$~50 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 06^th April, 2026 Uploaded on: 07^th April, 2026 + W.P.(C) 5904/2020 & CM APPL. 21338/2020, CM APPL. 21862-

21863/2026 M K G FINANCIL SERVICES PRIVATE LIMITED. ....Petitioner Through: Mr. Rahul Agrawal, Mr. Rajesh Agrawal and Mr. Sunil Dhamija Advocates (M: 9910056062).

versus UNION OF INDIA MINISTRY OF FINANCE APPELLATE AUTHORITY DEPARTMENT OF FINANCIAL SERVICES & ANR. .....Respondents Through: Mr. T. P. Singh, SPC for UOI (M:

9971529687).

Mr. Ramesh Babu, Ms. Manisha Singh, Ms. Tanya Chowdhary and Mr.

Rohan Shrivastava, Advs. for RBI.

CORAM:

JUSTICE PRATHIBA M. SINGH JUSTICE MADHU JAIN Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.

2. The present petition has been filed under Article 226 and 227 of the Constitution of India by the Petitioner, which is a Non-Banking Financial Company (hereinafter, ‘NBFC’), inter alia, challenging the order dated 11^th February, 2020 passed by the Respondent No. 1 i.e., the Appellate Authority which confirmed the order dated 12^th September, 2018 passed by the Reserve Bank of India – cancelling the registration of the Petitioner as an NBFC. The order dated 12th September, 2018 was communicated to the Petitioner vide letterdated17^thSeptember,2018.Further,thechallengeinthepresentpetition is also to the Net Owned Fund (hereinafter ‘NOF’) notification being Notification No. 132/CGM(VSNM)-99 dated 20^th April, 1999.

3. The brief background of the present case is that the Petitioner had filed anapplicationforregisteringitselfasanNBFCanditwasgrantedregistration with the Reserve Bank of India (hereinafter, ‘RBI’) on 19^th August,1999. The Petitioner was thereafter conducting its business as an NBFC.

4. A revised regulatory framework had come into existence w.e.f. 10^th November, 2014 vide Circular No. 002/03/10.001/2014-15. As per the said circular,therequirementofminimumNOFofRs.2crorewasmadeapplicable toallNBFCs andthedeadline for achieving thesaidNOFwas 1^st April,2017. 5. In the present case, as per the RBI, the NOF was not achieved by the Petitioner and accordingly, a Show Cause Notice (hereinafter, ‘SCN’) was issued by the RBI on 2^nd May, 2018 to the Petitioner. Reply dated 10^th May, 2018 was thereafter filed by the Petitioner to the SCN. The impugned cancellation order was passed by the RBI on 12^th September, 2018, however, it appears to have been communicated to the Petitioner on 17^th September, 2018.

6. The case of the Petitioner is that it achieved Rs.2 crore NOF on 21^st September, 2018 but had received the impugned cancellation order on 22^nd September, 2018. Hence, it deserves to be considered that the NOF was achieved and the impugned cancellation order passed by the RBI should be set aside and remanded back to the RBI for fresh consideration.

7. On behalf of the Respondent No.2-RBI, it is submitted that by the time the NOF was achieved, the only remedy available with the Petitioner was to apply afresh as per the extended Rules and Guidelines. Ld. Counsel has also placed on record similar orders passed by the ld. Single Judge of this Court where similarly placed NBFCs have been permitted to file fresh applications for licensing.

8. The Court has considered the matter. There are several petitions which havebeen filedbyvarious NBFCsbefore this Court,wherein differentorders have been passed from time to time, depending upon the facts of each case. The broad principle that has been adopted by this Court is that prior to the passing of the cancellation order, if the NOF has been achieved, the Court has setasidetheimpugned order andremandedthe matter for fresh consideration. 9. However, in this case, it is seen that the impugned cancellation order was passed on 12^th September, 2018 and was communicated vide letter dated 17^th September, 2018. Even on the date when the RBI had communicated the letter through speed post to the Petitioner, it had not achieved the requisite NOF.

10. The case of the Petitioner at best is in te