w w w . L a w y e r S e r v i c e s . i n


Arun T. Dhumale & Others v/s State of Maharashtra Through the Government Pleader & Others

    Writ Petition (Stamp) Nos. 95405 of 2020 & 97828 of 2020 along with Ordinary Original Civil Jurisdiction Writ Petition (Lodging) No. 5797 Of 2020
    Decided On, 12 March 2021
    At, High Court of Judicature at Bombay
    By, THE HONOURABLE MR. JUSTICE R.D. DHANUKA & THE HONOURABLE MR. JUSTICE V.G. BISHT
    For the Petitioners: Bhavesh Parmar a/w Rahul Gaikwad, Rajesh Sahani, Gauri Govilkar, Ritika Bharadia i/by Gravitas Legal, D.V. Sawant a/w Priyanka P. Kulkarni, Abhishek Sawant i/by M/s. P.S. Chambers, Advocates. For the Respondents: R5, Venkatesh Dhond, Senior Counsel a/w Prasad Shenoy, Aditi Phatak, P. Zaiwala i/by M/s. Udwadia & Co., R6, M.M. Chunawala i/by A.A. Ansari, Advocates, Jyoti Chavan, Yuvraj D. Patil, Rajan S. Pawar, AGPs.


Judgment Text
R.D. Dhanuka, J.

1. By Writ Petition (Stamp) No. 95405 of 2020 filed under Article 226 of the Constitution of India, the petitioners have impugned the order dated 28th April, 2020 passed by the respondent no.3 i.e. Reserve Bank of India thereby cancelling the licence of the CKP Co-operative Bank Limited to carry on the banking business in India under Section 22 read with Section 56 of the Banking Regulation Act, 1949 (hereinafter referred as ‘the said CKP Bank’). The petitioners in Writ Petition (L) No. 5797 of 2020 have impugned the order dated 22nd Separate, 2020 passed by the respondent no.2 i.e. Department of Cooperation Marketing and Textiles and order dated 4th May, 2020 appointing the Liquidator of the said CKP Bank.

2. The petitioners in Writ Petition (Stamp) No. 97828 of 2020 have challenged the order dated 28th April, 2020 passed by the respondent no.2 i.e. Reserve Bank of India thereby cancelling the licence of the said CKP Bank and have also impugned the order dated 4th May, 2020 passed by the Commissioner for Co-operation and Registrar of Cooperative Societies thereby appointing a Liquidator of the said CKP Bank. The petitioners in the said Writ Petition have also prayed for a writ of mandamus to issue directions to the Reserve Bank of India to prepare a scheme of reconstruction or amalgamation of CKP Bank with other Co-operative Bank/Banks having sound financial position in the interest of justice under the supervision and control of the Reserve Bank of India, State of Maharashtra and Union of India. In the alternate prayer clause (c), the petitioners have prayed for a writ of mandamus against the Reserve Bank of India and Union of India to provide sufficient financial aid to the said CKP Bank for its revival and to said CKP Bank to be run under the direct supervision and control of the Reserve Bank of India, State of Maharashtra and Union of India with new Management/Board of Directors as this Court may deem fit.

3. By consent of parties this batch of petitions were heard together finally and are being disposed of by a Common Order. Some of the relevant facts for the purpose of deciding these three petitions are as under:-

4. The petitioners in Writ Petition (Stamp) No. 95405 of 2020 are the share holders of the said CKP Bank. The petitioner nos. 1 to 3 are the members of the same family having joint deposits in the Saving Account opened with the said CKP Bank. The petitioners in Writ Petition (Stamp) No. 95405 of 2020 have also filed a separate Writ Petition bearing Writ Petition (Lodging) No. 5797 of 2020 for the reliefs already set out aforesaid. The petitioners in Writ Petition (Stamp) No. 97828 of 2020 are the depositors of various amounts with the said CKP Bank and holds shares in the said CKP Bank. It is the case of the petitioners in the said Writ Petition that the petitioners have deposits valued at approximately Rs.67,60,000/- with the said CKP Bank and also hold shares in the said CKP Bank.

Some of the facts which are identical in all three matters are as under:-

5. On or about 21st October, 1915, the said CKP Bank was registered as a Co-operative Society. On 10th November, 1986, the said CKP Bank was granted licence by the Reserve Bank of India to conduct banking business. On 30th November, 2009, the Reserve Bank of India addressed a letter to the said CKP Bank on the basis of an Inspection Report dated 31st March, 2009 thereby prohibiting the said CKP Bank from opening offsite ATMs/Extension Counters, as well as from extending the area of operation/opening of new branches. On 9th March, 2012, the Reserve Bank of India placed further restrictions on the said CKP Bank directing it to (i) reduce the exposure limit of single and group borrowers to 50% of the prescribed limits and (ii) arrest fresh slippage of loans to NPA and fix accountability for deterioration in the bank’s asset portfolio. The Reserve Bank of India further warned the said CKP Bank that if the directions were not strictly complied with, it would face consequent penal action.

6. On 23rd April, 2012, on the basis of deficiency observed during the statutory inspection of the said CKP Bank as on 31st March, 2011, the Reserve Bank of India requested the Registrar of Co-operative Societies to supersede the Board of Directors of the said CKP Bank and to appoint an Administrator in terms of Section 110A (3) of the Maharashtra Co-operative Societies Act, 1960 (for short ‘the said MCS Act’). On 7th May, 2012, pursuant to the said requisition made by the Reserve Bank of India on 23rd April, 2012, the Board of the said CKP Bank was superseded by the Registrar of Co-operative Societies. On 12th October, 2012, based on the statutory inspection of the said CKP Bank as on 31st March, 2012, the Reserve Bank of India observed that the said CKP Bank had not maintained required CRAR, which was at (-) 6.6%. The gross NPA was assessed at 30.5% and assessed the loss at Rs.11,761.34 lakhs along with deposit erosion of 5.3%. It was noted by the Reserve Bank of India that TAFCUB had sought imposition of Supervisory Action Framework (SAF). The Reserve Bank of India requested the said CKP Bank to submit an Action Plan to the Reserve Bank of India indicating its plans to reduce the NPAs to reasonable level within a period of one year, followed by statements indicating the progress on a quarterly basis. The said CKP Bank was also called upon to submit plans to Reserve Bank of India indicating its plans to improve RoA within a period of one year, followed by half-yearly financial statements of profitability, audited by the auditors.

7. On 21st March, 2013, the Reserve Bank of India imposed further directions to the said CKP Bank i.e. (i) to explore options for its merger, (ii) not permitting the said CKP Bank to increase its credit deposits beyond the level of deposit as on the date of the said letter and (iii) prohibiting the said CKP Bank from premature payment of all term deposits with effect from the date of the said letter.

8. It is the case of the Reserve Bank of India that since condition of the said CKP Bank was continuously deteriorating as reflected by the Inspection Report as on 31st March, 2010 to 31st March, 2013, the Reserve Bank of India imposed “All Inclusive Directions” under Section 35A of the Bank Regulation Act, 1949 including but not limited to a prohibition from allowing withdrawal of a sum exceeding Rs.1,000/- from any account or deposit with the bank, imposed restriction not to incur or extinguish any other liability unless specifically approved in writing by the Reserve Bank of India including borrowing of funds and/or acceptance of fresh deposits. Those directions/prohibitions were extended from time to time by the Reserve Bank of India till 30th March, 2020.

9. It is the case of the Reserve Bank of India that while carrying out statutory inspection report of the said CKP Bank on 31st March, 2014 various deficiencies/irregularities were revealed. The real or exchangeable value of paid up share capital and reserves of the said CKP Bank was assessed at (-) Rs.17,992.71/- lakhs. The said CKP Bank was not having adequate assets to meet its liabilities and was not complying with the provisions of Section 22 of the Banking Regulation Act, 1949. The said CKP Bank also did not comply with the requirement of minimum share capital prescribed in terms of the provisions of Section 11(1) of the Banking Regulation Act, 1949. Bank’s CRAR was assessed at (-) 68.9% as against the regulatory requirement of 9%. The deposits of the said CKP Bank had been eroded to the extent of 31.20%. The net loss of the said CKP Bank was assessed at Rs.11,711.90/- lakhs with the accumulated losses reported by the said bank at Rs.17,518.23/- lakhs. The gross and net NPAs were assessed at Rs.27,229.71/- lakhs (70.6% of the gross loans and advances) and Rs.14.013.69 lakhs (55.3% of the net advances) respectively. The additions to NPAs were significantly higher at Rs.8,357.98/- lakhs as compared to the recoveries of Rs.1,063.93/- lakhs during the year.

10. It is the case of the Reserved Bank of India that since the financial health of the said CKP Bank continued to deteriorate and its affairs were ex-facie being conducted in a manner detrimental to the depositors, the Reserve Bank of India issued a show cause notice dated 11th June, 2015 calling upon the said CKP Bank to show cause as to why the licence granted to the said CKP Bank under Section 22 of the Banking Regulation Act, 1949 should not be cancelled. In the said show cause notice, the Reserve Bank of India observed that it was conclusively established that the said CKP Bank was not in a position to pay its present and future depositors. The affairs of the said CKP Bank were and are being conducted in a manner detrimental to the interest of the deposits. The said CKP Bank did not comply with Sections 11(1), 18, 22(3)(a), 22(3)(b) and 24 of the Banking Regulation Act, 1949. The financial position of the said bank left little scope for its revival. It was further mentioned in the said show cause notice that in all likelihood, public interest would be adversely affected if the bank was allowed to carry on its business any further.

11. On 7th July, 2015, the said CKP Bank replied to the said show cause notice dated 11th June, 2015 and sought two years time to improve its working and its financial position and/or to enable a successful merger with another co-operative bank. The said request was made by the newly appointed Board of Directors and Managers of the said CKP Bank.

