The cancellation decision was within the authority of the RBI, and the petitioner's admission of guilt and the opportunity of a personal hearing satisfied the principles of natural justice.

JUDGMENT :

Prayer: Writ petition filed under Article 226 of the Constitution of India for writ of certiorari calling for the records on the file of the second respondent order dated 25.06.2020 received under covering letter DOS/Che No./002/ 13.23.502/2020-21 dated 06.07.2020 and quash the same as illegal, without jurisdiction, contrary to the provisions of the Act and against the principles of natural justice and fair play.

1. The petitioner was registered with Reserve Bank of India as a non-deposit taking Non-Banking Financial Company, in short “NBFC”. Originally the petitioner was registered in the name of “Sri Patwa Benefit Fund Limited” and subsequently, the name of the petitioner was changed to “Vani Vilas Finance Limited”. A fresh certificate of registration was issued by the respondents on 21.11.2007 in favour of the petitioner.

2. The petitioner has challenged the order dated 25.06.2020 passed by the second respondent cancelling its certificate of registration for not complying with various provisions of Reserve Bank of India Act, in short “RBI, Act” and its directions/regulations issued from time to time.

3. Aggrieved by the same, this writ petition has been filed primarily on the ground that (a) the second respondent without jurisdiction and contrary to the provisions of RBI Act has passed the impugned order cancelling the petitioner’s certificate of registration; (b) principles of natural justice has been violated by the second respondent before passing the impugned order cancelling the petitioner’s certificate of registration.

4. A counter affidavit has been filed by the respondents denying the allegations of the petitioner and they would submit that the impugned order was passed only by the competent authority under the RBI Act. According to them, as per the standard operating procedure followed by RBI for cancellation of certificate of registration on supervisory grounds, the competent authority is made aware of all the material facts so as to enable the competent authority to take an informed decision. According to them, the impugned order only after the approval/signature of the competent authority was communicated to the petitioner by the Regional Office of the respondents located in Chennai.

5. In the counter affidavit, the respondents have also stated that principles of natural justice has been adhered to by them before passing the impugned order. They have stated that show cause notice was issued to the petitioner in respect of the violations of RBI Act and other regulations committed by them and sufficient opportunity was also granted to the petitioner to give its explanation and only thereafter, the impugned order came to be passed. It is also their case that the petitioner has pleaded guilty to the various violations of the statute/circulars/master directions in its reply sent to the respondents. Therefore according to them, the impugned order has been passed only in accordance with law and there is no violation of principles of natural justice.

6. Heard Mr.T.Pramod Kumar Chopda, learned counsel for the petitioner and Mr.C.Mohan, learned counsel representing M/s.King & Patridge for the respondents.

7. Learned counsel for the petitioner at the outset would submit that the impugned order has been passed without jurisdiction. He drew the attention of this Court to the show cause notice dated 10.05.2019 issued by the first respondent seeking for explanation with regard to the alleged violations committed by the petitioner and he would point out that show cause notice was issued by the first respondent, but the impugned order cancelling the petitioner’s certificate of registration has been signed by the second respondent. Therefore, he would submit that the second respondent even without hearing the matter has passed the impugned order and therefore according to him, the impugned order has been passed without jurisdiction. In support of his submission, learned counsel for the petitioner drew the attention of this Cou