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Delhi High Court Dismisses PIL Seeking 100% Bank Deposit Insurance and Comprehensive Guidelines

New Delhi: The Delhi High Court on Wednesday dismissed a Public Interest Litigation (PIL) that sought directions for 100% insurance coverage for bank deposits and comprehensive guidelines for safeguarding depositors' money during financial crises, such as the one faced by the Punjab and Maharashtra Co-operative Bank (PMC Bank).

A bench comprising Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora held that many of the prayers in the PIL had become infructuous due to prior judicial pronouncements and subsequent policy decisions, while others fell squarely within the domain of the executive and legislature.

The PIL, filed in October 2019 by Bejon Kumar Misra , had sought multiple reliefs including: * Interim protective measures for PMC Bank depositors whose money was blocked. * Issuance of exhaustive guidelines for safeguarding deposits during financial crises. * Direction to the Union of India and RBI to ensure complete insurance of deposits by enacting appropriate policy. * Direction to constitute a High-Powered Committee for co-operative banks. * Quashing of certain RBI notifications. * Direction to RBI under the DICGC Act, 1961, to provide 100% insurance cover instead of the existing Rs. 1,00,000.

Arguments Presented

The petitioner's counsel argued that the PIL was filed with liberty from the Supreme Court and predated some other related cases. They highlighted the plight of depositors, the need for enhanced insurance, and pointed to the 'dual control' mechanism over co-operative banks by both the RBI and Registrar of Co-operative Societies as a potential cause of mismanagement.

The Reserve Bank of India (RBI), represented by senior counsel, contended that the core issues concerning PMC Bank depositors and the quashing of notifications had already been extensively litigated and decided. They pointed to a detailed judgment by a Single Judge of the Delhi High Court in WP(C) 2225/2020, filed by affected deposit holders, where the same relief was sought and dismissed. The RBI further cited a judgment of the Bombay High Court (WP(L) No. 3030/2019) on identical issues, which was subsequently upheld by the Supreme Court (SLP(C) No. 13047/2020). The RBI argued that since affected persons had already approached the court and decisions had been rendered, the present PIL was not maintainable on these points.

Court's Reasoning and Decision

The High Court, after considering the submissions and reviewing the relevant judgments and RBI's affidavit, agreed with the RBI's position on several counts.

Regarding the prayers for protective measures for PMC Bank depositors and the quashing of RBI notifications (prayers 'a' and 'e'), the Court noted that these issues were indeed covered by the prior judgments of the Delhi High Court, Bombay High Court, and the Supreme Court. Furthermore, the Court took note of the RBI's affidavit dated March 13, 2024, which placed on record the Gazette notification dated January 25, 2022, sanctioning the scheme of amalgamation of PMC Bank with Unity Bank. The Court stated that this amalgamation scheme, prepared by RBI under Section 45 of the Banking Regulation Act, 1949, aimed to protect depositors' interests and rendered the previous directives and reliefs sought for PMC depositors infructuous.

Concerning the prayers for providing 100% insurance cover for deposit holders (prayers 'c' and 'f'), the bench observed that while the insurance cover was Rs. 1 lakh per account at the time of filing, it had since been enhanced to Rs. 5 lakhs per bank account with effect from February 4, 2020, with the approval of the Government of India. The Court explicitly held that the issue of further enhancing this insurance cover to 100% and bearing the premium costs is a "policy matter which has to be decided by the concerned Respondents" (Executive), and the Court was not inclined to issue directions in this regard.

Finally, with respect to the prayers seeking comprehensive guidelines for financial crises and the constitution of a High-Powered Committee for co-operative banks (prayers 'b' and 'd'), the Court reiterated that these matters fall within the "domain of policy making by the Executive and Legislature" and declined to issue any directions.

In light of these findings, the Delhi High Court concluded that the prayers sought in the petition did not survive for consideration and accordingly disposed of the PIL. The judgment reinforces the principle that courts generally refrain from interfering in policy decisions unless there is a clear violation of fundamental rights or law.