12. On 18th July, 2016 and 11th November, 2016, the said CKP Bank submitted action plan in order to enable its revival. It is the case of the Reserve Bank of India that on 3rd August, 2016 and 25th January, 2017 the Reserve Bank of India granted various permissions/relaxations as sought for by the said CKP Bank including the permission to raise share capital for non-members, sale of properties, permission to implement OTS Schemes, VRS Schemes, reduction of interest rate, transfer of funds to DEAF, grant of gold loans and augmentation of share capital through conversion of deposits etc. The said CKP Bank however was unable to show much progress on the revival plan on any front. The level of gross NPAs of the said CKP Bank continued to be consistently high.

13. It is the case of the Reserve Bank of India that since the said CKP Bank failed to show any progress from the date of the show cause notice dated 11th June, 2015, despite being given sufficient time to implement its action plan for revival, the Reserve Bank of India issued a fresh show cause notice on the basis of statutory inspection of the said CKP Bank as on 31st March, 2016. By the said show cause notice, the Reserve Bank of India called upon the said CKP Bank to show cause as to why its banking licence under Section 22 of the Banking Regulation Act, 1949 should not be cancelled in light of various facts set out in the said show cause notice.

14. On 28th Separate, 2017 and 21st November, 2017, the said CKP Bank replied to the said show cause notice dated 23rd August, 2017 by putting forward a ‘Revival Action Plan with Turnaround Strategies’. The said CKP Bank accepted that it was a non-compliance of various statutory obligations including those under the Banking Regulation Act, 1949 on its part. It was contended in the said two letters that the Board/Management was trying their best against all odds.

15. On 28th April, 2020, the Reserve Bank of India passed a detailed order and came to the conclusion that it was evident that financial position of the said CKP Bank was highly adverse and unsustainable. There was no concrete revival plan or proposal for merger with another bank. Credible commitment towards revival from the management was not visible and the said CKP Bank was not satisfying various statutory requirements. The Public interest would be adversely affected if the said CKP Bank was allowed to carry on its business any further. The Reserve Bank of India accordingly exercised the powers conferred on it under Section 22(4) read with Section 56 of the Banking Regulation Act, 1949 and cancelled the banking licence issued to the said CKP Bank on 10th November, 1986 to conduct banking business in India and directed the said CKP Bank to stop conducting all activities including the business of ‘Banking’ within the meaning of Section 5(b) of the Act and also acceptance and repayment of deposits with immediate effect.

16. The Commissioner for Co-operation and Registrar of Cooperative Societies passed an order dated 4th May, 2020 by exercising powers under Section 110A(1)(A) of the MCS Act appointed Shri J.D. Patil, District Deputy Registrar, Co-operative Societies, Mumbai City, (i) as Liquidator of the said CKP Bank, to conduct the affairs of the said CKP Bank as per powers exercisable under Section 105 of the said MCS Act with a direction to submit quarterly progress report of the Liquidation Proceedings to the Commissioner for Co-operation and Registrar of Co-operative Societies, Maharashtra State. By the said order the respondent no.3 passed an order for winding up of the affairs of the said CKP Bank under Section 110A of the MCS Act read with Section 103.

17. On 26th May, 2020, Mr. Vishwas Utagi filed a Writ Petition bearing No. WP-ASDB-LD-VC-14 of 2020 before this Court inter-alia impugning the said order dated 28th April, 2020 passed by the Reserve Bank of India. On 2nd June, 2020, the petitioners in Writ Petition (Stamp) no. 95405 of 2020 and Writ Petition (L) No. 5797 of 2020 filed a Writ Petition bearing WP-ASDB-LD-VC-42 of 2020 before this Court impugning the said order dated 28th April, 2020 passed by the Reserve Bank of India.

18. Mr. Parmar, learned counsel for the petitioners in Writ Petition (Stamp) No. 95405 of 2020 and Writ Petition (L) No.5797 of 2020 invited our attention to some of the annexures to the writ petition filed by his clients and would submit that the impugned orders passed by the Reserve Bank of India and the Registrar, Co-operative Societies suffer from violation of principles of natural justice and due process of law. There was substantial delay of almost 5 years from the date of first show cause notice dated 11th June, 2015 and almost 3 years from the second show cause notice dated 23rd August, 2017. On this ground itself, both these impugned orders are liable to be quashed and set aside.

19. It is submitted by the learned counsel that the first show cause notice was issued on 11th June, 2015 whereas second show cause notice was issued on 23rd August, 2017. In the impugned order, the Reserve Bank of India has considered alleged facts and allegations subsequent to the issuance of the show cause notices without giving any opportunity to the CKP Bank to deal with those additional facts considered in the impugned order before passing the said order. There was no grave urgency in passing the impugned order dated 28th April, 2020 during the period of lock-down declared by the Central Government as well as by the State Government due to pandemic of Covid 19 without issuing any further show cause notice for subsequent developments relating to facts and allegations post the second show cause notice dated 23rd August, 2017. The directives issued by the Reserve Bank of India under section 35A of the Banking Regulation Act were in force upto 31st May, 2020 which were effective from the year 30th April, 2014 and extended from time to time.

20. It is submitted that since no action as threatened in the first show cause notice dated 11th June, 2015 was taken by the Reserve Bank of India, it was clear that the reply to the said show cause notice given by the CKP Bank was satisfactory and the allegations which were subject matter of the said show cause notice dated 11th June, 2015 were incorrect and were thus required to be discarded. Similarly since no legal action as threatened by the Reserve Bank of India was taken after receipt of the reply of the CKP Bank to the second show cause notice dated 23rd August, 2017, it was clear that the reply given by the bank was satisfactory and there was no substance in the facts and allegations which were the subject matter of the show cause notice dated 23rd August, 2017.

21. It is submitted by the learned counsel that the impugned order under section 22(5) of the Banking Regulation Act thereby cancelling bank licence of the CKP Bank and the appointment of the liquidator vide order dated 4th May, 2020 for winding up of the bank defeated the right of the CKP Bank to prefer an appeal under section 22(5) of the Banking Regulation Act. He invited our attention to the affidavit in reply filed by the liquidator of the CKP Bank and would submit that the liquidator himself has taken a stand that he was not an aggrieved person but at the same time did not give permission to the aggrieved persons like the petitioners to prefer an appeal under section 22(5) of the Banking Regulation Act. The State Government rejected the appeals filed by the aggrieved persons like the petitioners merely on the ground of locus standi of the petitioners and not on merits.

22. It is submitted by the learned counsel that the order passed by the Registrar on 4th May, 2020 thereby appointing the liquidator of the CKP Bank was passed in undue haste based on the directives issued by the Reserve Bank of India dated 28th April, 2020 for winding up of the bank by appointing liquidator and even before the completion of 30 days provided for filing an appeal under section 22(5) of the Banking Regulation Act against the impugned order under section 22(4).

23. Learned counsel for the petitioners invited our attention to some of the letters addressed by the CKP Bank to the Reserve Bank of India and would submit that though various revival plans were submitted by the management of the CKP Bank to Reserve Bank of India, none of those revival plans were considered by the Reserve Bank of India and illegally cancelled the banking licence of the CKP Bank. The petitioners as well as the large number of persons having deposits more than Rs.5 lacs with the CKP Bank have been seriously prejudiced with the impugned order passed by the Reserve Bank of India. The affidavit in reply filed by the Reserve Bank of India and the liquidator of the CKP Bank also clearly indicate that there are about 1940 persons having deposits amounting to Rs.12,564 lacs.

24. It is submitted by the learned counsel that though the liquidator was under obligation to file an appeal against the order passed by the Reserve Bank of India thereby cancelling the banking licence of the CKP Bank and directing the Registrar to wind up the affairs of the said CKP Bank, the liquidator instead of filing an appeal against the said order or other appropriate proceedings, chose to accept the illegal order passed by the Reserve Bank of India and by the Registrar of Cooperative Societies. He invited our attention to the averments made in paragraph (14) of the affidavit in reply filed by the liquidator and would submit that the liquidator has erroneously admitted that the action on the part of the Reserve Bank of India was correct and thus no appeal was filed by the liquidator against the said order.

25. It is submitted by the learned counsel that since nothing adverse was found against the CKP Bank and more particularly about the financial condition thereof after the issuance of the second show cause notice, the Reserve Bank of India ought to have issued a fresh show cause notice before passing the impugned order after a period of more than two years from the date of issuing the said show cause notice. There is thus gross injustice done to the depositors having deposited more than Rs.5 lacs.

26. It is submitted by the learned counsel that The Deposit Insurance And Credit Guarantee Corporation had collected the insurance premium under section 15 of The Deposit Insurance And Credit Guarantee Corporation Act each year from the said CKP Bank and was simply performing its obligation by distributing the amount upto Rs. 5 lacs per depositor who had deposited more than Rs. 5 lacs with the CKP Bank and after making such payment will seek reimbursement from the liquidator under Section 21 of the said Act and would cause further grave prejudice to the depositors who had deposited more than Rs. 5 lacs with the CKP Bank. He submits that on 4th May, 2020, the power to appoint the liquidator under section 11A(1)(ii) of the MCS Act could not have been exercised by the Registrar of the Co-operative Societies in view of the fact that as on the date of the said order i.e. 4th May, 2020, the said CKP Bank ceased to be an insured co-operative bank in view of the Reserved Bank of India having cancelled the banking licence of the said CKP Bank on 28th April, 2020 itself with immediate effect.

27. Learned counsel relied upon the definition of the ‘insured banking’ as provided under section 2(i) under the said The Deposit Insurance And Credit Guarantee Corporation Act. He submits that the said impugned order dated 4th May, 2020 passed by the Registrar of the Co-operative Societies under section 110A (1)(ii) of the MSC Act does not in any manner give power for circumventing and bypassing the compliance with the requirements provided for liquidation under Chapter X of MCS Act. Under the said Chapter X, the mode and manner in which the liquidator is appointed and his functions and powers are prescribed. He submits that in the said impugned order dated 4th May, 2020, there was a specific reference made to sections 103 and 105 of the MCS Act apart from section 110A (1) (ii) of the MCS Act.

