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2025 (3) TMI 671 - HC - Indian Laws


ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

1. Whether the writ petition filed under Article 226 of the Constitution of India was maintainable against the Reserve Bank of India (RBI) for failing to exercise its powers under the RBI Act.

2. Whether the learned Single Judge exceeded the scope of jurisdiction by issuing directions that were beyond the reliefs sought in the writ petition.

3. Whether the principles of natural justice were violated by the learned Single Judge by not allowing the appellants to be heard on the merits of the case.

4. Whether the writ petition was maintainable despite the pendency of proceedings before the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

ISSUE-WISE DETAILED ANALYSIS

1. Maintainability of the Writ Petition

The relevant legal framework involved Article 226 of the Constitution, which allows High Courts to issue directions to any person or authority for the enforcement of rights. The Court considered whether the RBI's inaction constituted a failure to exercise its statutory powers under the RBI Act, thereby justifying the issuance of a writ of mandamus. The Court noted that the RBI had supervisory concerns regarding the management of ECL, including breaches of the leverage ratio and unauthorized issuance of debentures. The Court held that the writ petition was maintainable as the RBI had failed to act on these concerns, which warranted judicial intervention.

2. Scope of Jurisdiction and Directions Issued

The appellants argued that the learned Single Judge had exceeded the jurisdiction by issuing directions beyond the reliefs sought in the writ petition. The Court examined whether the directions issued were within the ambit of the writ petition. It was found that the directions were aimed at ensuring compliance with the RBI's regulatory framework and protecting the interests of stakeholders, which were within the scope of the writ petition.

3. Principles of Natural Justice

The appellants contended that they were not given an opportunity to be heard on the merits of the case, violating the principles of natural justice. The Court reviewed the proceedings and found that the parties had been given ample opportunity to present their arguments on both the maintainability and merits of the case. Therefore, the Court concluded that there was no violation of natural justice.

4. Pendency of Proceedings Before NCLT and NCLAT

The appellants argued that the writ petition was not maintainable due to ongoing proceedings before the NCLT and NCLAT. The Court considered whether the reliefs sought in the writ petition could be addressed by these tribunals. It was determined that the NCLT and NCLAT did not have the jurisdiction to issue writs of mandamus to the RBI, and thus, the writ petition was maintainable. The Court also noted that the RBI's regulatory role was distinct from the issues being adjudicated by the NCLT and NCLAT.

SIGNIFICANT HOLDINGS

The Court established several core principles:

1. A writ of mandamus can be issued to compel a public authority to exercise its statutory powers when there is a failure to act, as highlighted in the case of CAG vs. K. S. Jagannathan & Anr.

2. The RBI, as a regulatory authority, has a duty to act upon discovering regulatory breaches by an entity under its supervision. Failure to do so can warrant judicial intervention under Article 226.

3. The existence of proceedings before specialized tribunals like the NCLT and NCLAT does not preclude the High Court's jurisdiction to issue writs of mandamus when the relief sought pertains to the exercise of statutory powers by a regulatory authority.

4. The principles of natural justice are upheld when parties are given a fair opportunity to present their case, and the Court found that such opportunity was provided in this instance.

The Court upheld the findings of the learned Single Judge regarding the maintainability of the writ petition and dismissed the appeal, affirming that the RBI's inaction warranted judicial scrutiny and intervention.

 

 

 

 

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