Gauhati High Court
The Urban Development Cooperative Bank ... vs The Union Of India And Ors on 25 January, 2012
Equivalent citations: AIR 2012 (NOC) 195 (GAU.)
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM, NAGALAND, MEGHALAYA, MANIPUR,
TRIPURA, MIZORAM AND ARUNACHAL PRADESH)
WP(C) 4226/1999
The Urban Development Cooperative Bank Ltd., a
registered Co-operative Society bearing Registration
No. DS-I of 1990-91 dated 14.11.90, having its Head
Office at Sibsagar, 785640, represented by its
Chairman Shri Dipesh Ch. Chetia.
.........Petitioner.
-Vs-
1. The Union of India.
2. The State of Assam represented by the
Secretary, Co-operation Department, Govt. of
Assam, Dispur, Guwahati-6.
3. The Reserve Bank of India, Urban Bank Deptt.,
Station Road, Guwahati-1.
4. The Registrar of Co-operative Societies, Assam,
Guwahati.
5. The Deputy Registrar of Co-operative Societies,
Sibsagar, District - Sibsagar, Assam.
6. The District Deputy Registrar of Co-operative
Societies, Sibsagar, District - Sibsagar, Assam.
.........Respondents.
BEFORE THE HON'BLE MR. JUSTICE B.K. SHARMA For the Petitioner : Mr. D.K. Mishra, Sr. Adv.
Mr. K. Goswami, Adv.
For the respondents : Mr. M. Bhuyan, SC, RBI.
Date of hearing : 05.01.2012.
Date of judgement : 25.01.2012
WP(C) 4226 of 1999 Page 1 of 25
JUDGEMENT AND ORDER (CAV)
The petitioner society is aggrieved by the closure of its case for registration / licensing as a Cooperative Bank by the Reserve Bank of India (for short RBI). The orders assailed in this regard, are dated 9.6.1999, 19.8.1999, 20.8.1999 and 8.9.1998 (Annexure-XXIII, XX, XXII and XVII) respectively, issued by the RBI ; Deputy Registrar of Cooperative Societies, Sivasagar and Additional Registrar of Cooperative Societies. For a ready reference, the said orders / communications are reproduced below :-
"RESERVE BANK OF INDIA URBAN BANKS DEPARTMENT POST BAG No.120, STATION ROAD GUWAHATI-781001 UBD. No. 686/12.02.0017/98-99 9th June 1999 The Registrar, Cooperative Societies, Government of Assam, S.S. Road, Guwahati- 781 001 Dear Sir, Registration / Licensing of Urban Cooperative Banks - The Urban Development Cooperative Bank Ltd., Sibsagar.
Please refer to your letter No. CF.28/98/17 dated 8th September 1998 on the above subject. In this connexion it is advised that the above case has already been treated as closed by us in 1997 and the same need not be revived. You may advise the promoters of the above bank suitably under advice to this office.
Yours faithfully, Sd/-
( Mrs. P.S. Sakhardande ) Assistant General Manager."WP(C) 4226 of 1999 Page 2 of 25
"GOVT. OF ASSAM OFFICE OF THE DEPUTY REGISTRAR OF COOPERATIVE SOCIETIES : SIBSAGAR Letter No. CSDA 1/89/Pt-1/67 Dated Sibsagar the 19th August'99 From :- Sri A.K. Hazarika, Dist. Deputy Registrar of Co-
operative Societies, Sibsagar.
To :- The Chief Executive Officer, The Urban Development Co-operative Bank Ltd. Sibsagar.
Sub : Banking License.
Ref : This office letter No. CSDA.1/89/Pt.1/66 dated 9.8.99.
Sir, With reference to this Office letter under reference, you were intimated above the closure of your proposal for Banking Licence by the R.B.I. You were also informed that the R.B.I. will not revive the proposal in future.
But, it has come to my notice that you are still continuing Banking Business without licence from R.B.I. You are, therefore, asked to stop all Banking Business immediately on receipt of this communication.
This matter most Urgent.
Yours faithfully, Sd/-
DIST. DEPUTY REGISTRAR OF COOP : SOCIETIES : SIBSAGAR."