28. It is submitted by the learned counsel that the existence of the legal entity of a society registered and incorporated on 21st October, 1915 under the MCS Act cannot and should not be taken away by exercising powers vide impugned order dated 28th April, 2020 by the Reserve Bank of India under section 22(4) of the Banking Regulation Act read with section 110A (1) (ii) of the MCS Act. Under the said provision, the Reserve Bank of India was only empowered to either grant or cancel licence to operate as a bank or control the operations of licenced banks and was not empowered to decide the existence of persons/legal entities registered and incorporated under other laws such as MCS Act. He submits that even if the banking licence of the CKP Bank could have been cancelled by the Reserve Bank of India, the existence of the CKP Bank as well as the society could not be wound up as a society on such ground.

29. Learned counsel for the petitioners placed reliance on section 13C(b) of the The Deposit Insurance And Credit Guarantee Corporation Act, 1961 and would submit that though by the said order dated 28th April, 2020, the banking licence of the said CKP Bank was cancelled under section 22 of the Banking Regulation Act, 1949, there can be no bar against the said CKP Bank from conducting any other business. The order passed by the Registrar of Co-operative Societies thereby directing to wind up the affairs of the CKP Bank is contrary to section 13C(b) and (c) of the said The Deposit Insurance And Credit Guarantee Corporation Act, 1961. The said CKP Bank was incorporated and registered under the provisions of MCS Act. The banking licence was given to the said CKP Bank on 10th November, 1986 whereas the said entity was registered as a society long back. The existence of the said society as a legal entity thus has to be continued.

30. Learned counsel for the petitioners placed reliance on sections 102 and 103 of the MCS Act and would submit that the Registrar of Co-operative Societies ought to have followed the mandatory procedure under the said provisions before passing any order of winding up against the said CKP Bank.

The submissions made by Mr.D.V.Sawant, learned counsel for the petitioners in Writ Petition (St) No.97828 of 2020:-

31. Mr. Sawant, learned counsel for the petitioners submits that his clients have deposited various amount to the tune of Rs.67,60,000/- with the said CKP Bank. He submits that there are large number of depositors in addition to the petitioners who have deposited more than Rs. 5 lacs with the said CKP Bank. He invited our attention to the letter dated 30th November, 2009 addressed by the Reserve Bank of India to the Chief Executive Officer to the CKP Bank and would submit that by the said letter, the Reserve Bank of India imposed various restrictions against the CKP Bank and more particularly prohibiting the CKP Bank from opening offsite ATMs/Extension Counters, as well as from extending the area of operation/opening of new branches.

32. Learned counsel invited our attention to the letters dated 9th March, 2012, 23rd April, 2012 and the order passed by the Commissioner for Co-operation and Registrar of Co-operative Societies, Maharashtra State, Pune under section 110A (1)(iii) of the MSC Act. He submits that by the said order, the Commissioner for Cooperation and Registrar of Co-operative Societies had appointed the Board of Administrators of the said CKP Bank in place of the Board of Directors to maintain the affairs of the said bank as per the provisions of the said MCS Act read with MCS Rules and the bye-laws of the bank.

33. Learned counsel invited our attention to section 45 of the Banking Regulation Act and would submit that under the said provision, the Central Government is empowered to direct the Reserve Bank of India to order moratorium of the bank. He invited our attention to the prayer clause (c) of the Writ Petition filed by his clients inter alia praying for framing of a scheme of reconstruction or amalgamation of the said CKP Bank with other bank. He relied upon section 35(1-A) of the Banking Regulation Act and would submit that none of these powers were exercised by the Central Government though the said powers were urgently required to be exercised to save the large number of depositors who had deposited their hard earned money with the said CKP Bank and for the purpose of revival of the said bank. The Central Government ought to have directed the Reserve Bank of India to provide financial aid to the respondent no. 2 to respondent no. 6 as prayed in the petition filed by his clients. He placed reliance on section 17 of the Reserve Bank of India Act in support of this submission.

34. Learned counsel invited our attention to the averments made in paragraph (15) of the affidavit filed by the respondent no.5 i.e. Deposit Insurance and Credit Guarantee Corporation (DICGC) and would submit that the respondent no.5 has only sanctioned a sum of Rs.5 lacs in case of depositors who have deposited more than Rs.5 lacs. It is submitted that the petitioners would suffer tremendous hardship because of the sanctioned amount of Rs. 5 lacs only as against the amount of larger deposit made by his clients with the said CKP Bank. He placed reliance on the judgment of this Court in case of Bahuudeshiya Development Bank Ltd. vs. State of Maharashtra and Others, 2004(1) Mh.L.J.232 and in particular paragraphs 17 to 19 and would submit that since the Reserve Bank of India as well as the Registrar of Co-operative Societies have not followed the principles of natural justice, both the impugned orders deserve to be set aside on this ground itself.

35. Learned counsel placed reliance on section 18A of the MCS Act and would submit that under the said provision two co-operative banks could have been amalgamated by the Registrar by exercising its powers under the said provisions. He tendered a chart in support of his submission that various co-operative societies have been amalgamated by passing orders by the Registrar, Co-operative Societies.

36. Ms. Jyoti Chavan, learned AGP for the respondent no.1 in Writ Petition (Stamp) No. 95405 of 2020, Writ Petition (L) No. 5797 of 2020 and Writ Petition (Stamp) No. 97828 of 2020 tendered written submissions and also made oral submissions. It is submitted by the learned counsel that the Reserve Bank of India had instructed the Commissioner for Co-operation and Registrar of Co-operative Societies, Maharashtra State, Pune to supersede the Board of Directors and to appoint Administrator Board on the said CKP Bank due to the financial irregularities in the said CKP Bank. The Commissioner for Co-operation and Registrar of Co-operative Societies accordingly vide his letter dated 7th May, 2012 superseded the Board of Directors and appointed Board of Administrator. The said Board of Administrator took charge of the said CKP Bank on 31st May, 2012. The financial position of the said CKP Bank deteriorated in the year 2012-13 due to mismanagement, gross violation of banking norms due to the said CKP Bank not maintaining proper CRR and SLR, financial irregularities. The deposits of the said CKP Bank were decreased by Rs.469 crores.

37. It is submitted that to avoid further depletion in deposits, the Reserve Bank of India imposed restrictions and ordered moratorium under Section 35A of the Banking Regulation Act, 1949 by letter dated 30th April, 2014 and imposed restrictions on withdrawal limit of Rs.10,000 to each depositor. The election of the Board of Directors of the said CKP Bank was thereafter held for the period of 2015-16 to 2020-2021. The newly elected Board of Directors carried out the affairs of the said CKP Bank from 23rd April, 2015 to 4th December, 2019. Since 7 Directors of the said CKP Bank resigned, there was insufficient coram of the Board of Directors.

38. The said Authorized Officer took over the charge of the said CKP Bank from 6th December, 2019 during the continuance of restrictions under Section 35A of the Banking Regulation Act, 1949. The order of handing over charge to the District Deputy Registrar was extended by the Reserve Bank of India from 1st April, 2019 to 31st May, 2020. The financial position of the said CKP Bank however was not improved at all but further deteriorated. There was heavy loss to the tune of Rs.323 crores to the said CKP Bank. The Reserve Bank of India thus was justified in passing the order dated 28th April, 2020 thereby cancelling the banking licence of the said CKP Bank after giving several opportunities to the said CKP Bank to improve its financial position and to submit revival plan. The management of the said CKP Bank however could not revive financial condition of the said CKP Bank.

39. It is submitted by the learned counsel that after the cancellation of the banking licence of the CKP Bank, the depositors of the said CKP Bank who had deposited more than Rs.5 lakhs are eligible to receive their deposits insurance claims upto maximum Rs.5 lakhs per depositor from Deposit Insurance and Credit Guarantee Corporation (DICGC), the respondent no.5 in Writ Petition (Stamp) No. 97828 of 2020. It is submitted that the proposal for getting the insurance claims has been submitted to the respondent no.5. The respondent no.5 has already sanctioned claims of 43719 depositors in the sum of Rs.25,067.07 lakhs. The respondent no.5 has already transferred the said amount on 1st January, 2021 to the bank account opened in the name of the liquidator of the said CKP Bank opened with the Bank of Baroda, Tardeo branch. The Liquidator has already started disbursing the amounts to the respective depositors by NEFT/RTGS w.e.f. 14th January, 2021.

40. From the said sanctioned deposit insurance claims, the Liquidator disbursed of Rs.3866.42 lakhs to 3640 depositors as on date. It is submitted that total depositors of the said CKP Bank as on 30th April, 2020 were 102551. Out of the said 102551 depositors, 100611 depositors had deposited upto Rs.5 lakhs holding total deposits of Rs.36027 lakhs and remaining 1940 depositors had deposited more than Rs.5 lakhs with the said CKP Bank holding total deposits of Rs.12546 lakhs. The learned counsel produced the statement along with her written arguments showing the number of depositors, the amount of deposits having KYC and non-KYC with 8 branches of the said CKP Bank. The said chart would also indicate the disbursal of the claim as on 6th February, 2021 to various depositors. Insofar as the petitioners in Writ Petition (Stamp) No. 97828 of 2020 are concerned, the details of those depositors are also furnished.

41. Learned counsel placed reliance on the affidavit-in-reply filed by the respondent no.5 in Writ Petition (Stamp) No. 97828 of 2020 and submits that respondent no.5 has already indicated the amounts sanctioned by respondent no.5 in respect of the claim for 43720 depositors amounting to Rs.250,64,03,500.25/-. The claim of the petitioners in the said Writ Petition were included in the said sanction claim and the amount would be disbursed by the Liquidator through the agency bank i.e. Bank of Baroda, Tardeo branch, Mumbai by NEFT. Two of the petitioners had deposited more than Rs.5 lakhs would be paid Rs.5 lakhs.

