2019 (4) TMI 792 - HC - Indian Laws

Maintainability of petition - existence of alternative remedy of appeal - Proceedings u/s 45-IA of RBI Act - NBFC - requirement of having Net Owned Fund (NOF) - condonation of delay in filing appeal - Principles of natural justice - Held that - In the present case, the petitioners claim that the impugned order is vitiated by breach of principles of natural justice. When a writ petitioner alleges violation of the principles of natural justice in the decision making process vitiating the decision itself, then such a writ petition cannot be said to be not maintainable. The allegation of breach of principles of natural justice can be gone into by the writ Court. The present writ petition therefore cannot be said to be non maintainable merely because a statutory alternative remedy of appeal exists. The second proviso to Section 45-IA(6) of the Act of 1934 requires a reasonable opportunity to be granted before any order of cancellation of Certificate of Registration being passed - In the facts of the present case, it cannot be said that, the impugned order is non-speaking with regard to the aspect of non consideration of the prayer for condonation made as by the first petitioner or that the impugned order suffers from the breach of principles of natural justice. Petition dismissed.

Issues Involved:
1. Breach of principles of natural justice.
2. Non-speaking order.
3. Maintainability of the writ petition.
4. Requirement of oral hearing under Section 45-IA(6) of the Reserve Bank of India Act, 1934.
5. Consideration of the prayer for condonation of delay.

Detailed Analysis:

1. Breach of Principles of Natural Justice:
The petitioners argued that the impugned order dated August 9, 2018, issued by the RBI was vitiated by a breach of principles of natural justice. They contended that the second proviso to Section 45-IA(6) of the RBI Act, 1934, mandates an opportunity for a hearing before canceling a Certificate of Registration. The petitioners received a show-cause notice on May 10, 2018, and replied on June 22, 2018. They alleged that they were not afforded a hearing on their prayer for condonation of delay in meeting the Net Owned Fund (NOF) requirement of ?200 Lakhs by April 1, 2017, as prescribed by the notification dated March 27, 2015. The respondents countered that the petitioners admitted the charges in their reply, negating the need for an oral hearing. The court noted that the petitioners did not request an oral hearing and found no active prejudice caused by the lack of one. The court concluded that the principles of natural justice were not breached as the petitioners were allowed to make written representations, which were considered.

2. Non-Speaking Order:
The petitioners claimed that the impugned order was non-speaking regarding their prayer for condonation of delay. The court observed that the impugned order referred to the show-cause notice, the petitioners' reply, and discussed the failure to comply with the NOF requirement. The court held that the order contained sufficient reasons and was not non-speaking. The request for condonation was deemed to have been rejected by the tenor of the order.

3. Maintainability of the Writ Petition:
The respondents argued that the writ petition was not maintainable due to the availability of an alternative statutory remedy under Section 45-IA(7) of the Act. The court referred to the Whirlpool Corporation case, which held that the existence of an alternative remedy is not a complete bar to maintaining a writ petition, especially when there is an alleged breach of principles of natural justice. The court found the writ petition maintainable as it was filed within the prescribed period for statutory appeal and involved allegations of breach of natural justice.

4. Requirement of Oral Hearing under Section 45-IA(6):
The petitioners relied on a Madras High Court judgment, which interpreted the second proviso to Section 45-IA(6) to require an oral hearing. The respondents cited various judgments to argue that an oral hearing is not mandatory in all cases and that written representation suffices. The court agreed with the respondents, stating that the right to a hearing does not necessarily mean an oral hearing. The court found that the petitioners admitted the charges and did not request an oral hearing, thus no breach of natural justice occurred.

5. Consideration of the Prayer for Condonation of Delay:
The petitioners argued that their prayer for condonation of delay was not considered by the impugned order. The court held that the order was not required to contain elaborate reasons and that the rejection of the condonation request was implicit in the order. The court found that the order was speaking on the points raised and did not suffer from a breach of principles of natural justice.

Conclusion:
The court dismissed the writ petition, finding no breach of principles of natural justice, and held that the impugned order was not non-speaking. The court also found the writ petition maintainable despite the availability of an alternative remedy. The requirement of an oral hearing under Section 45-IA(6) was not mandatory, and the prayer for condonation of delay was deemed to have been considered and rejected.

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