$~51 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 06^th April, 2026 Uploaded on: 09^th April, 2026 + W.P.(C) 10062/2020 & CM APPL. 32037/2020 RVS FINANCIAL SERVICES LIMITED .....Petitioner Through: Mr. Abhishek Krishna, Advocate.

versus UNION OF INDIA MINISTRY OF FINANCE APPELLATE AUTHORTIY & ANR. .....Respondents Through: Ms. Arunima Dwivedi CGSC with Ms. Swati Jhunjhunwala, Ms. Himanshi Singh and Ms. Monalisha Pradhan, Advs. for UOI (M:

9810916537).

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 22nd June, 2020 passed by the Respondent No. 1 i.e., the Appellate Authority which confirmed the order dated 2nd August, 2018 passed by the Reserve Bank of India– cancelling the registration of the Petitioner as an NBFC. The order dated 2nd August, 2018 was communicated to the Petitioner vide letter dated 2nd August, 2018. Further, the challenge in the present petition 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 an application for registering itself as an NBFC and it was granted registration with the Reserve Bank of India (hereinafter, ‘RBI’) on 4th January, 2003. 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, the requirement of minimum NOF of Rs.2 crore was made applicable to all NBFCs and the deadline for achieving the said NOF was 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. A reply dated 15th May, 2018 was thereafter filed by the Petitioner to the SCN. The impugned cancellation order was passed by the RBI on 2nd August, 2018, and the same appears to have been communicated to the Petitioner on 2nd August, 2018.

6. The case of the Petitioner is that it achieved Rs.2 crore NOF on 22^nd December, 2019 and the same was within the prescribed time as published by the RBI. 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 extant 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. Mr. Babu, ld. Counsel for the RBI further submits that merely bank statements or bank balance are not sufficient to show the NOF as there ought to be an auditor certificate proving that the NOF has been achieved as the liabilities of the NBFC would also have to be considered apart from infusing of funds.

9. The Court has considered the matter. There are several petitions which have been filed by various NBFCs before this Court, wherein the different orders 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 set aside the impugned order and remanded the matter for fresh consideration.

10. In the opinion of this Court, even on the date wh