RAMANUJAM J.

These writ appeals arise out of the common judgment dated February 9, 1983, rendered by Padmanabhan J. in W. P. Nos. 3180 and 3208 of 1979 (A.S P. Aiyer v. Reserve Bank of India dismissing the same. The appellants herein had filed the above writ petitions praying for the issue of a writ of mandamus directing the respondents herein to forbear from enforcing the Miscellaneous Non-Banking Companies' (Reserve Bank) Directions, 1973 (hereinafter referred to as "the Directions"), on the ground that the said Directions are not valid and enforceable. These writ petitions having been dismissed by Padmanabhan J., the appellants have filed these appeals reiterating the contentions which they urged before the learned judge.

The appellants are partners of the Palghat Credit Corporation, a partnership firm registered under the Indian Partnership Act, 1932. They are also shareholders and directors of Palghat Chit Funds (P.) Ltd., a company registered under the Companies Act, 1956 (hereinafter referred to as "the company"). The partnership firm receives deposits from and lends money to the members of the public. During financial crisis of the company, the partnership firm helps it by paying money to it to discharge the obligations of the company directly or get a credit in the books of the company. As on December 31, 1976, the company owed to the partnership firm a sum of Rs. 24, 43, 601.87 which stood reduced to Rs. 6, 40, 000 as on May 31, 1979. The money advanced by the partnership firm to the company is said to be the money deposited with the partnership firm by the members of the public. The Reserve Bank with a view to impose certain restrictions on non-banking institutions including chit funds companies receiving deposits from the public have issued the above Directions. Under the said Directions, the deposits accepted by non-banking institutions from its shareholders will, however, be exempted if a declaration was given by the shareholder to the effect that such money has, not been given by him by borrowing or accepting deposits from the members of the public. As the Palghat Chit Funds (P.) Ltd. received deposits from the partnership firm which had received deposits from the members of the public and as the amount of deposits also exceeded the limits specified in the Directions, the second respondent filed C.C. No. 3220 of 1979 on the file of the Sixteenth Metropolitan Magistrate, Madras, against the appellants on the ground that they had violated the said Directions. It is, in these circumstances, the appellants filed the above writ petitions. The appellants herein have challenged the validity of the said Directions. The first ground of attack is that in so far as the 1973 Directions make a departure from the 1966 Directions as regards the shareholders' right to receive deposits and to lend the same to the company, the same are open to attack as violative of art. 19(1)(g) of the Constitution and, therefore, the decision of this court in Mayavaram Financial Corporation Ltd. v. Reserve Bank of India holding the 1966 Directions to be valid can have no application. The second ground of attack is that the 1973 Directions restricting the shareholders' right to receive deposits and to lend it to the company is not "with reference to the receipt of deposits by the company" as contemplated by s. 45H of the Reserve Bank of India Act, 1934, and, therefore, that portion of the Directions should be taken to be ultra vires s. 45H. The third ground of attack is that the 1973 Directions in so far as they make a classification with reference to the source of deposit is discriminatory and is violative of art. 14 of the Constitution in view of the definition of "deposit".For the purpose of appreciating the above contentions, it is necessary to scan through the relevant statutory provisions. Section 45K of the Reserve Bank of India Act, 1934, provides as follows:

(1) The Bank may at any time direct that every non-banking institution