Important points:
The power granted to the RBI for cancellation of Registration is discretionary, the petitioner cannot be heard to contend that the RBI is bound to cancel the Registration of a non-banking financial company whenever there is a failure to comply with any condition subject to which the Certificate of Registration had been issued to it.

JUDGMENT :

N. NAGARESH, J.

1. The petitioner seeks to direct the 2nd respondent-Governor, Reserve Bank of India, to take action against the 5th respondent under Section 45-1A(6)(ii) of the Reserve Bank of India Act, 1934 for violating the directions issued by the 2nd respondent.

2. The petitioner states that the 5th respondent is a non-banking Company registered with the Reserve Bank of India. The petitioner filed a complaint before respondents 2 and 3 alleging that she deposited Rs. 65,898/- in the Kodungallur Branch of the 5th respondent, but instead of giving deposit receipt in the name of the 5th respondent, they gave receipt in the name of a non-existent entity. The petitioner filed a police complaint before the Sub Inspector of Police, Kodungallur and accordingly a crime was registered against the 6th respondent and others as Crime No. 948/2011.

3. The petitioner further states that in response to the complaint filed by her, the officials of the Reserve Bank of India visited the Branches and Head Office of the 5th respondent-Company and found that allegations made by the petitioner are true. According to the petitioner, the 3rd respondent informed the public that the 5th respondent being a non-deposit taking non-banking financial company with effect from 22.03.2011, acceptance of deposits from the public is contrary to the terms and conditions of the Certificate of Registration currently held by it.

4. Though the said Ext.P1 public notice was issued by the 2nd respondent, no action was taken in accordance with Chapter III B of the Reserve Bank of India Act, contends the petitioner. The petitioner filed W.P. (C) No. 33355/2011 praying for a direction to the 2nd and the 3rd respondents to entrust the investigation to a senior Police Officer. This Court, by an order dated 15.12.2011, directed investigation in the crime to be conducted by the Dy. S.P. Thrissur. The 2nd respondent was directed to consider Ext.P5 representation filed by the petitioner. Exhibit P2 is the judgment in W.P. (C) No. 33355/2011.

5. The petitioner contends that the 2nd respondent was not willing to take any action pursuant to Ext.P2 direction of this Court. Therefore, the petitioner filed a Contempt of Court Case. The said Contempt of Court Case was closed as per Ext.P3 judgment. In the meanwhile, Crime No. 948/2011 was filed in Kodungallur Police Station. The petitioner settled the criminal case on an understanding that she can pursue remedies in the civil court. According to the petitioner, the 2nd and 3rd respondents are duty bound to control the activities of the 5th respondent, under Chapter III B of the Reserve Bank of India Act. The omission of respondents 2 and 3 in not acting upon the complaint filed by the petitioner, is highly arbitrary and unsustainable. The 2nd respondent is therefore compellable to take action against the 5th respondent under Section 45-1A(6)(ii) of the RBI Act for violating the directions issued by the 2nd respondent.

6. Respondents 5 and 6 resisted the application filing counter affidavit. Respondents 5 and 6 stated that the petitioner was a party to Crl. M.C. No. 764/2014 filed by the 6th respondent. In the said Crl. M.C. a settlement was arrived at between the parties and it was agreed that the complaint was lodged by the petitioner due to some misunderstanding. On the basis of the said submission, the Crl. M.C. was closed by this Court. The RBI issued Ext.P4 show-cause notice and the 5th respondent gave a detailed explanation as per Ext.R6(c). On receipt of the explanation, the RBI suggested certain corrective actions. The directions of the RBI were complied with and a compliance report was also submitted to the RBI. The RBI informed respondents 5 and 6 that the explanation given by them are largely acceptable.

7. Respondents 2 and 3 stated that proceedings were taken against respondents 5 and 6. Respondents 5 and 6 gave reply in the matter. The compliance report submitted by respondents 5 and 6 was largely acceptable to t