IN THE HIGH COURT OF MADHYA PRADESH

AT GWALIOR

BEFORE

HON'BLE SHRI JUSTICE AMIT SETH

WRIT PETITION No. 13866 of 2022

THE DISTRICT CENTRAL COOPERATIVE BANK HEAD OFFICE AT NEAR

GIRLS SCHOOL COURT ROAD SHIVPURI THR. ITS

Versus

THE RESERVE BANK OF INDIA AND OTHERS

Appearance:

Shri Narottam Sharma - Advocate for the petitioner.

Shri Raju Sharma - Advocate for respondent No.1.

None for respondent No.2, though served.

Reserved on : 03/12/2025 Delivered on : 12/01/2026

ORDER under the provisions of the M.P. Cooperative Societies Act, 1960, is operating in District Shivpuri and is holding a banking license from the RBI.

The instant writ petition filed under Article 226 of the Constitution of India

claims the following reliefs:

"(a) That, the order Annexure-P/1 may kindly be quashed and the

waiver application of the petitioner may kindly be allowed,

The orders levying penal interest Annexure-P/4 & P/5, so also the recovery and coercive proceedings pursuant thereto may also be

quashed,

(b) Costs and any other relief which this Hon'ble Court may deem fit

kindly be awarded."

2. Brief facts leading to filing of the present writ petition are as under:

2​ .1The petitioner, being a District Central Cooperative Bank registered

2​ .2Since the petitioner bank failed to maintain the Statutory Liquidity Ratio (hereinafter referred to as "SLR") and Cash Reserve Ratio (hereinafter referred to as "CRR") for certain months in the financial year 2021-2022, the penal interest was levied on the petitioner bank by the respondent in the following manner:

August to October 2021 ₹34,60,302 ​November 2021 to January 2022 ₹25,70,237 Total ₹60,30,539.00

2.3A representation seeking waiver of the penal interest for the failure to maintain SLR and CRR for certain months was moved by the petitioner before the respondents, which came to be rejected vide order dated 02.06.2022 (Annexure- P/1), whereby the petitioner was informed that the representation of the petitioner was considered sympathetically but the same is not acceptable. Accordingly, the petitioner was directed to deposit the penal interest. It is this order which is under challenge in the instant writ petition.

3. Learned counsel appearing for the petitioner submits that Section 18(1-

B) and Section 24(8) of the Banking Regulation Act, 1949, empower the respondent to waive off the penal interest levied for failure to maintain SLR/CRR upon an application in writing by the defaulting banking company, showing sufficient cause for its failure to comply with the provisions of the Act. The petitioner's counsel submits that the Act contemplates a statutory power on the respondent authorities to decide the application seeking waiver of penal interest and therefore, the application made by the petitioner was required to be considered and decided by the respondents by passing a reasoned and speaking order. He submits that the order dated 02.06.2022 impugned in the instant writ petition, is patently a non-speaking order. The respondents were bound to decide the representation/application made by the petitioner seeking waiver of penal interest by passing a reasoned and speaking order.

4. Learned counsel appearing for the petitioner, by referring to the pleadings made in the petition, submits that there was a failure on the part of the petitioner bank to maintain SLR/CRR in some months of financial year 2021- 2022 on account of financial crunch in all sectors of the economy caused by the spread of pandemic COVID-19 in the last two years. That apart, the bank suffered defalcation and fraud to the tune of ₹80,56,21,342, resulting in a precipitation of financial crisis in the petitioner bank, for which an FIR was also registered by the petitioner. He further submits that non-maintenance of CRR/SLR does not result in any harm or financial loss to the RBI. The levy of penal interest for failure to maintain SLR/CRR is deterrent in nature and not compensatory. Therefore, there being no willful default on the part of the petitioner, the RBI ought to have