"GOVT. OF ASSAM OFFICE OF THE DEPUTY REGISTRAR OF COOP : SOCIETIES : SIBSAGAR Memo No. CSDA/1/89/Pt-I/68 Dated Sibsagar the 20th Aug/99.
From : Sri A.K. Hazarika, Dist. Deputy Registrar of Coop : Societies, Subsagar.
To : The Branch Manager
(a) The Apex Coop Bank Ltd. Sibsagar Branch.
WP(C) 4226 of 1999 Page 3 of 25
(b) The State Bank of India, Sibsagar Br.
(c) The Central Bank of India, Sibsagar Br.
(d) The UCO Bank, Sibsagar Br.
(e) The Allahabad Bank, Sibsagar Br.
Sub : Registration / Licensing of the Urban Development Coop: Bank Ltd. Sibsagar.
Ref : UBD No. 616/12/020017/98-99 dt. 9.6.99.
Sir, With reference to the subject mentioned above, I have the honour to inform you that the Reserve Bank of India has closed the proposal for Licencing of the Urban Development Coop : Bank Ltd. Sibsagar branch vide their letter under reference.
The Bank has been asked to stop all Banking business vide this Office letter No. CSDA/1/89/Pt-I/67 dt. 19.8.99. Therefore you are requested not to allow any transaction without further correspondence from this end.
This matter may be treated as most urgent.
Sd/-
Deputy Registrar of Cooperative Societies, Sibsagar."
"GOVERNMENT OF ASSAM OFFICE OF THE REGISTRAR OF COOPERATIVE SOCIETIES ::: ASSAM: GUWAHATI No. CF.28/98/17 Dated Guwahati, the 8.9.98 From :- Shri B.N. Deka, Addl. Registrar of Coop :
Societies (G), Assam, Guwahati.
To : The Reserve Bank of India, Urban Bank Deptt.
Station Road, Guwahati-1.
Sub :- Application for Banking licence of the Urban development Coop : Bank ltd., Sibsagar.
Sir, With reference to subject cited above, I have the honour to forward herewith the application (with enclosed) for issuing Banking licence of Urban WP(C) 4226 of 1999 Page 4 of 25 Development Coop: Bank Ltd, Sibsagar for favour of your necessary action.
Enclo : Two sets (Fifteen sheets each) Yours faithfully Sd/-
Addl. Registrar of Coop : Societies (G), Assam, Guwahati-1."
2. The case as projected in the writ petition is that in the year 1990, some conscious citizens of Sivasagar thought of setting up a bank in cooperative sector and accordingly 15 (fifteen) persons, named in paragraph 4 of the writ petition, approached the Registrar of Cooperative Societies, Assam, for his advise and basic instruction for establishing a Urban Cooperative Bank and get it registered as per the provisions of the Assam Cooperative Societies Act, 1949.
3. Consequent upon the advise, the said 15(fifteen) persons formed a bank in the name and style of The Urban Development Cooperative Bank Ltd. and applied for registration. The Reserve Bank of India (respondent No.3) after scrutiny of the application, issued clearance for registration, however subject, to certain conditions, some of which are as follows :-
"2(b) :The promoters of the proposed bank enroll from the bank's area of operations at least 700 members engaged in different avacations such as artisans, small scale industrial units, small traders/businessmen, professionals, self-employed, etc. and also collect from them a minimum share capital of Rs. 3.00 lakhs as per our present norms. A certificate from the District Deputy Registrar of Cooperative Societies confirming that these requirements have been complied with along with a list of members enrolled as also a certificate from the Assam Apex Cooperative Bank Ltd., Sibsagar WP(C) 4226 of 1999 Page 5 of 25 showing the amount of share capital deposited by the promoters should be submitted to our Guwahati Regional Office for record.
3. Please note that the proposal in question should be registered by your Department only after the above requirements have been complied with by the promoters of the proposed bank.
4. Further, after the proposal has been registered, the bank may be advised to submit to our Guwahati Regional Office application in Form IIIA (in duplicate) as prescribed in Rule 6(a) of the Banking Regulation (Co-operative Societies) Rules, 1966, duly signed by the bank's Chairman/ President / authorized official under the bank's official seal for issue of a licence to commence banking business under Section 22 of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies). The above application should be accompanied by a certified true copy (in duplicate) of each of the following documents.
