MR. JAYANT PATEL -- As common questions arise for consideration in all the petitions, they are being considered by common judgement.

2. In all the petitions, the challenge by the petitioners is the initiation of the action of the respondent authorities under Bombay Money Lenders Act, 1946 (hereinafter referred to as “Money Lenders Act/ML Act”). Basis of all the petitions are that the petitioners are non-banking finance companies (NBFCs) registered under the Indian Companies Act and they are being regulated and governed by the provisions of Reserve Bank of India Act, 1934 (with the amendment and more particularly Chapter-III B) (hereinafter referred to as “RBI Act”). They are under the control and supervision of Reserve Bank of India for the purpose of issuance of instructions and guidelines, therefore, they are not governed by the provisions of ML Act which is a State Act. As the concerned Registrar under ML Act has issued notice calling upon the petitioners to produce the accounts and documents for verification as to whether the provisions of ML Act are being complied with or not, failing which the fine and the other consequence may arise by initiation of the action under the ML Act, all the petitioners have approached to this Court by the present petitions for challenging the legality and validity of the action of issuing notice by the concerned Registrar under the ML Act.

3. It is an undisputed position that neither the petitioners are registered under ML Act as money lenders nor have obtained any licence under ML Act. It may be recorded that ML Act is a State Act enacted by the State legislature for the then State of Bombay and has been adopted in Gujarat State for its enforcement and is in operation in Gujarat State. Whereas RBI Act is a Central Act enacted by the Parliament.

4. In order to examine the controversy, reference to certain provisions of RBI Act would be relevant and more particularly Chapter 3B of the RBI Act which has been inserted by Act No.55 of 1963. The objects and reasons for insertion of Chapter-III B would assume importance in order to better understand the controversy. The same reads as under:

“The existing enactments relating to banks do not provide for any control on companies or institutions, which although they are not treated as banks, accept deposits from the general public to carry on other business which is allied to banking. For ensuring more effective supervision and management of the monetary and credit system by the Reserve Bank, it is desirable that the Reserve Bank should be enabled to regulate the conditions

on which deposits may be accepted by this non-banking companies or institutions. The Reserve Bank should also be empowered to give any financial institution or institutions directions in respect of matters, in which the Reserve Bank, as the Central Banking institution of the country, may be interfered from the point of view of control over the credit policy. The Reserve Bank's powers in relation to commercial banks should also be enhanced and extended in certain directions, so as to provide for stricter supervision of the operations and working of such banks.”

5. The aforesaid makes it clear that the intention of the Parliament to insert the provisions of Chapter-3 III B inter alia is to control and regulate the conditions for acceptance of the deposit and to control the credit policy of non-banking finance companies and the financial institutions (hereinafter referred to as “NBFC”).

6. At this stage, it would be profitable to advert the observations made by the Apex Court in the case of Reserve Bank of India Vs. Peerless Co. reported at 1987(1) SCC 424. the Apex Court has made the following observations regarding the interpretation of the statute:

“Interpretation must depend on the text and the context. The are the basis of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are import. That interpret