Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Ker) 41071

IN THE HIGH COURT OF KERALA AT ERNAKULAM
M.A.Abdul Hakhim, J
M P Jackson – Appellant
Versus
Reserve Bank Of India – Respondent
WP(C) NO. 3275 OF 2026

Advocates:
For the Appellants/Petitioners: Arjun Raghavan, T.R.Harikumar, Pooja Pankaj
For the Respondents: Millu Dandapani, Sumathy Dandapani, Rajani K.N.

Principles of natural justice are not inherently applicable to institutional supersession under the cited banking regulation. Mandatory consultation with the state government is a strict procedural requirement; however, judicial relief may be denied for procedural defects where delayed challenges would disrupt institutional stability and depositor interests.

Headnote:(A) Banking Regulation Act, 1949 - Section 36AAA - Supersession of Board of Directors of a Co-operative Bank - Whether principles of natural justice are applicable - Legislative intent indicates exclusion of hearing requirement in the specific provision unlike adjacent section - Principles of natural justice cannot be implied where the statute expressly omits them and where hearing processes would delay necessary administrative intervention - Consultation with State Government under mandate is mandatory - Registrar of a department is not equivalent to the State Government - Procedural compliance with statutory consultation requirements is essential. (Paras 13, 17, 20)

(B) Writ Jurisdiction - Exercise of discretion - Effect of delay in legal challenge - Court will not interfere with a technical procedural flaw in an administrative order where significant time has lapsed, the appointed administrator is functioning, and restoration would be against public interest and the security of depositors. (Para 22)

Facts of the case:
The petitioner challenged an order of supersession regarding the board of a co-operative banking institution. The petitioner contended that the order violated the principles of natural justice, lacked the mandatory consultation with the higher level of government, and compromised the democratic structure of the institution. The respondent authority argued that the specific statute provided for supersession without personal hearing requirements and that the consultation process undertaken was sufficient.

Findings of Court:
The court determined that the statute in question excludes the requirement of a personal hearing by legislative design. However, it concluded that the requirement for consultation with the Government is mandatory and cannot be satisfied by consulting only subordinate registry officers. Despite this procedural lapse, the court refused to set aside the order due to the significant delay in filing the petition and the potential harm to the financial stability of the institution if the former management were restored.

Issues: 1. Applicability of the principles of natural justice to the process of institutional supersession under the relevant banking framework. 2. Whether consultation with the registry authority satisfies the statutory mandate to consult the Government. 3. Limits of judicial discretion when addressing procedural defects in delayed challenges involving public interest.

Ratio Decidendi: The court held that where a statute intentionally departs from the requirement of a hearing, it must be respected. Strict adherence to statutory consultation procedures is required, but relief under extraordinary jurisdiction remains discretionary and will be withheld if the public interest and institutional stability outweigh the petitioner's grievances due to significant lapse in time.

Result: Writ Petition dismissed.

JUDGMENT

Dated this the 03^rd day of July, 2026

1. The Petitioner is the former President of Respondent No.4 - Urban Co-operative Bank. The Petitioner has filed this Petition challenging Ext.P5 order of the Respondent No.1/Reserve Bank of India issued under Section 36AAA r/w Section 56 of the Banking Regulation Act, 1949, superseding the Board of Directors of Respondent No.4. Other reliefs sought for in the Writ Petition are to declare that the principles of natural justice are to be read into the provisions of Section 36AAA r/w Section 56 of the Banking Regulation Act, 1949, and to direct the Respondent No.1 to restore the elected Managing Committee of Respondent No.4, forthwith.

2. The Respondent No.1 conducted an inspection on the operation of the Respondent No.4/Bank and prepared Ext.P1 Inspection Report considering the financial position as on 31.03.2022. Several irregularities in the operation of the Respondent No.4 were found in Ext.P1. The Respondent No.1, invoking its powers under Section 35A of the Banking Regulation Act, issued Ext.P3 All-Inclusive-Directions (AID) dated 29.07.2025 imposing certain regulatory restrictions in the operations of the Respondent No.4 for a period of six months with effect from 30.07.2025. The Respondent No.4 submitted a Request dated 08.09.2025 to the Respondent No.1 seeking permission to sell Non-Banking Assets (NBAs) of the Respondent No.4 to come out of AID restrictions, which was replied to by the Respondent No.1 as per Ext.P4 dated 24.09.2025 that AID restrictions do not prohibit the sale of NBAs. The contention of the Petitioner is that while the Respondent No.4 initiated action to sell the NBAs to improve its financial position, the Respondent No.1 issued Ext.P5 order of supersession removing the Board of Directors of Respondent No.4 and appointing an Administrator for the Respondent No.4 for a period of one year from 07.10.2025 to 06.10.2026.

3. The Respondent No.1 filed Counter Affidavit dated 27.02.2026 opposing the prayers in the Writ Petition. Petitioner filed Reply Affidavit dated 10.03.2026 answering the contentions raised in the Counter Affidavit. The Respondent No.1 filed Additional Counter Affidavit dated 29.05.2026 clarifying certain facts in answer to the contentions raised in the Reply Affidavit.

4. I heard the learned Counsel for the Petitioner, Sri. Arjun Raghavan, the learned Senior Counsel for the Respondent No.1, Smt. Sumathy Dandapani, instructed by Adv.Sri.Millu Dandapani, and the learned Government Pleader for the Respondent Nos.2 & 3.

5. The learned Counsel for the Petitioner contended that Ext.P5 Order was totally unwarranted in the facts and circumstances of the case. The Respondent No.4 had been conducting its operation strictly in accordance with Ext.P3 AID. The financial condition of the Respondent No.4 could have been improved by the sale of NBAs, if a reasonable time was granted to the Respondent No.4. Learned Counsel challenged Ext.P5 on three specific grounds: (1) Ext.P5 Order was issued in violation of the principles of natural justice, (2) Ext.P5 Order was passed without consultation with the State Government as mandatorily required under Section 36AAA of the Banking Regulation Act, and (3) Respondent No.1 has no authority to appoint Administrator to replace the democratically elected Board of Directors of the Respondent No.4 on 23.01.2024 for a period of five years, which is answerable to the General Body of the Respondent No.4.

6.First contention of the Learned Counsel for the Petitioner is that even though Section 36AAA of the Banking Regulation Act does not expressly provide an opportunity of hearing, an order of supersession is having consequence of loss of office and also loss of reputation, and the same has to be termed as civil consequence. It is well settled by the decisions of the Hon'ble Supreme Court that once it is found that there is civil consequence arising out of a transaction, the order therein can only be issued after hearing the affec

Click Here to Read the rest of this document

2026 Supreme(Online)(Ker) 41071

IN THE HIGH COURT OF KERALA AT ERNAKULAMM.A.Abdul Hakhim, JM P Jackson – AppellantVersusReserve Bank Of India – RespondentWP(C) NO. 3275 OF 2026

Cases Referred (9)

IN THE HIGH COURT OF KERALA AT ERNAKULAM
M.A.Abdul Hakhim, J
M P Jackson – Appellant
Versus
Reserve Bank Of India – Respondent
WP(C) NO. 3275 OF 2026