(i) Certificate of registration issued by the Co-operation Department.
(ii) Resolution passed by the Board of Directors (Committee of Management) of the bank resolving a licence of commencing banking business and (b) to authorize the bank's Chairman / President and / or any other official of the bank, to make such application on behalf of the bank ;
(iii) Bank's by-laws duly registered by the Co-operation Department.
(iv) A list showing the name, address and occupation of each of the Directors elected at the bank's first general meeting held after its registration.
(5) Please note that our clearance is for a period of one year only from the date of this letter. It may please be ensured that the promoters complete all the required formalities within this period and get the bank registered."
( Emphasis added )
4. Consequent upon the aforesaid instructions the said 15(fifteen) persons applied for registration of the bank along with WP(C) 4226 of 1999 Page 6 of 25 its bye laws. Thereafter, the respondent No.4 i.e. Registrar of Cooperative Societies, Assam, registered the petitioner bank along with banking bye laws and issued Registration Certificate bearing Regn. No. TS-1/1990-91 dated 14.11.1990. According to the petitioner, the RBI had no direct communication with the petitioner and all communications were with the respondent No. 4 only. It has been stated by the petitioner that it had fulfilled all the criteria for registration and had written a letter to the respondent No. 5 i.e. the Deputy Registrar of Cooperative Societies, Sivasagar, asking for clarification as to whether the petitioner society was in a position to get registration, in response to which, the said authority wrote the Annexure-IV letter dated 6.11.90 conveying that it had fulfilled all the conditions as required by RBI except collection of share money. By the said letter, the petitioner society was asked to do the needful without any further delay and to ensure collection of share money up to the required limit immediately to facilitate submission of application for commencing banking business.
5. According to the petitioner after the bank was registered with the Registrar of Cooperative Societies, the promoters became the share holders of the bank and they took follow up action, such as adopting resolution as to the aim and object of the proposed bank, formation of Board of Directors, adoption of the bye-laws of the proposed bank, etc. Simultaneously, the bank also applied to the respondent No.4 for issuance of necessary clearance letter to move the RBI for granting banking license. In turn, the Deputy Registrar of Cooperative Societies, Assam by its letter dated WP(C) 4226 of 1999 Page 7 of 25 224.6.91 (Annexure-IX) intimated the Registrar of Cooperative Societies, Assam, about the steps taken by the bank.
6. After the aforesaid development, the petitioner made the Annexure-X application dated 25.7.1991, as per the requirement of Section 22 of the Banking Regulation Act, 1949 for license to commence banking business. The said application was made through the respondent No.4. When the matter rested thus, the RBI revised the Entry Point Norms for Cooperative Urban Banks, thereby fixing the Minimum Share Capital balance at Rs. 8.34 lakhs. The petitioner was intimated about the same by the respondent No.5 vide its Annexure-XI letter dated 25.8.93. After the said letter, the petitioner applied again on 15.12.93 to the RBI through the respondent No.4 for issuance of license for banking business. According to the petitioner, in the said application dated 15.12.93, it had indicated about the fulfillment of the revised target of share capital. The application submitted by the petitioner was forwarded to the RBI by the Additional Registrar of Cooperative Societies (C), Assam, Guwahati.
7. On receipt of the aforesaid application, the Assistant Chief Officer of RBI wrote back to the registrar of Cooperative Societies, Assam, asking for some more details. The letter was written on 15.3.94 (Annexure-XIII). For a ready reference, the said letter dated 15.3.94 is reproduced below :-
WP(C) 4226 of 1999 Page 8 of 25
"Reserve Bank of India Urban Bank Department STATION ROAD, GUWAHATI-781001 15th March, 1994.
Ref No. UBD(GUWA)347/12.02.0017/93-94 The Registrar of Cooperative Societies, Assam, Guwahati-781001.
Dear Sir, Registration / Licensing of new Urban Coop. Banks - Urban Development Cooperative Bank Ltd., Sibsagar.
Please refer to your letter No. CF.57/89/321 dated 28th December, 1993 on the captioned subject furnishing the clarifications in response to our letter No. UBD(GUWA)/1727/H4(A-XVII) dated 7th July, 1992. In this connection, we have to advise as under :
(i) On perusal of the enquiry report furnished vide your letter No. CF.57/89/267 dated 25th May, 1992, we observe that the share capital paid (collected) of he captioned bank (proposed) as on March'92 was Rs. 3.99 lakhs whereas the deposits with the Apex Bank and UCO Bank aggregated Rs. 3.07 lakhs.
