1. Criminal complaint under Sections 58-B(5) and 58-E of the Reserve Bank of India Act, 1934 — contravention of Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 — challenge to validity. (Para 1 , 2 )
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1990 Supreme(SC) 19
SUPREME COURT OF INDIA
K.N.Singh : N.M.Kasliwal
P.S.Subramaniam
Versus
Reserve Bank Of India
Case No. : 2194 of 1985
Date of Decision : 1/16/90
The court held that the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 are valid and that the subsequent amendment to the Reserve Bank of India Act, 1934, defining the term 'deposit' under Section 45-l(bb), does not affect the validity of those directions.
Headnote:(A) Reserve Bank of India Act, 1934 - Sections 58-B(5), 58-E and 45-l(bb) - Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 - Validity of Directions - Challenge to the enforcement of directions issued under the Act - Validity of directions upheld - Subsequent amendment to the Act defining the expression 'deposit' under Section 45-l(bb) by the Reserve Bank (Amendment) Act, 1974 does not affect the validity of the 1973 Directions. (Para 3)
Facts of the case:
A criminal complaint was filed against the appellants for contravention of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973. During the pendency of the criminal proceedings, a writ petition was filed under Article 226 of the Constitution challenging the validity of the said Directions and seeking a mandamus to restrain their enforcement. The writ petition was dismissed by a Single Judge and the order was subsequently affirmed by a Division Bench of the High Court.
Findings of Court:
The court upheld the validity of the 1973 Directions and found that the provisions of Section 45-l(bb) introduced by the Amending Act of 1974 do not affect the validity of the 1973 Directions.
Issues: Whether the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 are valid and whether the definition of 'deposit' introduced by the 1974 Amendment impacts their validity.
Ratio Decidendi: The court affirmed the High Court's view on the validity of the 1973 Directions and ruled that the subsequent amendment to the Act defining 'deposit' does not invalidate the directions issued prior to the amendment.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Validity of Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 — effect of Section 45-l(bb) of the Reserve Bank (Amendment) Act, 1974 on the validity of said directions. (Para 2 , 3 )
3. Validity of 1973 Directions upheld — Section 45-l(bb) of the Reserve Bank (Amendment) Act, 1974 defining deposit does not affect the validity of the 1973 Directions. (Para 3 )
4. Subsequent amendments to a principal Act defining specific terms do not necessarily invalidate directions issued under the Act prior to such amendments. (Para 3 )
5. Appeal dismissed — interim orders discharged — direction to dispose of pending criminal proceedings expeditiously. (Para 3 )
6. Does the definition of deposit under Section 45-l(bb) of the Reserve Bank (Amendment) Act, 1974, invalidate the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973?
No, the court held that the provisions of Section 45-l(bb) defining the expression deposit by the Reserve Bank (Amendment) Act, 1974, do not affect the validity of the 1973 Directions. (Para 3 )
7. Are the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973, legally valid?
Yes, the court affirmed the High Court's view and upheld the validity of the 1973 Directions. (Para 3 )
8. Can a challenge to the validity of regulatory directions stay criminal proceedings for contravention of those directions?
While the writ proceedings resulted in a stay for over nine years, the court ultimately dismissed the challenge and directed the trial court to dispose of the case expeditiously. (Para 2 , 3 )
(1) THIS appeal is directed against the division bench judgment of the High court of Madras dated 7/11/1984 affirming the order of a learned Single Judge dismissing the appellants writ petition made under Article 226 of the Constitution for the issue of mandamus restraining the respondents from enforcing the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 against the appellant.
(2) THE respondent Reserve Bank of India, and its Deputy Chief Officer in the Department of Non Banking Companies (Reserve Bank of India) filed a criminal complaint before the XVI Metropolitan Magistrate, Madras under S. 58-B(5 and 58-E of the Reserve Bank of India Act, 1934 and Section 190(l)(a) of the Criminal Procedure Code against the appellant for contravention of provisions of the Miscellaneous Non- Banking Companies (Reserve Bank) Directions, 1973 hereinafter referred to as the 1973 Directions and issued under the Reserve Bank of India Act, 1934. During the pendency of the criminal proceedings the appellants who are accused in the aforesaid criminal case filed a writ petition under Article 226 of the Constitution before the High court for the issue of a mandamus restraining the respondents, namely, the Reserve Bank of India from enforcing the 1973 Directions against the appellants. In the writ petition validity of the aforesaid Directions issued by the Reserve Bank was challenged on a number of grounds. The learned Single Judge dismissed the writ petition by an elaborate judgment, dated 9/02/1983. On Letters Patent Appeal the division bench considered the matter again in detail and it affirmed the order of the learned Single Judge by upholding the validity of the 1973 Directions. Hence this appeal by special leave.
(3) AFTER hearing learned counsel for the parties at length and having considered the provisions of the Directions and the provisions of the Act, we agree with the view taken by the High court in upholding the validity of 1973 Directions. We are further of the opinion that the provisions of Section 45-l(bb) defining the expression deposit by the Amending Act (Act 51 of 1974 the Reserve Bank (Amendment) Act, 1974 does not at all affect the validity as of the 1973 Directions. There is no merit in the appeal, it is accordingly dismissed. There will be no order as to costs. The interim orders, stand discharged. The court before which the criminal proceedings are pending should proceed with the case in accordance with law and dispose of the same expeditiously as the trial has not proceeded for more than 9 years on account of stay in writ proceedings.
