JUDGMENT :

SUNIL B. SHUKRE, J.

1. RULE. Rule made returnable forthwith. Heard finally by consent of learned counsel for the parties.

2. By this petition, the petitioner, a registered Co-operative Spinning Mill, has questioned legality and correctness or otherwise of the action of the Reserve Bank of India, respondent no. 1, in imposing certain restrictions on respondent no. 3, a registered Co-operative Bank and a banking company within the contemplation of the Banking Regulation Act, 1949 (for short “Act of 1949”) in making investments, refunding deposits, incurring any liability and so on and so forth without prior approval of respondent no. 1-RBI.

3. The petitioner contends that it being a Co-operative Spinning Mill, it has compulsions to maintain all its accounts and deposits with a Co-operative Bank like the respondent no. 3. It submits that it had initially deposited an amount of Rs.11 crores from out of its working capital in the fixed deposits in the year 2017 with the respondent no. 3 and against these deposits, the respondent no. 3 granted overdraft facility to the petitioner. The petitioner submits that since then the petitioner was diligently utilizing the overdraft facility without a single default. It further submits that it has been using the overdraft facility for meeting its working capital needs as well as business, operational and administrative needs. It further submits that it is also using overdraft facility for paying half-yearly loan installment of Rs.4,42,17,935/- for repayment of the loan it has taken from National Co-operative Development Corporation. The petitioner further submits that due to restrictions imposed by respondent no. 1, the petitioner is unable to operate its overdraft account and meet its various liabilities. It also submits that even though the petitioner is maintaining overdraft and other accounts with other banks, it is the overdraft account maintained by it with respondent no. 3, which mainly caters to the business, operational and administrative needs of the petitioner including the need for payment of half-yearly loan installments.

4. According to the petitioner, the restrictions imposed by respondent no. 1 are unreasonable, belated and arbitrary as they do not consider the position of an operational unsecured creditor like the petitioner. The petitioner says that it is an operational creditor vis-a-vis its employees and cotton growers, to whom it makes payments in various forms from time to time and therefore, it is not in the same position as the other depositors. Besides, the petitioner further submits that the petitioner has an excellent financial track record with respondent no. 3 and it is an entity which directly supports nearly 600 skilled and unskilled female and male labourers and indirectly helps thousands of families and therefore the petitioner could not be treated at par with the other depositors. The petitioner contends that respondent no. 1 had already got a fair idea about sinking financial condition of respondent no. 3 during the statutory inspection of respondent no. 3 taken by respondent no. 1 in 2019-20 and that it had also imposed moderate restrictions as per its letter dated 4th June 2020; for example, to not declare dividends, to not make donations, to not incur capital expenditure exceeding Rs.50,000/- per year and so on, but, subsequently, when it became fairly clear that the financial condition of respondent no. 3 was not improving, rather deteriorating, it was necessary for respondent no. 1 to have taken serious action immediately, but, it did not do so and allowed respondent no. 3 to go further down in its health. According to the petitioner, if timely action had been taken by respondent no. 1, the stage for taking impugned action would not have arrived.

5. The petitioner thus submits that the entire action of respondent no. 1, which is impugned here, is arbitrary, unreasonable and amounts to giving equal treatment to unequal and it is not permissible in la