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TMI Blog2019 (4) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... first petitioner acted in violation of the Revised Regulatory Framework for Non-Banking Financial Companies (NBFC)(RBI/2014-2015/520 DNBR (PD) CC. No.024/03.10.001/2014- 15 read with Notification No. DNBR 007/CGM (CDS)-2015 dated March 27, 2015. He has submitted that, the notification dated March 27, 2015 required a NBFC to have Rs. 200 Lakhs as the Net Owned Fund (NOF) on or before April 1, 2017. The first petitioner could not generate the required NOF within the stipulated time. The petitioners prayed for condonation of such delay. The authorities did not afford the petitioners any hearing on the prayer for condonation. The authorities proceeded to cancel the Certificate of Registration issued in favour of the first petitioner for carrying on the business of non-banking financial institution under Section 45-IA of the Act of 1934. He has relied upon an unreported judgment and order dated January 29, 2019 passed by the High Court of Judicature of Madras in W.P. Nos. 18225, 21092, 21993 and 25143 of 2018, W.M.P. Nos. 21531, 24753, 25786, 29213 and 29214 of 2018 (M/s. Nahar Finance and Leasing Ltd. & Ors. v. The Regional Director, Reserve Bank of India & Ors.) and submitted that, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) of the Act of 1934. When there exists a statutory alternative remedy available, the Courts must be slow in entertaining a writ petition. In the facts of the present case, it cannot be said that, the impugned order is without jurisdiction. The authority passing the impugned order did have the jurisdiction to do so. It cannot be alleged that, there was absence of jurisdiction when the authority passed the impugned order. Moreover, the petitioner is guilty of allowing the statutory period prescribed for the purpose of preferring an appeal to lapse and then file the writ petition. When a person is guilty in such aspect, the writ petition should not be entertained. In support of such contention, he has relied upon All India Reporter 1961 Supreme Court page 1506 (A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani & Anr.). In reply, learned Senior Advocate appearing for the petitioner has submitted that, the petitioner filed the writ petition within the prescribed period of statutory appeal. He has drawn the attention of the Court to the fact that, the impugned order is dated August 9, 2018. The same was issued to the petitioners under cover of a writing da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 Lakhs as NOF. The first petitioner replied to the second show-cause notice on June 22, 2018. The first petitioner received a third show-cause notice dated May 25, 2018 alleging non-compliance of various directions of the Master Circulars and earlier directions contained in the letters dated May 18, 2017 and February 28, 2018. It was alleged that the first petitioner was included in the list of high-risk financial institution for non-compliance of the provisions of the specified notifications and that, the first petitioner failed to submit mandatory returns. It was also alleged that, the first petitioner was guilty of violation of various directions of RBI including the Non-Banking Financial Company Returns (Reserve Bank) Directions, 2016 dated September 29, 2016. The first petitioner replied to the third show-cause notice through its letter dated July 3, 2018. In the reply, amongst others, the first petitioner claimed that, it did not receive the letters dated May 18, 2017 and February 28, 2018. The first petitioner thereafter received the impugned order under cover of a letter dated August 27, 2018 issued by the respondent no. 2. The impugned order was received by the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Bank under the provisions of this Chapter; or (b) to maintain accounts in accordance with the requirements of any law or any direction or order issued by the Bank under the provisions of this Chapter; or (c) to submit or offer for inspection its books of account and other relevant documents when so demanded by an inspecting authority of the Bank; or (v) has been prohibited from accepting deposit by an order made by the Bank under the provisions of this Chapter and such order has been in force for a period of not less than three months: Provided that before cancelling a certificate of registration on the ground that the non-banking financial company has failed to comply with the provisions of clause (ii) or has failed to fulfil any of the conditions referred to in clause (iii) the Bank, unless it is of the opinion that the delay in cancelling the certificate of registration shall be prejudicial to public interest or the interest of the depositors or the non-banking financial company, shall give an opportunity to such company on such terms as the Bank may specify for taking necessary steps to comply with such provisions or fulfilment of such condition: Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution but also for "any other purpose". 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field." Whirlpool Corporation (supra) has held that, existence of alternative remedy is not a complete bar for maintaining a writ petition. Notwithstanding the existence of alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at case found the show-cause notice to be an impalpable congeries of suspicions and fears, of relevant and irrelevant matter and to include some trivia. In the facts of that case, necessity to afford oral hearing was found. 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. This proviso has been interpreted by the Madras High Court in M/s. Nahar Finance and Leasing Ltd. & Ors. (supra) to mean that, such proviso requires an opportunity of personal hearing. There are two parts to the allegation of breach of principles of natural justice in this case. One part is the allegation that, Section 45-IA(6) requires an oral hearing to be given. The other part is that, the impugned order is non-speaking with regard to the prayer for condonation made by the petitioners. The second proviso of Section 45-IA(6) of the Act of 1934 is not specific as to whether, the opportunity of hearing to be granted before cancellation of the Certificate of Registration being passed should be oral or that, a representation would suffice. The Peerless General Finance & Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. In the facts of that case, it found that, the written representation made by the affected party effectively met the requirement of principles of natural justice. In the facts of the present case, the first petitioner admitted the charges levelled against it by the show-cause notice dated May 10, 2018. The petitioners have not been able to substantiate any prejudice being caused by the impugned order by non-grant of an oral hearing. Oral hearing in all circumstances is not mandatory. Section 45-IA(6) of the Act of 1934 does not mandate an oral hearing. Allowing the noticee to make a representation and considering such the show-cause notice and the representation made thereto in an unbiased fair and transparent manner and by passing a reasoned order, the requirement of hearing under Section 45-IA(6) would stand complied with. In a given case, if a request for oral hearing is made and the authority considers such request as reasonable or where the authority suo motu calls for an oral hearing, then oral hearing can be given. Non grant of oral hearing will not automatically translate itself as a breach of the principles of natural justice. In this case, the petitioners did not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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