KATHMANDU, May 13: The Supreme Court (SC) has issued a mandamus directing the government to return depositors' money by selling the collateral held by troubled cooperatives, setting a deadline for action. A joint bench of Justices Kumar Regmi and Nityananda Pandey has given the government 45 days to establish the National Cooperative Regulatory Authority.
The SC instructed the government to form a recommendation committee within seven days and to establish the authority within one and a half months after the committee's formation. The full text of the verdict, issued on May 11, was released on Sunday. Senior advocates Surendra Bhandari, Dhruba Lal Shrestha, and other affected depositors had filed writ petitions demanding a resolution to ongoing issues in the cooperative sector.
The verdict directs the government to establish the recommendation committee within seven days, in accordance with Section 103 (e) (1) of the amended Cooperative Act 2074 BS. The committee will recommend candidates for the appointment of the chairperson and members of the authority. Following this, the government must establish the Authority within one month and 15 days.
The SC also ordered the management committee, formed under the Act, to immediately recover depositors' money from troubled cooperative institutions by selling the assets or collateral secured during loan disbursements.
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The law requires the government to form a three-member recommendation committee, consisting of the chairperson of the Public Service Commission (or a designated member), the finance secretary, and an expert. This committee will recommend three individuals, including one for the chairperson's position, for the authority.
The SC emphasized the urgent need for the government to implement the powers, duties, and responsibilities of the National Cooperative Regulatory Authority while prioritizing the best interests of depositors. It also instructed the government to act swiftly on the recommendations in the 2081 BS report by the Parliamentary Special Inquiry Committee on the misuse of cooperative savings.
The SC called for coordination and serious, responsible efforts from all three tiers of government to resolve the problems in the cooperative sector.
Despite the legal provisions requiring the formation of a regulatory body to oversee savings and credit cooperatives and guarantee deposit refunds up to five lakh rupees per depositor, the government has not taken effective action.
The SC stated that the government's failure to implement the Parliamentary Special Inquiry Committee's report and establish the Loan Recovery Tribunal has only worsened the problems in the cooperative sector.
Citing these legal provisions, the SC emphasized the urgent need for the government to establish the National Cooperative Regulatory Authority to address the sector's challenges. It ordered the government to form the National Cooperative Regulatory Authority and begin resolving the issues without delay.
The National Cooperative Regulatory Authority holds the legal mandate to register, regulate, monitor, and supervise savings and credit cooperatives, as well as to investigate and resolve complaints about the misuse of depositors' funds.
The SC noted that cooperative-related issues have long been a national problem. The amendment to the Cooperative Act introduced Section 103(a), which established the National Cooperative Regulatory Authority and mandated it to regulate and supervise savings and credit cooperatives. However, the government has yet to form the Authority.
Despite the clear legal framework for addressing cooperative sector issues, the delay in forming the powerful regulatory authority has only complicated the situation. The SC verdict pointed out that while petitioners raised concerns about policy and legal reforms, institutional management has not been achieved, and authorities have not acted with the necessary urgency to enforce the law.