42. Learned AGP placed reliance on the judgment of this Court in case of Ishwardas Premkumar Choradiya v/s. State of Maharashtra, 2002 (4) BCR 1 and in particular paragraph 4 in support of her submission that no show cause notice was required to be issued by the Commissioner for Co-operation and Registrar of Co-operative Societies under Section 110A(3) of the MCS Act, Registrar has no discretion in the matter when directions are issued by the Reserve Bank of India to supersede and appoint an Administrator, the right of hearing is excluded. She submits that in this case also since the Reserve Bank of India had already cancelled the banking licence of the said CKP Bank and had already issued directions to the Registrar to windup the affairs and business of the said CKP Bank, the Registrar, Co-operative Societies was bound to follow such directives issued by the Reserve Bank of India. She submits that the facts of this case are identical to the facts before this Court in case of Ishwardas Premkumar Choradiya (supra).

43. Ms. Chavan, learned AGP for the State invited our attention to the main object clauses of the said CKP Bank for formation of the said CKP Bank and would submit that the main object of the said CKP Bank was to carry on the banking business and thus the Registrar of Co-operative Societies was justified in passing an order of winding up against the said CKP Bank. The specific purpose of formation of the said CKP Bank was already defeated in view of huge loss suffered by the said CKP Bank and with no possibility of revival and more particularly in view of the Reserve Bank of India already having cancelled banking licence of the said CKP bank.

44. It is submitted by the learned counsel that only four depositors have filed the Writ Petition as against more than 102571 depositors for various amounts with the said CKP Bank. She submits that it is not pleaded that the said CKP Bank had any object other than banking. She submits that about 94% of the depositors had deposited below Rs.5 lakhs and would be fully paid by the respondent no.5.

45. Mr. Dhond, learned senior counsel for the Reserve Bank of India in Writ Petition (Stamp) No. 95405 of 2020 and for respondent no.5 in Writ Petition (Stamp) No. 97828 of 2020 on the other hand tendered the synopsis in the matter explaining that though various opportunities were granted by the Reserve Bank of India to the said CKP Bank from time to time for improving its financial condition and to submit revival plan the said CKP Bank could not improve its financial condition and revive it. It is submitted by the learned senior counsel that after sufficient indulgence was shown to the said CKP Bank, Reserve Bank of India having found no improvement in the financial condition of the said CKP Bank and on the contrary the condition having been deteriorated day by day, the Reserve Bank of India had no alternate than to pass an order for cancellation of banking licence of the said CKP Bank. He submits that the Reserve Bank of India was also justified in issuing the directions under Section 110A of the MCS Act to the Registrar to windup the affairs of the said CKP Bank. The learned senior counsel tendered a copy of those directives issued by the Reserve Bank of India.

46. It is submitted by the learned senior counsel that considering the precarious financial condition of the said CKP Bank with no sign of improvement, the Reserve Bank of India issued various directions thereby restricting various activities of the said CKP Bank so as to obviate any further loss of the bank and its depositors. The Board of Administrator was also appointed since 7th May, 2012. On 21st March, 2013, the Reserve Bank of India had directed the said CKP Bank to explore the option for merger with any other Co-operative bank. No steps were however taken by the management of the said CKP Bank. None of these actions taken by the Reserve Bank of India from time to time against the said CKP Bank was challenged by the said CKP Bank or by any of the members of the said CKP Bank including the appointed Board of Administrator.

47. Learned senior counsel invited our attention to the letter dated 18th July, 2016 and 11th November, 2016 from the said CKP Bank submitting action plan and seeking two years time for implementing such plan. In view of such request made by the said CKP Bank, the Resreve Bank of India did not take any further action contemplated under the first show cause notice. Since, no improvement in the financial condition of the said CKP Bank was shown, in spite of assurance given by the said CKP Bank, the Reserve Bank of India issued second show cause notice on 23rd August, 2017. There was erosion in the deposits every year. The said second show cause notice issued by the Reserve bank of India was never challenged by the said CKP bank or any members of the said bank including the depositors. In response to the said second show cause notice, the said CKP Bank again sought six months from 30th November, 2017 for revival of the said CKP Bank. He submits that the Reserve Bank of India waited for more than two years and gave sufficient indulgence to the said CKP Bank to revive its financial condition in Public interest and in the interest of depositors. The financial condition of the said CKP Bank however went on deteriorating day by day causing tremendious loss to the bank and to the depositors. Learned senior counsel invited our attention to the reasons recorded in the impugned order passed by the Reserve Bank of India and justified the said order.

48. Learned senior counsel placed reliance on Section 110A of the MCS Act and would submit that in view of non obstante provision under Section 110A(1), the Reserve Bank of India has power to pass an order for winding up, re-institution, suspension or supersession of the Committee of insured co-operative bank. Since, the banking licence of the said CKP Bank was already cancelled by the Reserve Bank of India earlier, the Reserve Bank of India was justified in issuance of directions to the Registrar to take steps to windup the affairs of the said CKP Bank. The said order was passed by the Reserve Bank of India in Public interest. On the basis of such directives issued by the Reserve Bank of India, the Registrar passed an order on 4th May, 2020 for winding up of the said CKP Bank. The Registrar, Co-operative Societies was not denuded from exercising the powers, even if the said order was passed after few days after the directives issued by the Reserve Bank of India.

49. It is submitted by the learned senior counsel that since the said CKP bank was already an insured co-operative bank, the Reserve Bank of India rightly exercised the powers to direct the Registrar to windup the said insured co-operative bank. He submits that even on cancellation of banking licence by the Reserve Bank of India, all the existing liabilities as on the date of the cancellation of banking licence which were insured continues even thereafter. Learned senior counsel placed reliance on Section 102 of the MCS Act and would submit that the said power granted to the Registrar for passing an order of winding up is in case of situation under Section 83, 84 or 89A of the MCS Act. The powers of the Registrar under Section 102 are in addition to the powers under Section 110A of the MCS Act and both the powers are different.

50. Learned senior counsel placed reliance on the judgment of Andhra Pradesh High Court in case of Reserve Bank of India v/s. Pattern Surya Prakash Rao and Ors., 2007 SCC OnLine AP 736 and in particular paragraphs 16, 18, 20, 22, 27, 29, 30, 44, 49 and 86 to 90 and would submit that the facts before this Court are identical to the facts before the Andhra Pradesh High Court. The principles of law laid down by the Andhra Pradesh High Court in the said judgment applies to the facts of this case. The issues raised by the petitioners in these three petitions are already negatived by the Andhra Pradesh High Court in the said judgment. Special Leave Petition against the said judgment delivered by the Andhra Pradesh High Court is dismissed.

51. Learned senior counsel placed reliance on the judgment of this Court in case of Veershaiva Co-operative Bank Ltd. v/s. Reserve Bank of India, 2018 SCC OnLine Bom 3885 and in particular paragraphs 20, 24 and 28. He submits that the powers of Court for interference with the decision of the expert bodies such as Reserve Bank of India are limited. He submits that the powers exercised by the Reserve Bank of India for cancelling the banking licence of the CKP Bank was not done hurriedly as sought to be canvased by Mr. Sawant, learned counsel for the petitioners in Writ Petition (Stamp) No. 97828 of 2020. The Reserve Bank of India had from time to time given opportunities to the said CKP Bank to improve its financial condition. After giving full opportunities and showing maximum indulgence to the said CKP Bank, the Reserve Bank of India having found no hope of revival of the said CKP Bank, Reserve Bank had to cancel the banking licence of the said CKP Bank. The said CKP Bank never conveyed any proposal to the Reserve Bank of India for its merger with any other co-operative Bank. Learned senior counsel invited out attention to the letter dated 28th Separate, 2017 from the said CKP Bank to the Reserve Bank of India in reply to the show cause notice issued by the Reserve Bank of India and would submit that even by the said letter, the said CKP Bank could not submit any revival plan, which could be considered by the Reserve Bank of India.

52. Insofar as the reliance placed on the Section 45 of the Banking Regulation Act, 1949 by Mr. Sawant, learned counsel for the petitioner in Writ Petition (Stamp) No. 97828 of 2020 is concerned, it is submitted by the learned senior counsel that since financial condition of the said CKP Bank was not improved and there was no possibilities of any revival of the said CKP Bank in spite of various opportunities, Reserve Bank of India was justified in not preparing scheme of reconstitution of amalgamation. He submits that Section 102 of the MCS Act has no application to the facts of this case. The powers were exercised by the Reserve Bank of India under Section 110A of the MCS Act. Learned senior counsel placed reliance on various averments made by the respondent no.5 in Writ Petition (Stamp) No. 97828 of 2020 setting out the manner in which the claims made by various depositors were approved and the amount sanctioned thereon. He submits that only because of the intervention of the respondent no.5, the depositors of various fixed deposits with the said CKP Bank are getting the amount to the extent of Rs.5 lakhs maximum, those who had deposited more than Rs.5 lakhs.

53. It is submitted that in any event in case there being any surplus left after distribution of all the assets amongst the creditors after liquidation proceedings are over, the depositors may get the balance amount. In support of this submission, he relied on Section 110A of the MCS Act which provides for the disposal of the surplus assets by the Liquidator of the said CKP Bank subject to previous sanction of the State Government amongst its members in such manner as may be prescribed.

54. Insofar as reliance placed by Mr. Sawant, learned counsel for the petitioner in Writ Petition (Stamp) No. 97828 of 2020 on Section 18A of the MCS Act is concerned, it is submitted by the learned senior counsel that amalgamation of the two co-operative banks cannot be permitted post winding up of one of the co-operative bank. None of the depositors had approached the Registrar under Section 18A of the MCS Act requesting for amalgamation of the said CKP Bank with another co-operative bank before passing of the impugned order of cancellation of banking licence of the said CKP Bank by the Reserve Bank of India.

