2021 Supreme(Bom) 35

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. DHANUKA, V.G. BISHT, JJ.
Arun T. Dhumale & Ors. - Petitioners
Versus
State of Maharashtra, Through the Government Pleader & Ors. - Respondents
Writ Petition (Stamp) No. 95405 of 2020 along with Writ Petition (Lodging) No. 5797 of 2020 along with Writ Petition (Stamp) No. 97828 of 2020
Decided On : 12-03-2021

Point of Law: Bank - Cancellation of License by RBI - Power to grant banking licence by the Reserve Bank of India to the banks on the conditions set out in Section 22(3) of the Banking Regulation Act is coupled with duty to cancel such banking licence in case of any breach or violation of such terms and conditions after giving opportunity to such bank to revive and to comply with those conditions and directions as may be issued by the Reserve Bank of India.

Headnote:

Reserve Bank of India Act – Sections 45 – Maharashtra Co-operative Societies Act, 1960 – Sections 110, 105, 103, 11, 5 – Banking Regulation Act, 1949 – Sections 22, 56, 35 – Constitution of India,1950 – Article 226 – Cancellation of License – Appointment of Liquidator – Petitioners in Writ Petition (Stamp) have challenged the order passed by the respondent no.2 thereby cancelling the licence of the said CKP Bank and have also impugned the order passed by the Commissioner for Co-operation and Registrar of Co-operative Societies thereby appointing a Liquidator of the said CKP Bank. – The petitioners in the said Writ Petition have also prayed for a writ of mandamus to issue directions to the Reserve Bank of India to prepare a scheme of reconstruction or amalgamation of CKP Bank with other Co-operative Bank/Banks having sound financial position in the interest of justice under the supervision and control of the Reserve Bank of India, State of Maharashtra and Union of India. In the alternate prayer clause (c), the petitioners have prayed for a writ of mandamus against the Reserve Bank of India and Union of India to provide sufficient financial aid to the said CKP Bank for its revival and to said CKP Bank to be run under the direct supervision and control of the Reserve Bank of India, State of Maharashtra and Union of India with new Management/Board of Directors as this Court may deem fit.

Findings of Court:

Power to grant banking licence by the Reserve Bank of India to the banks on the conditions set out in Section 22(3) of the Banking Regulation Act is coupled with duty to cancel such banking licence in case of any breach or violation of such terms and conditions after giving opportunity to such bank to revive and to comply with those conditions and directions as may be issued by the Reserve Bank of India. – Reserve Bank of India once having exercised such powers and duty in compliance with Section 22(4) of the Banking Regulation Act and if such order is in public interest and in the interest of bank and its depositors, Court cannot interfere with such decision making process of the Reserve Bank of India. – Principles of law laid down by the Supreme Court in case of Joseph Kuruvilla Vellukunnel (supra) applies to the facts of this case. – Court is respectfully bound by the said judgment. It is large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bona-fides of the Reserve Bank of India in issuing the directions which were issued under Sections 45-J and 45-K of the Reserve Bank of India Act by exercising powers enabling in it in that behalf under those provisions in the public interest. Its objective is to ensure monetary stability in India and to operate and regulate the credit system of the country. – It has to maintain a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rupee as well as apparent creditworthiness of the banks operating in the country and the interest of the depositors. – Reserve Bank of India occupies place of “pre-eminence” to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body. Reserve Bank of India has complied with its duties and obligations in public interest. – No case is thus made out by any of the petitioners to interfere with the impugned orders passed by the Reserve Bank of India or the Department of Co-operation Marketing and Textile. Since, all the parties have argued the matter on the merits, we have not gone into the issue of locus of these petitioners who were few of the depositors of the deposits made with the said CKP Bank. – All the petitions are devoid of merits.

Result: Writ Petition dismissed.