2022 (8) TMI 1318 - HC - Indian Laws

Cancellation of the Petitioner s Certificate of Registration to carry on its business as a Non-Banking Financial Institution - Section 45-IA of the Reserve Bank of India Act, 1934 - HELD THAT - The Court is informed that when the said Petitioner filed its statutory appeal, the Appellate Authority, vide order dated 11th February 2021, directed the RBI to review its order dated 8th June 2018 cancelling the Certificate of Registration of the Petitioner. Pursuant thereto, RBI revoked the cancellation order. In light of the above, Mr. Ramesh Babu M.R., counsel for Respondent No. 3-RBI, on instructions and without prejudice to rights and contentions, states RBI shall re-examine the issue in case the matter is remanded back to them - In view of afore-noted stand, Mr Makhija states that Petitioner is agreeable to RBI re-examining the issue raised in the present petition. The Impugned Orders, i.e. the order dated 28th November 2018 passed by RBI, and order dated 29th June 2020 passed by the Appellate Authority, are set aside. The matter shall now be considered afresh by the RBI in light of the current position of law and the judgments of the court.

Summary

Issues:
Petitioner challenging cancellation of Certificate of Registration by RBI and rejection of appeal by Appellate Authority.

Analysis:

1. Cancellation of Certificate of Registration: The Petitioner, a Non-Banking Financial Company, challenged the cancellation of its Certificate of Registration by RBI under Section 45-IA of the RBI Act. The Petitioner argued that it had met the Net Owned Fund (NOF) requirement as per RBI notification, submitting relevant financial documents confirming compliance. Despite this, RBI issued a show cause notice for cancellation, leading to the Impugned Orders.

2. Legal Proceedings: The Petitioner, through its Senior Counsel, cited a decision of the Division Bench of the Madras High Court in a similar case involving RBI and another financial entity. The Division Bench's decision highlighted the jurisdictional aspects of extending time for compliance with NOF requirements and the statutory appeal process under Section 45-IA(7) of the RBI Act. The Supreme Court's dismissal of a Special Leave to Appeal further clarified the statutory remedy available.

3. Resolution and Re-examination: The Appellate Authority, in a subsequent order, directed RBI to review its cancellation order, leading to the revocation of the same. Respondent RBI, through its counsel, expressed willingness to re-examine the issue if remanded back to them. Consequently, both parties agreed to RBI re-evaluating the matter, resulting in the setting aside of the Impugned Orders for fresh consideration by RBI.

4. Court's Directions: The Court, without expressing any opinion on the case's merits, set aside the Impugned Orders and allowed the Petitioner to submit additional representations and documents within a specified timeline. It directed RBI to make a decision within six weeks based on the current legal position and court judgments. The Court left all rights and contentions open for both parties and granted liberty to the Petitioner for further legal action if needed.

5. Conclusion: With the above directions, the petition was disposed of, along with any pending applications, ensuring a fair opportunity for the Petitioner to present its case and for RBI to reconsider the matter in accordance with the law.