The main legal point established is that RBI has the power to issue directives under the RBI Act, 1934, and the rights of workers and the status of the respondent company as an authority under Article 12 were not established.

1. The two writ petitions along with one application each made in such two writ petition for vacating the subsisting interim order are taken up for hearing analogously.

2. The writ petitioners seek cancellation of the directive of Reserve Bank of India to the respondent company to transit from Residuary Non-Banking Company (RNBC) business. For the sake of identification, W.P. No. 5232(W) of 2012 being the first in point of time, is referred to as the first writ petition and W.P. No. 11089(W) of 2012 being the second in point of time, is referred to as the second writ petition.

3. Learned Senior Advocate appearing in support of the first writ petition submits that, the Reserve Bank of India (RBI) had issued the impugned writing dated September 28, 2007, addressed to the Managing Director of the respondent company speaking of a review meeting claimed to be held on September 24, 2007. Referring to such review meeting RBI by the impugned letter dated September 28, 2007, has directed the respondent company to transit from RNBC model to other business model. He submits that, the RBI could not have issued such directive under the provisions of the RBI Act, 1934. He refers to the various definitions and to Sections 45I, 45K, 45M, 45B, 45J and 54A of the RBI Act, 1934 and submits that, the RBI could not have issued such a direction as contained in the impugned writing dated September 28, 2007. He refers to the report of the RBI dated September 2, 2010 where RBI had found that the business of the respondent company was sound. He refers to three Supreme Court decisions in relation to the private company reported at All India Reporter 1987 Supreme Court page 1023 (Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd & Others.), All India Reporter 1992 Supreme Court page 1033 (Peerless General Finance and Investment Co. Ltd & Anr. v. Reserve Bank of India) and 1996 Volume 1 Supreme Court Cases page 642 (Reserve Bank of India & Ors. v. Peerless General Finance and Investment Co. Ltd and Anr.). He refers to various paragraphs of such decisions, and submits that, the Supreme Court had noted that, the business of the respondent company was sound.

4. Referring to the various provisions of the RBI Act, 1934 learned Senior Advocate for the petitioners submits that, the RBI has the power to regulate the business of the respondent company. In the guise of regulation it cannot issue a direction for closure of the business. He relies upon 1896 Appeal Cases page 88 (Municipal Corporation of the City Toronto v. Virgo) and 1979 Volume 3 Supreme Court Cases page 229 (State of Uttar Pradesh & Ors. v. Hindustan Aluminum Corporation. & Ors.) in support of such contention.

5. Learned Senior Advocate for the petitioners refers to the writing of the RBI dated September 28, 2007 and submits that, the workers of the respondent company were not heard before a decision for closure of the business of the respondent company was taken. He submits that, the workers are an integral part of the respondent company and are entitled to be heard with regard to its business affairs, at least when it involves the closure of a business. He relies upon All India Reporter 1983 Supreme Court page 75 (National Textile Workers’ Union etc. v. P.R. Ramakrishnan & Ors.) in support of such contention. He submits that, RBI ought to have taken the plight of the workers of the respondent company into consideration while issuing the impugned writing, assuming that RBI has the power to issue the impugned writing. He refers to the second Peerless decision and the third Peerless decision in support of his contention that the plights of the workers of the respondent company were noted by the Hon’ble Supreme Court while dealing with the matters regarding the affairs of the respondent company. He submits that, the nature of business of the respondent company is such that, the field workers and the employees of the respondent company have a more significant role to play