55. Mr. Sawant, learned counsel for the petitioner in Writ Petition (Stamp) No. 97828 of 2020 in his rejoinder argument placed reliance on Section 36AF in support of submission that under the said provision, the Central Government has wide powers to make scheme after consultation with the Reserve Bank of India for carrying out the principles of the Banking Regulation Act in relation to any acquired bank. No such steps however have been taken by the Central Government.

56. Mr. Parmar, learned counsel for the petitioner in Writ Petition (Stamp) No. 95405 of 2020 in rejoinder submits that admittedly the second show cause notice was issued in the year 2017 whereas the impugned order thereby cancelling the banking licence was passed by the Reserve Bank of India only in May 2020. There was no grave urgency for the Reserve Bank of India for cancellation of the banking licence and more particularly during the pandemic period.

57. Learned counsel for the petitioner placed reliance on proviso to Section 22(4) of the Banking Regulation Act, 1949 and would submit that the banking licence could be cancelled only if the Reserve Bank of India would have formed an opinion that the delay will be prejudicial to the interest of the depositors of the company for the public. No such opinion was expressed by the Reserve Bank of India in the impugned order while cancelling the banking licence of the said CKP Bank. Such opinion of the Reserve Bank of India has to be reflected in the impugned order cancelling the banking licence, which is found missing in the said order.

58. It is submitted by the learned counsel that under the provisions of the Banking Regulation Act, 1949, the said CKP Bank has no right to challenge any interim directions issued by the Reserve Bank of India from time to time in last 10 years but to challenge only the final order of cancelling the banking licence under Section 22(4) of the Banking Regulation Act, 1949. The Liquidator of the said CKP Bank did not challenge the final order of cancellation of the banking licence by the Reserve Bank of India deliberately. He submits that the order passed by the Reserve Bank of India thereby cancelling the banking licence and the order directing the Registrar to windup the affairs of the said CKP Bank were passed on the same date i.e. 28th April, 2020. The right of appeal against the order of cancellation of banking licence was 30 days. The said CKP Bank lost its right of appeal against the order cancelling the banking licence against the said CKP Bank by the Reserve Bank of India. The remedy available to the said CKP Bank under Section 22(5) of the Banking Regulation Act, 1949 is defeated.

59. Learned counsel for the petitioner made an attempt to distinguish the judgment of Supreme Court in case of Joseph Kuruvilla Vellukunnel (supra) on the ground that various observations made in paragraphs 16 and 20 by the Hon’ble Supreme Court in the said judgment were not on the issues fell for consideration of the Hon’ble Supreme Court in the said matter and thus no reliance thereon can be placed by the learned senior counsel for Reserve Bank of India. Since, the Reserve Bank of India has acted illegally, this Court has ample power to interfere with the impugned order passed by the Reserve Bank of India. Learned counsel for the petitioner also made an attempt to distinguish the judgment of this Court in case of Veershaiva Cooperative Bank Ltd. (supra) on the ground that the facts before this Court in the said judgment were totally different.

60. It is submitted by the learned counsel that the Commissioner for Co-operation and Registrar of Co-operative Societies appointing the Liquidator and while passing the order of winding up had relied upon Section 110A(1)(ii) of the MCS Act but also had referred to Sections 103 and 105 of the said Act. No procedure however prescribed under Sections 103 and 105, which is mandatory was followed by the Commissioner for Co-operation and Registrar of Co-operative Societies while passing the said impugned order thereby ordering a winding up of the said CKP Bank. He submits that even if the banking licence of the said CKP Bank is cancelled rightly by the Reserve Bank of India, the legal entity of the said CKP Bank which was also a society is not cancelled. The petitioner is thus entitled to file this Writ Petition.

61. Mr. Dhond, learned senior counsel for the Reserve Bank of India relied upon paragraph 87 of the judgment of Andhra Pradesh High Court in case of Reserve Bank of India v/s. Pattern Surya Prakash Rao and Ors. (supra) and would submit that the Andhra Pradesh High Court had accepted the submissions of the learned Advocate General that once the banking licence is cancelled, the winding up is inevitable consequence. He submits that the Registrar has no power to order winding up of the banking company. Such powers are not independently exercised by the Registrar under Section 102 or 103 of the MCS Act. He submits that during the period of 2015-17, the financial condition of the said CKP Bank further deteriorated and thus there was no question of issuing any further show cause notice. The Reserve Bank of India had shown further indulgence even after the issuance of second show cause notice at the request of the Board of Management of the said CKP Bank. However, there was no improvement in the financial condition of the said CKP Bank and on the other hand the same further deteriorated.

REASONS AND CONCLUSION :

62. We shall decide the question whether in the facts and circumstances of the case, the Reserve Bank of India was justified in exercising powers under section 22 read with section 56 of the Banking Regulation Act to cancel the banking licence of the CKP Bank and was further justified in directing the Registrar of Co-operative Societies to take steps to wind up the said CKP Bank or not.

63. A perusal of the record summarized aforesaid clearly indicates that the Reserve Bank of India had been pointing out large number of irregularities on the part of the CKP Bank in conducting the affairs of the said CKP Bank thereby causing tremendous financial loss to the depositors, erosion of assets including the depositors, CKP Bank not maintaining the required CRAR during the period between 2009 and 2019. As far back as on 30th November, 2009, the Reserve Bank of India had addressed a letter to the CKP Bank thereby prohibiting the said CKP Bank from opening offsite ATMs / extension counters as well as from extending the area of operation / opening of new branches.

64. The Reserve Bank of India had thereafter on 9th March, 2012 placed various restrictions on the said CKP Bank thereby directing the CKP Bank to reduce exposure limit of single and group borrowers to 50% of the prescribed limits and arrest fresh slippage of loans to NPA and fix accountability for deterioration in the Bank’s asset portfolio. The said CKP Bank was warned that if the directions of the Reserve Bank of India were not complied with by the said CKP Bank it would face consequential penal action by the said CKP Bank. On 23rd April, 2012, the Reserve Bank of India requested the Registrar of Cooperative Societies to supersede the Board of Directors of the CKP Bank and to appoint an Administrator in terms of section 110 A(3) of MCS Act. Accordingly the Board of Directors of the said CKP Bank was superseded on 7th May, 2012 by appointing an Administrator by the Registrar, Co-operative Societies.

65. The Reserve Bank of India had noticed on statutory inspection of the said CKP Bank on 31st March, 2012 that the said CKP Bank had not obtained required CRAR, gross NPA was 30.5% and assets loss of the said CKP Bank was 11761.34 lakh along with deposit erosion of 5.3%. By the said letter, the Reserve Bank of India requested the CKP Bank to submit the action plan including its plan to reduce NPA to reasonable level within a period of one year. On 21st March, 2013, the Reserve Bank of India had directed the CKP Bank to exposure options of merger. That the said CKP Bank was not permitted to increase its aggregate deposits beyond the level of deposits on the date of the said letter and was prohibited from making pre-mature payment of the term deposit with effect from the said letter.

66. It is not in dispute that on 30th April, 2014, the Reserve Bank of India on the basis of the statutory inspection report as on 31st March, 2013 imposed various restrictions on the said CKP Bank under section 35 A of the Banking Regulation Act thereby prohibiting withdrawal of a sum exceeding Rs.1,000/- from any account or deposit with the said CKP Bank, restricting the said CKP Bank not to incur or extinguish any other liability unless specifically approved in writing by the Reserve Bank of India including borrowing of funds and/or acceptance of fresh deposits. On 31st March, 2014, the Reserve Bank of India found that real or exchangeable value of paid up share capital and reserves of the said CKP Bank was at (-) 17992.71 lakh. The said CKP Bank did not have adequate assets to meet its liabilities which was not in compliance with the provisions of section 22 of the Bank Regulation Act.

67. The said CKP Bank also did not comply with the requirement of minimum share capital in terms of the provisions of section 11(1) of the Banking Regulation Act. The CRAR of the said CKP Bank was assessed at (-) 68.9% as against regulatory requirement of 9%. The deposits of the said CKP Bank had been eroded to the extent of 31.20%. The net loss of the said CKP Bank was assessed at 11711.90 lakh with the accumulated losses reported by the said CKP Bank at 17518.23 lakh. The NPA were higher at 8357.98 lakh as compared to the recoveries of 1063.93 lakh during the year.

68. In the year 2015 when the Reserve Bank of India did not find any improvement in the financial condition of the said CKP Bank and since the said CKP Bank did not comply with various directives issued by the Reserve Bank of India since last several years, the Reserve Bank of India issued show cause notice on 11th June, 2015 as to why the licence granted to the said CKP Bank should not be cancelled. The said CKP Bank requested for two years time to improve its working and financial condition and/or enable to have a successful merger with another Co-operative Bank. The CKP Bank thereafter submitted an action plan on 18th July, 2016 and 11th November, 2016. The Reserve Bank of India thereafter granted various permission to raise share capital from non-members, sale of properties, reduction of interest rate etc. The said CKP Bank however, did not show any progress on the revival plan on any front.

69. The Reserve Bank of India was thus compelled to issue second show cause notice on 23rd August, 2017 pointing out various deficits and breaches on the part of the said CKP Bank and to show cause as to why the bank licence shall not be cancelled. Though the said said CKP Bank replied to the said show cause notice on 28th September, 2017 and 21st November, 2017, the said CKP Bank could not demonstrate as to why the banking licence should not be cancelled. The said CKP Bank could not deny the allegations made by the Reserve Bank of India in the said show cause notice against the bank and more particularly pointing out precarious financial condition of the said CKP Bank. The Reserve Bank of India therefore rightly passed an order on 28th April, 2020 thereby cancelling the banking licence of the said CKP Bank and directed the Registrar, Co- operative Societies to wind up the affairs of the said CKP Bank.

