By the Court.—The petition under Article 226 of the Constitution has been filed in order to assail the legality of an order dated 4 June 2014 passed by the Reserve Bank of India under Section 35-A of the Banking Regulation Act, 1949, the Act. A challenge has also been made to a subsequent order that was passed by the Executive Director of the Bank on 1 July 2014 on the objections submitted by the Bank. In consequence, a mandamus is sought to the effect that the petitioner should be permitted to withdraw the money deposited in its current account and to undertake normal banking activities.

2. The seventh respondent, Indian Mercantile Co-operative Bank Limited, is a primary Urban Co-operative Society registered under the U.P. Co-operative Societies Act, 1965 and has been granted a banking licence by the Reserve Bank. It is stated that the seventh respondent is a primary co-operative bank within the meaning of Section 56(ccv) of the Act. The petitioner had opened a current account in the bank through which its business transactions were conducted.

3. On 4 June 2014, the Reserve Bank issued directions in exercise of the powers conferred by Section 35-A of the Act. The directions prohibit the seventh respondent, without the prior approval in writing of the Reserve Bank, from granting or renewing any loans or advances, making any investment, incurring any liability including borrowal of funds and acceptance of fresh deposits and disbursement of any payment in discharge of its liabilities, obligations or otherwise. This is subject to the condition that a sum not exceeding one thousand rupees, out of the total balance in every savings account or current account or any other deposit account by whatever name called, may be allowed to be withdrawn by a depositor provided that wherever a depositor has a liability to the bank in any manner, the amount may be adjusted first to the relevant borrowal account. Certain other exceptions have been stipulated which are not material for the purpose of these proceedings.

4. On 16 June 2014, a circular has been issued by the Reserve Bank, providing for certain exceptional situations in which withdrawal of deposits would be permitted, subject to the recommendations of the Screening Committee and the approval of the Administrator for onwards submission to the Reserve Bank. The guidelines which have been framed in that regard provide as follows :

“1. A depositor is permitted to withdraw not more than Rs. 1.00 lakh on medical grounds and Rs. 0.50 lakh for other purposes i.e. education of self/children, marriage of self/children/brother/sister and livelihood.

2. A depositor will submit an application for withdrawal under hardship (Annex 2) to the Screening Committee of the Urban Co-operative Bank headed by the Administrator/Board and comprising Chief Executive Officer/General Manager/representatives of Depositors’ forum and Staff Union. The applications with recommendations of the Screening Committee will be forwarded to UBD, Lucknow.

3. In case of term deposits, premature payment will not be allowed.

4. The Screening Committee may ensure that the requisite documents are in place; for example

(i). In case of marriage—Marriage card in original/prepaid booking receipt of marriage hall etc., relationship proof in case of marriage of children/brother/sister.

(ii) On medical grounds.—If the treatment has occurred then the medical bills/receipts. If the treatment is yet to take place, then medical estimates certificate by the hospital/doctor etc.

(iii) In case of education—Photocopies of receipts of fees paid, relationship proof, admission proof etc.

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5. The direction that was issued by the Reserve Bank under Section 35-A was challenged before a Division Bench of this Court at Lucknow in a batch of petitions. By an order dated 19 June 2014, the Division Bench permitted the depositors to approach the Reserve Bank for withdrawal of their deposits in accordance with the guideline dated 16