So, Rs. 0.92 lakh has been utilized for loaning purposes. Further, no detailed report of loans & advances made by the bank has been furnished.
Therefore, please arrange to furnish detailed report on loans and advances made by the bank urgently as per proforma appended.
Name of Member Type Date Amount Security, Recovery
the -ship of of sanction if any position
loanee No. Loan Loan ed
1 2 3 4 5 6 7
(ii) Does the present Managing Director hails from
Golaghat which is outside the area of operation of the proposed bank. Please let us know his place of birth, permanent address etc.
(iii) Please let us know whether the Hon. High Court has dismissed the appointment of Senior Inspector of Cooperative Societies as Managing Director of the bank for which the present M.D. Mr. Bikash Barua has obtained a stay order. A copy of High Court's verdict may please be obtained & furnished to us. WP(C) 4226 of 1999 Page 9 of 25
(iv) Copies of resignation letter submitted by Mr. Barua, acceptance of it by the bank's board 7 his appointment letter as M.D. may also be furnished.
(v) Copies of letter written to the Civil Authority by the Board's Chairman and the reply (permission) obtained from them for holding the Annual General Meeting may please be furnished.
(vi) Copy of resignation letter submitted to the Krishna Credit Company by Mr. Barua may please be furnished. A certificate to the effect that he has no liability with the company may also be obtained from him & furnished.
(vii) It appears that the bank is maintaining deposits is State Bank of India, UCO Bank & Assam Cooperative Apex Bank Ltd. Please advise, the deposits maintained with other banks as on date duly supported with the certificates from the respective banks.
(viii) Copies of Societies Balance Sheet and Profit & Loss Account for the year ended 31 March, 1993 duly audited & provisional balance sheet as on 31st December, 1993 may please be furnished.
This may please be treated as urgent.
Yours faithfully, Sd/-
(S.P.S. Kukreja) Asstt. Chief Officer."
8. In the writ petition, the petitioner has stated about the said Annexure-XIII letter dated 15.3.94, by which as many as 8(eight) queries had been made. However, without stating anything as to whether the said queries had been made or not, the petitioner has WP(C) 4226 of 1999 Page 10 of 25 stated the following in paragraphs 16, 17 and 18 of the writ petition :-
"16. That, the petitioner begs to state that after submission of the aforesaid application of the petitioner the petitioner has been approaching the respondents authorities to expedite the matter of granting licence to the petitioner for banking business. While the petitioner enquired the matter before the respondent No.6, the said respondent No.6 had written to the Addl. Registrar of Co- operative Societies vide his letter dtd. 20.10.94 thereby requesting the respondent authorities to grant licence to the petitioner bank for greater interest of Sibsagar district.
17. That, the petitioner begs to state that thereafter the petitioner has been in close correspondence with the respondent No. 4, 5 & 6 requesting them to expedite the matter so that the Respondent No.3 issue the licence for banking business. The petitioner has stated before the respondents about the difficulties being faced by the bank due to tremendous pressure from the shareholders and members as to the fate of their deposit with the petitioner bank. But the respondents had turned a deaf ear to the request of the petitioner bank. As such the petitioner bank had written a letter to the General Manager, RBI stating the difficulties faced by the petitioner bank and praying for issuance of licence for banking business. The said letter bears No. UDCB/79/96-97 dtd. 19.9.96 which was sent by registered post with A/D. A/D card had been received by the petitioner with due signature of receipt by the RBI authorities.