70. It is not in dispute that the said CKP Bank did not challenge any action on the part of the Reserve Bank of India in last ten years by filing any proceedings in any Court of law or controverting the case of the Reserve Bank of India in various correspondence and show cause notice. In the affidavit in reply filed by the District Deputy Registrar, Co-operative Societies and the Liquidator of the said CKP Bank placed on record the financial status of the said CKP Bank as on 31st March, 2013, 31st 2015, 31st March, 31st March,2017 and 31st March, 2020 which demonstrated tremendous financial loss of the said CKP Bank, erosion in deposits, negative assets net worth, negative CRAR, net loss, erosion of deposits 97.38%, gross NPA and 10.05 net NPA.

71. In the said affidavit in reply filed by the Liquidator, it is stated that as per the policy of the Deposit Insurance and Credit Guarantee Corporation (DICGC) Individual depositors amount upto Rs.5 lakh is insured and safe which can be refunded to the depositors. There are total 131985 depositors having deposited about Rs.485.25 crore. Out of those 130855 depositors having deposited, an amount of Rs.364.79 crores are eligible for refund upto Rs.5 lakh as per DICGC norms. There are only 1130 depositors whose amount is more than Rs.5 lakh. The deposit amount of more than Ra.5 lakh is not insured above Rs.5 lakhs under DICGC Act and cannot be refunded at this stage. The total amount of 1130 depositors is Rs.120.45 crores. Out of that Rs.58 crores being less than Rs.5 lakh of individual depositors is insured. The Liquidator has already started liquidation proceedings.

72. The first stage of sending the proposal to the DICGC for sanction of claim list of the depositors has started. There are 1,31,985 depositors but after clubbing the single entity depositors number arrived is at 1,02,551. The Liquidator has already submitted the claim list along with KYC details of the depositors as on 23rd October, 2020 in respect of the total depositors 47,819 amounting to Rs.298.27 crores. The audit work of the said claim list is in process by the Auditors appointed by the DICGC. As soon as the DICGC sanctions the claim list, actual refund of the depositors amount be started.

73. We have also perused the affidavit in reply filed by the DICGC in Writ Petition (Lodging) No.97828 of 2020. The said DICGC also opposed the writ petition on various grounds. It is stated in the said affidavit that under the provisions of sections 16(1), 27 (2) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 the Corporation has sanctioned the claim for 43,720 depositors amounting to Rs.250,64,03,500.25 towards the eligible deposit insurance claims of the 43720 traceable depositors of the Bank and the amount remitted was in two tranches on December, 2020 and 1st January, 2021 to the Liquidator in the bank’s account opened with DICGC agency bank i.e. Bank of Baroda, Tardeo Branch, Mumbai.

74. In paragraph 15 of the said affidavit, the DICGC has averred that the claims of the petitioner in Writ Petition were included in the said sanctioned claim and the amounts would be disbursed by the Liquidator through the agency bank I.e Bank of Baroda by NEFT. As against the amount of deposit of Rs.8,29,568/- made by the petitioner no.2 i.e. Smita Chandrashekhar Kulkarni, the respondent no.5 has sanctioned a sum of Rs.5 lakh. Against another deposit of Rs.71,25,603/- deposited by the petitioner no.2, the respondent no.5 has sanctioned another Rs.5 lakh. The deposit amount of Rs.3,487/- by Chandrashekhar Guruprasad Kulkarni has not been included by the Liquidator.

75. A perusal of the record indicates that as against large number of deposits of the depositors, substantial amount of deposits were less than Rs.5 lakh. All such depositors which deposited less than Rs.5 lakh and have complied with the requisite norms, refund of the amount of such deposite has been sanctioned by the respondent no.5. Those who have deposited more than Rs.5 lakh with the said CKP Bank have been sanctioned Rs.5 lakh according to the policy.

76. In our view, there is no substance in the submission made by the learned counsel for the petitioner that the Reserve Bank of India could not have passed an order of cancellation of banking licence of the said CKP Bank and ought to have given a fresh show cause notice. The Reserve Bank of India had given liberty to the members of the said CKP Bank for its revival and also asked the said CKP Bank to submit an option for merger. The said CKP Bank did not take any steps to improve the financial condition and on the contrary made the financial condition of the said CKP Bank in miserable state of affairs. In these circumstances, the Reserve Bank of India was not required to wait indefinitely having waited for about ten years for revival of the CKP Bank. There was no further requirement of issuance of any fresh show cause notice after issuance of second show cause notice on 23rd August, 2017 and before passing the impugned order dated 28th April, 2020. The Reserve Bank of India had postponed the action in view of the request made by the CKP Bank as and by way of last indulgence.

77. The Reserve Bank of India was not required to give any hearing to the depositors before passing the order of suspension of the banking licence of the said CKP Bank. It is not the case of the said CKP Bank that principles of natural justice were violated by the Reserve Bank of India at any sage from 2009 onwards. The submission of the learned counsel for the petitioner that there was no urgency in passing the impugned order on 28th April, 2020 during the period of lock down is without any merit. The deteriorating financial condition of the said CKP Bank has been already highlighted in great detail in the aforesaid paragraphs. In our view, there is no merit in the submission of the learned counsel for the petitioner that since no action was taken by the Reserve Bank of India pursuant to the show cause notices dated 11th June, 2015 and 23rd August, 2017 for substantial period, the alleged deficiencies on the part of the said CKP Bank in not complying with the requisition directed in those two show cause notices were deemed to have been waived.

78. Insofar as the submission of the learned counsel for the petitioner that since the order passed by the Reserve Bank of India cancelling banking licence on 28th April, 2020 and the order which was followed by the order dated 4th May, 2020 directing the Registrar, Co-operative Societies on 4th May, 2020, the said CKP Bank had lost its right of appeal under section 22(5) of the Banking Regulation Act is concerned, the petitioners cannot be allowed to urge this submission. It was not the case of the Liquidator of the said CKP Bank that the said CKP Bank or the Liquidator had lost its right to file an appeal against the order passed by the Reserve Bank of India cancelling the banking licence of the said CKP Bank. Be that as it may, under section 22(5) of the Banking Regulation Act, the banking company aggrieved by the decision of the Reserve Bank of India cancelling the banking licence under section 22(1) can file an appeal and not by the depositors to the Central Government.

79. Insofar as the submission of the learned counsel for the petitioners that as on 4th May, 2020, the Registrar, Co-operative Societies had no power to appoint the Liquidator under section 110A (i) and (ii) of the MCS Act in view of the said CKP Bank ceased to be insured bank is concerned, there is no merit in this submission made by the learned counsel for the petitioners. Under section 110 A of the MCS Act, the Registrar, Co-operative Societies is empowered to pass an order of winding up of the insured co-operative bank however only with sanction or on requisition of the Reserve Bank of India. Under section 110 A (ii) the Registrar is bound to pass an order for winding up of the bank if so required by the Reserve Bank of India in the circumstances referred in section 13 D of the Deposit Insurance Corporation Act, 1961. Under section 110 A (iv) of the MCS Act, if an order for winding up of the bank is made with the previous sanction in writing or on the requisition of the Reserve Bank of India, such action shall not be liable to be questioned in any manner.

80. Under section 110 A (v) of the MCS Act, the liquidator or the insured co-operative bank or the transferee bank, as the case may be, shall be under an obligation to repay the Deposit Insurance Corporation established under the Deposit Insurance Corporation Act, 1961, in the circumstances, to the extent and in the manner referred to in section 21 of the Deposit Insurance Corporation Act, 1961. Merely because an order is passed by the Reserve Bank of India cancelling the banking licence of a bank under section 22 of the Banking Regulation Act, the existing liability of the Deposit Insurance Corporation to pay to the depositors as per the provision of the said Deposit Insurance Corporation Act on the date of passing such order does not come to an end. The submission of the learned counsel for the petitioner that on order of winding up of the bank, such bank is ceased to be an insured co-operative bank and that no order could be passed by the Registrar of Co-operative Societies under the direction of the Reserve Bank of India is totally misconceived.

81. The Deposit Insurance Corporation in its affidavit has not denied its liability to pay to the depositors of the CKP Bank upto to Rs.5 lakh depending upon the amount of deposit as per its policy. When this Court raised a query upon the learned counsel for the petitioners whether it was his case that the said Deposit Insurance Corporation was not liable to pay any amount of any of the depositors as on the date of winding up of the said CKP Bank, learned counsel for the petitioners now makes a statement that it was not the submission of the petitioners that the liability of the said Deposit Insurance Corporation would be ceased in view of the order of the winding up of the said CKP Bank or upon cancellation of the banking licence of the said CKP Bank by the Reserve Bank of India. The said CKP Bank was already an insured co-operative bank and thus the Reserve Bank of India rightly exercised powers to direct the Registrar, Co-operative Societies to wind up the said insured co-operative bank. All the existing liabilities as on the date of the cancellation of the banking licence which were insured with the Deposit Insurance Corporation were continued even thereafter till the date of such winding up of the affairs of the said CKP Bank.

82. In our view, the order passed by the Registrar, Co-operative Societies on 4th May, 2020 under section 110 A (I) and (ii) of the MCS Act is not in any manner in contravention with Section 102 of the MCS Act. The said power granted to the Registrar, Co-operative Societies for passing an order of winding up is in case of a situation under Sections 83, 84 or 89A of the MCS Act and operates in different field. The power of the Registrar under section 102 of the MCS Act has nothing to do with the duty of the Registrar to comply with the directions of the Reserve Bank of India under section 110 A of MCS Act. In our view, both the powers are separate and distinct. The Registrar of the Co-operative Societies has no power or discretion to refuse to wind up an insured co-operative bank once it receives such directives from the Reserve Bank of India under section 110 A of the MCS Act.

