$~13 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 10690/2021 & CM APPL. 32959/2021 MORGAN ASIA LIMITED ...Petitioner Through: Mr. J.M. Kalia, Mr. Dhruv Kalia and Mr. Siddharth Shukla, Advocates.

versus RESERVE BANK OF INDIA & ANR. ...Respondents Through: Mr. Ramesh Babu with Mr. Manish Singh, Ms. Tanya Choudhary and Ms. Jagriti Bharti Advocates for Respondent-1/RBI.

Mr. Ripu Daman Bhardwaj, CGSC for UOI.

% Date of Decision: 20^th August, 2024 CORAM:

HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE TUSHAR RAO GEDELA

JUDGMENT

TUSHAR RAO GEDELA, J

1. Present petition has been preferred by the petitioner, inter alia, seeking declaration of notification no. RBI/2014-15/299 dated 10^th November, 2014, bearing no. DNBR(PD) CC No. 002/03.10.001/2014-15 issued by the respondent/Reserve Bank of India (for short “RBI”) as ultra vires of section 45-IA (3) of Reserve Bank of India Act, 1934 (for short “RBI Act”) and also a declaration that proviso clause attached to section 45-IA(6) as ultra vires the Constitution, being discriminatory and violative Signature Not Verified Digitally Signed W.P.(C) 10690/2021 Page 1 of 16 of Article 14 of the Constitution of India apart from other provisions of the RBI Act. Simultaneously, the petitioner also seeks to set aside order of cancellation of the Certificate of Registration (for short “CoR”) issued by the respondent bearing no.1402/CAMS/05.08.000/2018-19 dated 12^th September, 2018 along with the corresponding order of the Adjudicating Authority of the respondent, and in consequence thereof, to set aside the order of the Appellate Authority dated 15^th April, 2020.

2. The petitioner company is a non-deposit accepting Non-Banking Financial Company (for short “NBFC”), duly incorporated on 18^th September, 1981, under the Companies Act, 1956. The petitioner was granted a CoR bearing No.14.00178 dated 3^rd March, 1998, by the RBI under the provisions of section 45-IA of the RBI Act, to carry on the business of a Non-Banking Financial Institution (for short “NBFI”) subject to fulfilling the requirements under Chapter III-B of the RBI Act and complying with the directions, regulations, including prudential norms issued by the respondent/RBI from time to time as also the terms and conditions under which the said CoR was issued to it.

3. Provisions of section 45-IA(1)(b) of the RBI Act stipulate that no NBFC can carry on the business of a NBFI without having a Net Owned Fund (for short “NOF”) of Rs.200.00 lakhs or such other amount, not exceeding Rs.200.00 lakhs, as the RBI may, by notification in the Official Gazette, specify. In terms of the notification issued by RBI being No.DNBS.132/CG(VSNM)-99 dated 20^th April, 1999, the requirement of minimum NOF for new companies applying for the grant of CoR to commence business of an NBFC was raised from Rs.25.00 lakhs to Signature Not Verified Digitally Signed W.P.(C) 10690/2021 Page 2 of 16 Rs.200.00 lakhs. However, the minimum NOF for companies that were already in existence before 21^st April, 1999, was retained at Rs.25.00 lakhs. Subsequently, respondent/RBI vide circular RBI/2014-15/520 DNBR (PD) CC.No.024 /03.10.001/2014-15 on Revised Regulatory Framework for NBFCs read with notification No.DNBR.007/CGM(CDS)-2015, both dated 27^th March, 2015, specified Rs.200.00 lakhs as the NOF required for all NBFCs to commence or carry on the business of NBFIs. However, the NBFCs holding a CoR issued by the RBI and having NOF less than Rs.200.00 lakhs were permitted to carry on the business of NBFIs provided such companies achieve the NOF of Rs.200.00 lakhs before 1^st April, 2017. As per para No.4.3 of the Revised Regulatory Framework for NBFC RBI/2014-15/299 DNBR (PD) CC. No.002/03.10.001/2014-15 dated 10^th November, 2014, the NBFCs failing to achieve the prescribed ceiling within the stipulated time period shall not be eligible to hold the CoR as NBFCs and the respondent/RBI would initiate the process for cancellation of CoR against such NBFCs.

4. Though the petitioner was