18. That, the petitioner begs to state that while the petitioner was approaching before the respondent No. 4, 5 and 6, the petitioner was informed that the file was under process and the petitioner should wait for some time. In the year 1998 the respondents had asked the petitioner to file another application for banking licence in the prescribed form of RBI while the petitioner enquired about the earlier two applications the Respondents No. 4, 5 and 6 could not answer properly, but had demanded a fresh application from the petitioner. The petitioner bank, having no alternative, had to file a fresh application on 25.6.98 vide the forwarding letter of the Chairman bearing No. UDCB/SBC/34/98-99 dated 29.6.98."WP(C) 4226 of 1999 Page 11 of 25
9. In the process, more than 4 (four) years had elapsed. The petitioner by its application dated 25.6.98 made to the Registrar of Cooperative Societies, submitted an application purportedly meeting the Entry Point Norms after fulfilling the required formalities, which was forwarded to the RBI by the Registrar of Cooperative Societies, Assam vide his letter dated 8.9.98. Thereafter, the petitioner by its representation dated 31.7.99 urged upon the District Deputy Registrar of Cooperative Societies, Sivasagar to look into the grievance and then to take early action in the matter, facilitating commencement of banking business. According to the petitioner, since its inception in 1991, its business had been surveyed and audited each and every year by the prescribed authority under the instruction of Respondent No. 4 i.e. Registrar of Cooperative Societies, Assam. It has also been stated that the Annual General Meeting of the bank had been held since 1991.
10. In paragraph 23 of the writ petition, the petitioner has stated that when it was waiting for the banking licence, it had received a letter dated 19.8.99 from the respondent No.5 indicating about the closure of the proposal of the petitioner bank with the stipulation that the proposal would not be revived in future.
11. Aforesaid development was followed by the letter dated 20.8.99 issued by the respondent No.5 directing altogether 5(five) banks and their branches in Sivasagar District, not to allow any WP(C) 4226 of 1999 Page 12 of 25 transaction with the petitioner bank. After the said letter, the banks' in question stopped all transactions with the petitioner bank. Thereafter, the petitioner made an enquiry in the office of the RBI and could obtain the copy of the letter dated 9.6.99 (Annexure- XXIII) whereby the Registrar of Cooperative Societies, Assam, was directed to intimate the promoters of the petitioner bank about the closure of its proposal in 1997, requiring the same not to be revived.
12. It is in the aforesaid background of the case, the petitioner has contended that it having fulfilled all the norms and satisfied the pre-requisites for getting a banking licence, the respondents, more particularly, the RBI could not have fused to grant the same and thus their action in the matter is most arbitrary and illegal, requiring intervention of this Court invoking power and jurisdiction under Article 226 of the Constitution of India.
13. In the affidavit dated 21.11.2000 filed by the RBI, while denying the contentions raised in the writ petition, so as to term the closure of the proposal by the RBI as arbitrary and illegal, has stated that as per the policy guideline framed by the RBI, the Registrar of Cooperative Societies can register a Urban Cooperative Bank only after the promoters of the proposed bank comply with the specified Entry Point Norms of collecting the minimum share capital and enrolling the minimum number of members. It has been contended that the same was made known to the respondent No.4 WP(C) 4226 of 1999 Page 13 of 25 vide its letter dated 8.1.1991. According to the RBI, the petitioner bank managed to obtain the registration certificate from the Registrar of Cooperative Societies, Assam, even without due compliance of the proposed norms and thus, both the parties i.e. the petitioner and the Registrar, had contravened the rule laid down by the RBI with regard to registration of bank.
14. It has also been stated that the proposal of the petitioner bank was examined by the RBI way back in March, 1990 and certain discrepancies were noticed and accordingly the respondent No.4 was directed to furnish necessary clarifications. In the mean time, the RBI also received a complaint against the Chief Executive Officer of the petitioner bank pertaining to misappropriation of funds. The said complaint was referred to the respondent No.4, who in turn forwarded the final licence proposed by the petitioner bank on 21.12.93 with new norms incorporated therein. On scrutiny, several discrepancies were noticed and accordingly a clarification had been called for. However, inspite of repeated reminders made both to the petitioner and respondent No.4, the RBI did not receive any response. It was in such a situation, the proposal was closed. It has been pointed out that while granting the permission for registration, it was made clear that the same would be valid for one year only.
15. The RBI in its affidavit has also pointed out that the petitioner bank could not have started banking business without WP(C) 4226 of 1999 Page 14 of 25 obtaining a valid licence from the RBI, which is an offence under Section 22(1) of the Banking Regulation Act, 1949.
