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Issues Involved:
1. Pre-decisional notice and natural justice in the context of moratorium under section 45(2). 2. Relationship between moratorium and the draft scheme. 3. Suspension of provisions under section 45(2) versus section 53. 4. Scope of "modification" under section 45(6). 5. Judicial review of RBI's valuation under section 11(5). 6. High Court's jurisdiction under Article 226 regarding RBI's decisions. Issue-wise Detailed Analysis: 1. Pre-decisional Notice and Natural Justice in the Context of Moratorium under Section 45(2): The court held that at the stage of ordering a moratorium under section 45(2), no prior notice is required. The court reasoned that giving a pre-decisional notice might lead to a "run" on the bank or other detrimental actions by the bank's directors, which would defeat the purpose of the moratorium. The court emphasized that the moratorium is an interim measure intended to create conditions suitable for considering the introduction of a scheme and that principles of natural justice can be applied at a later stage when the scheme is finalized. 2. Relationship Between Moratorium and the Draft Scheme: The court clarified that the moratorium is a step leading towards the consideration of introducing a scheme and is not an end in itself. The grounds for imposing a moratorium under section 45(1) must align with the grounds for introducing a scheme under section 45(4), which include public interest, interests of depositors, securing proper management of the banking company, and the interests of the banking system of the country. The court rejected the argument that the grounds for a moratorium could be different or additional to those for introducing a scheme. 3. Suspension of Provisions under Section 45(2) Versus Section 53: The court held that an order under section 45(2) can include terms and conditions that effectively suspend certain actions and proceedings against the bank. The court interpreted the words "terms and conditions" in section 45(2) to permit such suspensions, and clarified that the exercise of statutory power under section 45(4) to introduce a draft scheme is not precluded by a section 45(2) order. 4. Scope of "Modification" under Section 45(6): The court accepted the respondents' interpretation that objections under section 45(6) could include requests for the withdrawal of the scheme, not just modifications. The court recorded the respondents' submission that the appellants could contend that neither the grounds for a section 45(1) application nor the grounds for a section 45(4) decision existed. This post-decisional opportunity was deemed sufficient to address the appellants' concerns about natural justice. 5. Judicial Review of RBI's Valuation under Section 11(5): The court refrained from questioning the RBI's valuation method under section 11(5), emphasizing that the RBI is an expert body. The court noted that section 11(6) makes the RBI's determination of the aggregate value of the paid-up capital and reserves final. The court found no basis to review the RBI's inspection reports or valuation figures under Article 226 of the Constitution of India. 6. High Court's Jurisdiction under Article 226 Regarding RBI's Decisions: The court held that it is not within the High Court's jurisdiction under Article 226 to sit in judgment over the reasons assigned by the RBI in its section 45(1) application or its satisfaction for bringing in a draft scheme under section 45(4). The court acknowledged the RBI's unique position and expertise in supervising and regulating the banking sector. The court found that the reasons provided by the RBI for the moratorium and draft schemes were relevant and based on substantial evidence, and thus, not subject to judicial review. Conclusion: The court dismissed the letters patent appeals, upholding the RBI's actions and the Central Government's moratorium orders. The court emphasized the importance of the RBI's expertise and the statutory framework designed to protect public interest, depositors, and the banking system.
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