Merely on the liquidation, or the factum that the period fixed for liquidation is over, liability of the members for the loans cannot be said to have been wiped off.
The Apex Court in the matter of Goa State Cooperative Bank Ltd. vs. Krishna Nath A. and Ors. observed that the concept of restitution is a common law principle and it is a remedy against unjust enrichment or unjust benefit. The court cannot be used as a tool by a litigant to perpetuate illegality. A person who is on the right side of the law, should not have a feeling that in case he is dragged in litigation, and wins, he would turn out to be a loser and wrongdoer as a real gainer, after 20 or 30 years. Thus, the members who have obtained stay in appeal or on recovery proceedings or the case is pending, cannot take advantage of the fact that the period fixed for Liquidator under the Act is over. In the instant case, the bank itself is a prime lender cum liquidator. The proceedings cannot come to the end. Thus, it is open to the bank to continue with the recovery proceedings and make recoveries from the defaulting members. Merely on the liquidation of Society, or the factum that the period fixed for liquidation is over, liability of the members for the loans cannot be said to have been wiped off. The disbursement of loan in an arbitrary manner and failure to recover was the very fulcrum on the basis of which winding up of the Society was ordered. Though the Liquidator cannot continue once the proceedings are over, the notice in such cases should be issued by the Registrar to the creditors and to persons for whose benefit recovery is to be made, to continue the pending proceedings in the instrumentality of court/tribunals/recovery officers etc.