16. In addition to the aforesaid affidavit-in-opposition, number of other affidavits have been filed by the department of Cooperative Societies, Reserve Bank of India and the petitioner. In the affidavits filed by the cooperative Societies, while stating the facts narrated above, it has been contended that the petitioner bank had been running the banking business without the banking licence from the RBI. Be it stated here that while entertaining the writ petition on 25.8.99, the Annexure-XXII communication dated 20.8.99, by which it was communicated to various banks that the petitioner bank had been asked to stop all banking business, had been stayed. It is on the strength of this order, the petitioner bank has been carrying on its banking business.
17. In the affidavits filed by the Registrar of Cooperative Societies, it has been stated that the petitioner bank had filed a fresh proposal for approval of registration and the same was forwarded by letter dated 29.11.2001. In the mean time, the RBI issued circular dated 12.6.2004, circulating the policy decision, not to consider any fresh proposal for organisation of new UCBs or for conversion of Cooperative Societies into UCBs, till such time the situation was reviewed and fresh announcement was made by the RBI. Having regard to such policy decision of RBI, the fresh proposal was not forwarded.
WP(C) 4226 of 1999 Page 15 of 25
18. In the affidavit filed by the RBI on 4.12.2010, it has been stated that a fresh proposal was received from the petitioner bank routed through the Registrar of Cooperative Societies, Assam in 2001 (29.11.2001). The same was pursuant to the revised licencing policy of 2000 (30.8.2000). On receipt of the said proposal, the RBI vide its letter dated 27.7.2001 informed the RCS, Assam, that for the reasons stated in the letter, it would not be feasible or wise to process the case without the required information. Thereafter, the proposal was returned back. The objection of the RBI in respect of the proposal was duly intimated to the petitioner bank vide letter dated 13.1.2004. it has been stated in the affidavit that thereafter the petitioner bank did not take any step and no response was shown to the said letter dated 13.1.2004. The petitioner bank did not make any communication and thereby virtually admitted the rejection of the proposal.
19. In paragraph-6 of the said affidavit, it has been stated that with regard to licencing of new Primary (Urban) Cooperative Banks, a circular was issued by the RBI on 12.6.04 and the same was addressed to all the Registrar of Cooperative Societies of all States and UTs. Referring to the announcement in para 139 of the RBI's Annual Policy Statement for the year 2004-05, the said circular made it clear that "no fresh proposals for organisation of new UCBs or for conversion of Cooperative Credit Societies into UCBs WP(C) 4226 of 1999 Page 16 of 25 will be considered till situation is reviewed and a fresh announcement is made by RBI in this regard."
20. The aforesaid circular letter dated 12.6.04 and the policy decision conveyed therein still stands and thus, it is the contention of the RBI that there is no question of acceptance of any fresh proposal from the petitioner at this stage.
21. After the hearing took place in the matter, the petitioner filed an affidavit on 11.11.2011 bringing on record the letter dated 26.12.1990 addressed to the RBI by the Registrar of Cooperative Societies, Assam and the licence dated 10.5.91 granted by the RBI in favour of another Urban Cooperative Bank, namely, Nalbari Urban Cooperative Bank Ltd., which according to the petitioner is under similar fact situation and consequently deprivation of similar licence to the petitioner under similar consideration, resulted in violation of equality clause enshrined in the Constitution of India.
22. By the said letter dated 26.12.90 addressed to the RBI by the RCS, Assam, a review was sought for in respect of the pre-conditions of registration of banks. It was thereafter, the RBI granted the licence dated 10.5.91 to the said bank, namely, Nalbari Urban Cooperative Bank Ltd. According to the petitioner, similar conditions were imposed on the said bank but the same were overlooked while granting licence to the bank, but in case of the WP(C) 4226 of 1999 Page 17 of 25 petitioner bank, same yardsticks and parameters were not applied, resulting in deprivation of licence to the petitioner.
23. I have heard Mr. D.K. Mishra, learned senior counsel assisted by Mr. K. Goswami, learned counsel for the petitioner as well as Mr. M. Bhuyan, learned counsel representing the respondent bank. None appeared for the State respondents.