83. Insofar as the submission of the learned counsel for the petitioners that the Reserve Bank of India had no power to decide the existence of the persons/entity, there is no merit in this submission of the learned counsel for the petitioners. In our view Ms.Chavan, learned AGP for the State Government is right in her submission that the main object of the CKP Bank was to carry on banking business and thus banking licence having been cancelled by the Reserve Bank of India, Reserve Bank of India was fully justified in directing the Registrar of Co-operative Societies under section 110 A of the MCS Act to wind up the affairs of the said CKP Bank.

84. Similarly, there is no merit in the submission of the learned counsel for the petitioners that the said CKP Bank could have conducted any other business even after banking licence of the said CKP Bank was cancelled by the Reserve Bank of India or that the said order passed by the Registrar, Cooperative Societies is contrary to section 13 (C)(b) and (c ) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961. Learned counsel for the petitioners could not dispute that the main object of formation of the said CKP Bank was to carry on banking business. Be that as it may, no such grievance has been made by the Liquidator of the said CKP Bank by filing any appropriate proceedings in any Court of law.

85. Insofar as the submission of the learned counsel for the petitioners that the Registrar, Co-operative Societies ought to have followed the mandatory procedure under sections 102 and 103 of the MCS Act before passing the order of winding up is concerned, this submission of the learned counsel is contrary to section 102 of the MCS Act. The powers of passing the order of winding up by the Registrar under section 102 of the MCS Act can be exercised only in the circumstances set out in the said provision and has nothing to do with the powers of winding up pursuant to the directives issued by the Reserve Bank of India under section 110 A of the MCS ACT. In our view since the directives were issued by the Reserve Bank of India under section 110 A of the MCS Act to the Registrar, Co-operative Societies the said Registrar was not required to follow any procedure prescribed under section 102 of the MCS Act.

86. Insofar as the submission of Mr.Sawant, learned counsel for the petitioners in Writ Petition (Stamp) No.97828 of 2020 that under section 45 of the Banking Regulation Act, the Reserve Bank of India was under an obligation to apply to the Central Government to prepare a scheme of reconstitution of amalgamation of the said CKP Bank is concerned, on perusal of the said provision, it is clear that if it appears to the Reserve Bank of India that there is good reason to apply to the Central Government for approval of the scheme of reconstitution of amalgamation of the bank, the Reserve Bank of India in that event may apply to the Central Government for an order of moratorium in respect of the banking capital. In this case, the record clearly indicates that though the Reserve Bank of India had given several opportunities to the said CKP Bank to improve its financial condition and to revive the bank by suggesting a revival plan including the plan of merger. The said CKP Bank totally failed to submit any such plan for merger.

87. The financial condition of the said CKP Bank became worst day to day and thus the Reserve Bank of India complied with its duty to cancel the banking licence and in simultaneously directing the Registrar, Co-operative Societies to wind up its affairs so as to obviate further deterioration and erosion of all the deposits and the assets of the said CKP Bank. The Reserve Bank of India for various reasons recorded in the impugned orders which are in public interest has passed the said order of cancellation of the banking licence of the said CKP Bank and was right in not exercising such powers under section 45 of the Banking Regulation Act.

88. Insofar as reliance placed on section 35 (1) (A) by Mr. Sawant, learned counsel for the petitioners in support of the submission that the Reserve Bank of India ought to have exercised powers to secure proper management of any banking company by directing to frame the scheme of reconstitution of amalgamation of the said CKP Bank with other bank is concerned, in our view, no such case was made out by the said CKP Bank. Several opportunities were given by the Reserve Bank of India to seek merger of the said bank with another co-operative bank, however the said CKP Bank miserably failed to merge it with another co-operative bank. The Reserve Bank of India did not find it in public interest to order such amalgamation of the said CKP Bank with other bank and thus rightly did not exercise such powers under section 35 A of the MCS Act.

89. Insofar as reliance placed on section 18 A of the MCS Act by Mr.Sawant, learned counsel for the petitioner is concerned, the said CKP Bank did not make out any case of merger of the said CKP Bank with any other bank. No such application was even otherwise made by the said CKP Bank to the Registrar for seeking merger of the said CKP Bank with any other Co-operative Bank. Reliance thus placed by the learned counsel on the said provision is misplaced.

90. Insofar the judgment of this Court in case of Chandrapur Zilla Sahakari Krushi and Gramin Bahuudeshiya Development Bank Ltd. (supra) relied upon by Mr. Sawant, learned counsel for the petitioner in Writ Petition (Stamp) No. 97828 of 2020 is concerned, in the said judgment this Court has taken a view that when suo-motu action under Section 102(1)(c) of the MCS Act is taken by the Registrar to windup the society by an interim order, principles of natural justice cannot be dispensed with, Registrar is duty bound to grant hearing to the concerned society. In our view, the said judgment would not advance the case of the petitioner. In this case, the Registrar has not exercised suo-motu action of winding up of the said CKP Bank under the said provision. The Reserve Bank of India had directed the Registrar, Cooperative Societies to windup the affairs of the said CKP Bank by exercising powers under Section 110A of the MCS Act. The Registrar was thus not required to issue any show cause notice or to give any hearing to the CKP Bank before passing the said order of winding up.

91. In our view, Ms. Chavan, learned AGP for the respondent-State rightly pointed out that the newly elected Board of Director of the said CKP Bank was constituted during the period between 2015-16 to 2020- 21 and was carrying on the affairs of the said CKP Bank during the period from 23rd April, 2015 to 4th December, 2019. Seven of the Directors of the said CKP Bank resigned. The Commissioner for Cooperation and Registrar of Co-operative Societies, thereafter superseded the Board of Directors and rightly appointed Shri J. D. Patil, District Deputy Registrar, Co-operative Societies, Mumbai City,

(i) as an Authorized Officer on the Board of the said CKP Bank. The Management of the said CKP Bank’s Board was also given various opportunities to revive the financial condition of the said CKP Bank during the said period of almost 5 years. However, no steps to revive the bank were taken by the Board of Management of the said CKP Bank. The learned AGP submitted a detailed note to show before this Court that the Liquidator of the said CKP Bank has already taken steps jointly with the respondent no.5 and has already crystallized the claims of the fixed depositors.

92. The learned AGP rightly placed reliance on the judgment of this Court in case of Ishwardas Premkumar Choradiya (supra) in support of her submission that the Registrar, Co-operative Societies was not required to issue the show cause notice to the Directors for supersession of Board of Directors. This Court in the said judgment has held that under Section 110A of the MCS Act, the Reserve Bank of India was justified in issuing directions to windup the affairs of a cooperative bank. The directions under the said provisions issued by the Reserve Bank of India to the Registrar, Co-operative Societies are binding. Once directions are issued by the Reserve Bank of India, the Registrar has no discretion in the matter but to supersede and appoint an Administrator. The right of hearing is thus excluded. We are in agreement with the views expressed by the learned Single Judge of this Court in the judgment in case of Ishwardas Premkumar Choradiya (supra).

93. In our view, the Registrar of Co-operative Societies while passing an order of winding up of the said CKP Bank rightly did not exercise the powers under Section 102 of the MCS Act but had complied with the mandatory directions issued by the Reserve Bank of India under Section 102 of the MCS Act. The Registrar of Co-operative Societies has no discretion to either issue a show cause notice or to give any hearing to the said CKP Bank or to any of the depositors. Reliance placed by Mr. Sawant, learned counsel for the petitioner in Writ Petition (Stamp) No. 97828 of 2020 on Section 102 of the MCS Act is thus misplaced.

94. This Court in the said judgment in case of Ishwardas Premkumar Choradiya (supra) has adverted to a judgment of Division Bench of this Court in case of Mahendra Husanji Gadkari v/s. State of Maharashtra and Ors., 1992(2) Mh.L.J. 1442 in which it was held that the directions issued by the Reserve Bank of India under Section 110A(3) of the MCS Act are binding on the Registrar. Once directions are issued by the Reserve Bank of India, the Registrar has no discretion in the matter but to supersede and to appoint an administrator. Once that be so, and as there is no discretion left with the Registrar, it must mean that the right to hearing is excluded. Once that be so, there was no question of issuing show-cause notice to the petitioner before passing the impugned order. The judgment delivered by the Division Bench of this Court in case of Mahendra Husanji Gadkari (supra) applies to the facts of this case. We are respectfully bound by the said judgment.

95. This Court in the judgment of Division Bench of this Court in case of Shri Bhagwat Munjabhau Shelke v/s. State of Maharashtra in Writ Petition No. 7131 of 2018 and other connected mattes delivered on 31st January, 2019 adverted to a judgment of Supreme Court in case of Reserve Bank of India v/s. M. Hanumaiah and Ors., (2008) 1 SCC 770, in which the judgment delivered by a learned Single Judge of this Court in case of Ishwardas Premkumar Choradiya (supra) was cited. In the said Supreme Court judgment, it was held that under provisions of Section 110A(3) of the MCS Act, the directions issued by the Reserve Bank of India are binding on the Registrar of Co-operative Societies and the Registrar has no discretion in the matter but to supersede and to appoint an administrator. Once that be so, and as there is no discretion left with the Registrar, it must mean that the ‘right to hearing is excluded’. The Supreme Court in the said judgment approved the view taken by a learned Single Judge of this Court in case of Ishwardas Premkumar Choradiya (supra) and the judgment of Division Bench of this Court in case of L.V. Sasmile v/s. State of Maharashtra, 1992 CTJ 729. The judgment of the Hon’ble Supreme Court in case of Reserve Bank of India v/s. M. Hanumaiah and Ors. (supra) and the judgment of Division Bench of this Court in case of Shri Bhagwat Munjabhau Shelke v/s. State of Maharashtra (supra) applies to the facts of this case. We are respectfully bound by the said judgments.

