A11: TRUE COPY OF THE ORDER DATED 29.9.2011 OF THE RESERVE BANK OF INDIA. ANNEXURE-A12: TRUE COPY OF THE INTERIM ORDER DATED 8.11.2011 IN W.P.(C) NO.29606/2011. ANNEXURE-A13: TRUE COPY OF THE ORDER DATED 22.3.2008 OF THE JOINT REGISTRAR OF CO-OP.SOCIETIES (G), KOZHIKODE, REGISTERING THE AMENDED BYE-LAWS OF THE BANK. ANNEXURE-A14: TRUE COPY OF THE CATEGORICAL STATEMENT ISSUED BY THE JOINT REGISTRAR (G) SHOWING THE STATUS OF THE BANK AS A PRIMARY AGRICULTURAL CREDIT SOCIETY. ANNEXURE-A15: TRUE COPY OF THE ORDER DATED 14.11.2012 IN C.M.P.NO.3814/12 IN CC 250/2005 OF THE JUDICIAL MAGISTRATE FIRST CLASS-II, PERAMBRA.