Srinagar: The J&K High Court has granted bail to the former chairman of the J&K State Cooperative Bank in an alleged money laundering case lodged against him by the Enforcement Directorate (ED).
As per ED’s narrative, the bail petitioner, Mohammad Shafi Dar of the bank, facilitated documentation with respect to the grant of loan of Rs 233 crores to River Jhelum Cooperative House Building Society allegedly in violation of rules.
Justice Rahul Bharti who admitted Dar’s bail observed “it was perhaps not in the domain of the J&K State Cooperative Bank, or its functionaries/officials to first get certified the status of the River Jhelum Cooperative House Building Society. The official of the government department and the Registrar Cooperative Societies, State of J&K, as being the highest administrative and statutory authority under law, recommended the case of the River Jhelum Cooperative House Building Society”.
The petitioner is in judicial custody on account of his arrest by the ED by reference to the 2021 case.
The accused cooperative society, purportedly registered and governed under the J&K State Cooperative Societies Act, approached the J&K Cooperative Bank with an application for loan of Rs 300 crores routed through the end of the Registrar Cooperative Societies J&K. It proposed to develop a satellite township upon 300 kanals of land situated at Shivpora, Srinagar.
The loan case of the Society is reported to have been sanctioned by the governing body/council of the J&K State Cooperative Bank Limited in September 2018, wherefrom the Board of Directors of the J&K State Cooperative Bank, Srinagar, had accorded its approval for the grant of loan in its favour by virtue of a decision taken in March 2019.
The loan amount of Rs 233 crores was provided to the Society on 25.4.2019.The sanctioned loan was disbursed in the form of payments to the actual identified landowners from the Society was in purported deals to acquire 257.19 kanals of land.
A proper lien in the revenue record is said to have been accorded in favour of the J&K State Cooperative Bank, Srinagar as being the financing bank.
An FIR in 2020 was registered by the Anti-Corruption Bureau (ACB), Srinagar, for alleged commission of offences under section 465, 467, 468, 471, 120-B RPC read with section 5(i)(d) and section 5(2) of J&K Prevention of Corruption Act.
It alleged illegalities and irregularities with respect to the entire matter of availing and grant of loan by the Society from the bank. The petitioner ex-chairman was arrested by the ACB in 2020 and was later on granted bail. The ACB presented its reports before the Court of Special Judge (Anti-Corruption), Srinagar wherein the trial of the case is going on.
The police report has named Hilal Ahmad Mir (chairman, River Jhelum Cooperative House Building Society), Abdul Hamid Hajam (secretary of the Society), Mohammad Mujeeb Ur Rehman Ghassi (then Registrar, Cooperative Societies, J&K), Syed Ashiq Hussain (then Deputy Registrar of Cooperative Societies) and the petitioner Mohammad Shafi Dar (then Chairman, J&K State Cooperative Bank).
The coming into picture of the Enforcement Directorate (ED) is when on 31.03.2021 it came to register ECIR/SRZO/04/2021 dated 31.3.2021 in the course of investigation whereof it led to the arrest of the petitioner on 30.11.2023. It alleged a money laundering angle in the case.
The ED has attached the land parcels so acquired by the Society from many landowners which is said to be worth a value of Rs.193.46 crore. The bank accounts of many landowner farmers have reportedly also been seized.
The High Court while granting the bail to the ex-chairman observed “it is a matter of routine for a cooperative bank to extend financial assistance in the form of a loan to its members or even to a cooperative society seeking loan. In the present case, it was perhaps not in the domain of the J&K State Cooperative Bank, Srinagar, or its functionaries/officials to first get certified the status of the River Jhelum Cooperative House Building Society, particularly when the official of government department and/or the Registrar Cooperative Societies, State of J&K, as being the highest administrative and statutory authority under J&K Cooperative Societies Act, 1989 was/were recommending the case of the River Jhelum Cooperative House Building Society”.
It said whether or not the decision on the part of J&K State Cooperative Bank, Srinagar, headed by the petitioner as its chairman was an act of prudent banking or not , with due diligence or not, is surely a matter which can be looked at from the criminal culpability view. That is why the ACB presented a police challan against the culprits including the petitioner.
“But still the advancement of a bank loan has taken place by disbursement of amount to the bank accounts of the beneficiaries who are said to be, and are not disputed to be, the actual landowners who willingly parted with their respective possession of the respective lands in favor of River Jhelum Cooperative House Building Society and in return received the consideration amount,” noted the court.
It added “thus, the use of the bank loan amount per se cannot be presumed to be meant for the purpose of generation and diversion of the proceeds of crime from the point of view of a banker. The transfer of land title on the basis of utilization of loan amount is supposed to be in the name of cooperative society i.e. River Jhelum Cooperative House Building Society and not in the name of any individual”.
The court observed that upon getting the pool of land at its disposal the River Jhelum Cooperative House Building Society was supposed to carry out the plot allocation/allotment to its members or would be members against consideration/premium to earn the profit and repay the loan amount in the transaction, and therefore the asset created by utilization of the bank loan from the point of view of J&K State Cooperative Bank with petitioner as its administrative head, not as management head, cannot be said to be with an end objective relatable to diversion of proceeds of crime and amounting to money laundering”.
It said the petitioner is well within his right to say and agitate that so long as the decision to grant loan on behalf of the J&K State Cooperative Bank, Kashmir, Srinagar is to be reckoned as having been taken by the Board of Management, then the liability and the responsibility for the said decision cannot be individualized to the petitioner alone and absolving the rest of the board members.