96. Learned Single Judge of this Court in case of Namdeo s/o Natha Sanap and Anr. v/s. The State of Maharashtra and Ors., 2015(1) Mh.L.J. 838 after adverting to the judgment of this Court in case of Ishwardas Premkumar Choradiya (supra), L.V. Sasmile (supra) and judgment of Supreme Court in case of Reserve Bank of India v/s. M. Hanumaiah and Ors. (supra) held that powers of Reserve Bank of India under Section 110A of the MCS Act are absolute and cannot be stressed upto granting an opportunity of hearing to the office bearers of the bank. We are in agreement of the views expressed by the learned Single Judge in case of Namdeo s/o Natha Sanap and Anr. (supra).

97. In our view, the order passed by the Registrar, Co-operative Societies thereby winding up the affairs of the CKP Bank is not a quasi-judicial order but is executive order, passing of which order neither contemplate any show-cause notice nor any personal hearing.

98. In our view, in conformity with the requirements of Section 2(gg) of the DICGC Act, 1961, Section 110A of the MCS Act provides for certain special provisions applicable to co-operative banks. Section 2(gg) of the DICGC Act, 1961 has to be read with Section 110A of the MCS Act. The said Section 2(gg)(iii) clearly provides that the eligible co-operative bank, if so required by the Reserve Bank of India in the public interest or for preventing the affairs of the bank being conducted in a manner detrimental to the interest of the depositors or for securing the proper management of the bank, an order shall be made for supersession of the Committee or Committee of Management or other Managing body of the bank and the appointing of administrator for a specified period. In case of insured co-operative banks under the DICGC Act, 1961, the order for winding up, reconstruction, supersession of the Committee cannot be made by the Registrar of Cooperative Societies under the MCS Act without sanction or requisition of the Reserve Bank of India. The Reserve Bank of India has powers under the provisions of MCS Act in respect of winding up, reconstruction, supersession of the Management Committee or Board of Directors of such insured co-operative bank. The said provision also has to be read with Section 56 of the Banking Regulation Act. In view of the said provisions under Section 110A of the MCS Act starting with a non-obstante clause, the said provisions overrides the other provisions of the Act.

99. Andhra Pradesh High Court in case of Reserve Bank of India v/ s. Pattern Surya Prakash Rao and Ors (supra) had considered similar submissions. It was held that by virtue of the provisions of Section 56 of the Banking Regulation Act, the provisions of the said Act are made applicable to the co-operative societies carrying on banking business, subject to the conditions set out in the said provision. It was the statutory obligations of the Reserve Bank of India contained in Section 22(3) and (3A) of the Banking Regulation Act, the Reserve Bank of India to cancel the banking licence on one of the circumstances enumerated under Section 13-D(a)(b) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The Reserve Bank of India is required to direct the Competent Authority to windup an eligible cooperative bank registered as such under the provisions of the said Act. It is held that once the Reserve Bank of India requires the Compet

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ent Authority to windup the bank, there is no discretion left with the Competent Authority except to windup the bank. 100. It is held that issuance of notice to only person who was likely to be aggrieved would not have made any difference whatsoever in the ultimate decision making of the Registrar and the same would have been an empty formality. The Hon’ble Supreme Court dismissed the Special Leave Petition against the judgment of Andhra Pradesh High Court in case of Reserve Bank of India v/s. Pattern Surya Prakash Rao and Ors. (supra). We are in respectful agreement with the views expressed by the Andhra Pradesh High Court in the said judgment and do hereby apply the principles laid down therein to the facts of this case. 101. Under Section 22(3) of the Banking Regulation Act, the Reserve Bank of India has to be satisfied by an inspection of the books of the company or otherwise that various conditions set out therein are satisfying before granting any banking licence. Under Section 22(4) of the Banking Regulation Act, the Reserve Bank of India is empowered to cancel a licence granted to a banking company, if the company ceases to carry on banking business in India or if the company at any time fails to comply with any of the conditions imposed upon it under sub-section (1) or if at any time, any of the conditions referred to in sub-section (3) and sub-section (3A) is not fulfilled. Under proviso to the Section 22, the Reserve Bank of India has to grant to the company on such terms as it may specify, an opportunity of taking the necessary steps for complying with or fulfilling such a condition unless it is of opinion that the delay will be prejudicial to the interests of the company’s depositors or the public. Large number of opportunities were given by the Reserve Bank of India in this case to the said CKP Bank to comply with or fulfilling the conditions on which the banking licence under Section 22(3) of the Banking Regulation Act was granted. 102. In our view, it is duty of the Reserve Bank of India to act as the strongest watchdog into the affairs of a bank having granted banking licence and to continuously supervise mandatorily whether the conditions for granting such banking licence have been complied with from time to time by such banks or not. It is duty of the Reserve Bank of India to safeguard the public interest and more particularly the interest of depositors and members of such bank and to cancel the banking licence, if in spite of granting opportunity to take the necessary steps for complying with or fulfilling the conditions of Banking Regulation Act, such bank does not comply with the conditions and there would be no possibility of its revival. The Reserve Bank of India is not required to give any such opportunity in the event, if it is of the opinion that delay will be prejudicial to the interests of the company’s depositors or the public. 103. In our view, the Reserve Bank of India had granted sufficient indulgence to the said CKP Bank to revive the said CKP Bank and its financial position by permitting to take steps to merge the said CKP Bank with any other co-operative bank and to take various steps for its revival. The said CKP Bank however did not take any steps to comply with those directions issued by the Reserve Bank of India giving ample opportunity under Section 22(3) of the Banking Regulation Act. The statement of objects and reasons of the Amendment Act 52 of 1953 of the Banking Regulation Act clearly indicates that the Banking Companies Act was passed to ensure proper administration of the Banking Companies in India. In our view, the Reserve Bank of India has rightly exercised its powers and had complied with its duty under Section 22(4) of the Banking Regulation Act by cancelling the banking licence of the said CKP bank in the facts and circumstances of this case. 104. The Division Bench of this Court in case of Veershaiva Cooperative Bank Ltd. (supra) has held that the authorities have to take into account relevant factors and on objective assessment of functioning of the bank can cancel the licence. If there is no illegality, irrationality or procedural improbability in the decision making process and the decision of the Reserve Bank of India having been taken in the best interest of depositors, Court cannot interfere with the decision making process. 105. We have minutely perused the correspondences exchanged between the Reserve Bank of India and the said CKP Bank, since 2009 till the revocation of the banking licence by the Reserve Bank of India which are brought on record by the parties. Upon perusal of the record, it is clear that the Reserve Bank of India has acted in Public interest and also in the interest of the depositors and to avoid further loss of their hard earned money while resorting to the cancellation of licence of the said CKP Bank as a last resort. We do not find any illegality, irrationality or procedural improbability in the decision making process of the Reserve Bank of India. If the Reserve Bank of India would not have taken timely appropriate steps and the decision to cancel the banking licence and to direct the Registrar of Co-operative Societies to windup the affairs of the said CKP Bank, the said CKP Bank would have suffered further loss and erosion of assets including deposits. The principles of law laid down by the Division Bench of this Court in case of Veershaiva Co-operative Bank Ltd. (supra) applies to the facts of this case. 106. The Hon’ble Supreme Court in case of Joseph Kuruvilla Vellukunnel (supra) relied upon by Mr. Dhond, learned senior counsel for the Reserve Bank of India has held that on examination of the Banking Companies Act reveals that whole intent and purpose of the Act is to secure the interests of the depositors. The Reserve Bank of India is the instrumentality by which it’s intent is to be achieved. The Act, at every turn, makes the Reserve Bank of India the authority to sanction, permit, certify, inspect, report, advise, control, direct, licence and prohibit. The Reserve Bank of India not only has powers over banking companies while they are functioning, but it has also powers when the banking companies wish or are forced to cease to function. 107. In our view, the power to grant banking licence by the Reserve Bank of India to the banks on the conditions set out in Section 22(3) of the Banking Regulation Act is coupled with duty to cancel such banking licence in case of any breach or violation of such terms and conditions after giving opportunity to such bank to revive and to comply with those conditions and directions as may be issued by the Reserve Bank of India. The Reserve Bank of India once having exercised such powers and duty in compliance with Section 22(4) of the Banking Regulation Act and if such order is in public interest and in the interest of bank and its depositors, Court cannot interfere with such decision making process of the Reserve Bank of India. The principles of law laid down by the Supreme Court in case of Joseph Kuruvilla Vellukunnel (supra) applies to the facts of this case. We are respectfully bound by the said judgment. 108. Supreme Court in case of Peerless General Finance and Investment Co. Limited and Anr. v/s. Reserve Bank of India, (1992) 2 SCC 343 has held that the Reserve Bank of India which is Banker’s Bank is a creature of statue. It is large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bona-fides of the Reserve Bank of India in issuing the directions which were issued under Sections 45-J and 45-K of the Reserve Bank of India Act by exercising powers enabling in it in that behalf under those provisions in the public interest. Its objective is to ensure monetary stability in India and to operate and regulate the credit system of the country. It has to maintain a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rupee as well as apparent creditworthiness of the banks operating in the country and the interest of the depositors. The Reserve Bank of India occupies place of “pre-eminence” to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body. 109. In our view, the Reserve Bank of India has complied with its duties and obligations in public interest. No case is thus made out by any of the petitioners to interfere with the impugned orders passed by the Reserve Bank of India or the Department of Co-operation Marketing and Textile. Since, all the parties have argued the matter on the merits, we have not gone into the issue of locus of these petitioners who were few of the depositors of the deposits made with the said CKP Bank. In our view, all the petitions are devoid of merits. 110. We therefore pass the following order:- (a) Writ Petition (Stamp) No. 95405 of 2020 (Civil Appellate Jurisdiction), Writ Petition (Lodging) No. 5797 of 2020 (Ordinary Original Civil Jurisdiction) and Writ Petition (Stamp) No. 97828 of 2020 (Civil Appellate Jurisdiction) are dismissed. (b) Rule is discharged. No order as to costs.
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