9911796707
TMI Blog1997 (11) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of moratorium, the bank would not, without the permission of the Reserve Bank of India in writing, grant any loan or advance, incur any liability or make any investment, etc. The petitioner challenged this order through a petition in the Delhi High Court. The Central Government as well as the Reserve Bank of India contested the petition. It was pleaded that various inspections had been conducted and that the impugned order had been passed in public interest. The writ petition was dismissed - see Bari Doab Bank Ltd. v. Union of India [1997] 89 Comp. Cas. 292 (Delhi). The Letters Patent Appeal filed by the petitioner having been dismissed, vide order dated 20-3-1997 - see Bari Doab Bank Ltd. v. Union of India [1997] 89 Comp. Cas. 438 (Delhi), it approached the Apex Court, through a petition for Special Leave to Appeal (Civil) No. 6900 of 1997. This petition was disposed of, vide order dated 31-3-1997 - see Bari Doab Bank Ltd. v. Union of India [1997] 89 Comp. Cas. 462 (SC)). Their Lordships found no infirmity in the view taken by the High Court that (page 463) "the petitioner will have post decisional opportunity at the stage of filing objections to the dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification is at annexure P-10 with the writ petition. The petitioner alleges that the order of moratorium passed on 30-9-1996 (annexure P-1 with the writ petition) and the three orders passed on 7-4-1997, copies of which are at annexures P-2, P-9 and P-10, respectively, are illegal and, thus, liable to be set aside. 3. Three separate written statements have been filed on behalf of the respondents. The petitioner has filed separate replications. The Respondent No. 2 has even filed a rejoinder. Counsel for the parties have been heard. 4. On behalf of the petitioner, Mr. Salman Khurshid contended that in the circumstances of the case, no ground for imposing the moratorium under section 45 was made out. The order was wholly unjustified. In any event, an effective post-decisional hearing was required to be given to the petitioner to show that the moratorium was not justified and that no ground for ordering the amalgamation of the bank with the Oriental Bank of Commerce or the sanctioning of the scheme was made out. The respondents had erred in not granting an effective opportunity. Still further, it was contended by the learned counsel that the petitioner had neither violate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily controlled bank and was hardly doing any banking business . ( ii )The "moratorium is. . . to maintain a particular status quo . . . no principles of nature justice can at all be attracted at that stage. The natural justice can be relegated to later stage." ( iii )The application filed by the Reserve Bank of India gave "ample details of the financial position of the Bari Doab Bank. . . and that it is a small bank which, in the interest of the bank, its depositors and the policy of the Reserve Bank, be merged with a bigger bank. . . ." The Court could not "go into the correctness of the expert opinion of the bank". ( iv )"The reasons specified in the files by the Government of India for preparing draft schemes. . . which we have perused are also based upon facts and figures as evaluated by the Reserve Bank of India and its inspectors from time to time and we are satisfied that the reasons are relevant for purposes of section 45(1) as well as section 45(4)". ( v )"As the reasons are now set out substantially in the counter-affidavits and as it has been fairly stated by the learned Solicitor-General of India that the appellants can file objections to the reasons so set o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for special leave. It is the admitted position that after the matter was disposed of by their Lordships, the petitioner did not file any objections before the Reserve Bank of India or the Central Government. Still further, in the communication dated 17-3-1997, the petitioner had, inter alia, stated the "voluminous scheme of amalgamation which has been prepared by your esteemed bank, an expert body in India. . . contains complicated provisions of far reaching financial implications as well as legal consequences". The petitioner further stated that "our board of directors does not have amongst themselves any of the legal or financial experts. As such the scheme may be referred to the chartered accountants of the bank already approved by the Reserve Bank of India. . . so as to protect and safeguard the interests of all the depositors, public at large, shareholders of the bank, employees and staff of the bank, etc." The petitioner asked for extension of time by four weeks. With regard to the order of moratorium, the petitioner submitted that it has "raised several objections regarding the action of the Reserve Bank of India under section 45(1). . ." in Civil Writ Petition No. 3885 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not enthuse enough confidence to authorise their setting up of a NBFC or a non-banking company. Further, during the long period that the banks were in existence and taking into account their inability to expand banking operations and to comply with the requirements necessary for grant of a banking licence, the Reserve Bank of India had urged the Bari Doab Bank Ltd. to convert into NBFC. The suggestion of the Reserve Bank of India was not seriously considered by the bank s management at that time. The present request appears to be a last-ditch effort to hold on to the non-banking assets in the company. The materials presently available do not indicate that public interest would be served by such conversion. 16. Notwithstanding these observations, it is open to the persons in charge of the management of these two banks to apply to the Reserve Bank of India in accordance with the provisions of the Reserve Bank of India Act for setting up a new NBFC or to the concerned authorities for setting up a non-banking company. The merger of these two banks with Oriental Bank of Commerce and the coming into being of a new NBFC and/or a non-banking company are unrelated acts and the request p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. 20. In view of the above, it cannot be said that the petitioner s request for conversion into a non-banking company was arbitrarily rejected. 21. The third question is, accordingly, answered against the petitioner. 22. It may be noticed that in the pleadings, a preliminary objection regarding the maintainability of the writ petition before this court had been raised. It was suggested that the petitioner had initially chosen to approach the Delhi High Court. No ground was made out for now filing the petition before this court. 23. In view of our conclusion on the merits, it does not appear to be very necessary to go into this question. It is all the more so in view of the fact that at the time of hearing, the objection was not even seriously pressed on behalf of the respondents. Still further, it was not even contended that the court at Chandigarh did not have the jurisdiction. 24. Certain miscellaneous applications had also been filed. It was submitted that the depositors were entitled to the money deposited by them with the petitioner-bank. Equally, the persons who had been allotted lockers were entitled to operate the same. 25. There was a contes ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