24. Mr. D.K. Mishra, learned counsel for the petitioner, in his long and elaborate arguments, submitted that once a society is registered under the provisions of the Assam Cooperative Societies Act, 1949, such registration can be cancelled only in accordance with the procedure contained in the Act. He submitted that the petitioner bank being a registered one under the Act, the same cannot be made functionless unless the registration is cancelled. According to the procedure laid down in the Act and the Rules framed there under. Referring to the Special General meeting of the Petitioner Society held on 3.9.1999, he argued that as per the resolution adopted in the said meeting, the Chief Executive Officer of the bank had addressed a letter dated 18.2.2000 to the District Deputy RCS, requesting for consideration of the application made by the petitioner for licence in his argument, he referred to the fresh proposal made by the bank and financial position of the petitioner bank. According to him, necessary direction is required to be issued to the RBI to consider applications submitted by the petitioner bank way back in 1991 and to be precise on 27.7.91. According to him, WP(C) 4226 of 1999 Page 18 of 25 the financial figures indicated in the written synopsis dated 11.11.2011, would go to show that the petitioner has crossed and gone much ahead of the viability norms required under the Entry Point Norms, both under the 1986 and 1993 policies and consequently, the RBI is duty bound to grant the licence to the petitioner.
25. Mr. M. Bhuyan, learned counsel representing the respondent bank i.e. the RBI, on the other hand, advancing his arguments submitted that after the 2004 policy of the RBI, not to accept any fresh proposal, the writ petition has become infructuous. Referring to the first application followed by fresh proposal under 1993 policy of the RBI, he submitted that all such proposals made over the years had lapsed and there is no question of re-consideration of the same at this stage. Referring to the new licencing policy, which came into being w.e.f. 30.8.2000, he submitted that the petitioner having responded to the same by its application dated 25.5.,2001, which was returned, the same having not fulfilled the required norms, the fresh proposal of the petitioner also got lapsed. For lone 3 (three) years of such return of the proposal, the petitioner did not do anything in the matter. He submitted that in the mean time, the fresh policy of 2004 having come into force, there is no question of consideration of the case of the petitioner on the basis of the application made in 1990.
WP(C) 4226 of 1999 Page 19 of 25
26. As regards the affidavit filed on 11.11.2011, which is after the first date of hearing, he submitted that the petitioner cannot go on developing its case. Distinguishing the facts situation involved in both the cases i.e. the petitioner bank and the Nalbari Urban Cooperative Bank Ltd., he submitted that the writ petition having been filed in 1999 after 8(eight) years of granting of such licence to the said bank, the petitioner ought to have been pleaded in their writ petition about the said fact, granting an opportunity to the RBI to deal with the same. However, he submitted that the grant of licence to another bank cannot give rise to the rights to the petitioner to grant licence to it without even fulfilling the requirement of the same.
27. I have considered the submissions made by the learned counsel for the parties and the entire materials on record. After giving my anxious consideration to the same, my findings are as follows :-
28. The RBI by its Annexure-I letter dated 25.6.90 had responded to the RCS Assam, conveying its no objection to the registration of the petitioner bank, subject to fulfillment of its conditions stipulated therein, which have been quoted above. Thus, there was no blanket NOC but the same was subject to fulfillment of the said required conditions, one of which was that the proposal should registered by the Cooperation Department only after fulfillment of the conditions laid down by the promoters of the proposed bank. It WP(C) 4226 of 1999 Page 20 of 25 was also stipulated that after the proposal has been registered, the bank should be advised to submit application in the required format as per the provisions of the Banking Regulation Act and the Rules framed there under. The NOC / clearance was provided subject to fulfillment of the said conditions with the clear stipulation that the same would remain valid for a period of one year, requiring the petitioner bank to fulfill all the required formalities within the said stipulated period of one year.
29. Admittedly, the petitioner could not fulfill all the required conditions as reflected in the Annexure-IV letter dated 6.11.90 addressed to the District Dy. RCS, Assam, in which it was stated that the condition relating to collection of share money was not fulfilled. The fact that initial proposal of the petitioner got lapsed, is also evident from Annexure-IX letter dated 25.8.93 issued by the Deputy RCS, Assam to the District Deputy RCS, Sivasagar, by which fresh application in the Revised Entry Point was directed to be submitted. Accordingly, the fresh application was submitted and forwarded by letter dated 28.12.93. It was on receipt of such fresh proposal, the above quoted letter dated 15.3.94 (Annexure-XIII) was addressed to the RCS by the RBI clearly stipulating therein the required information including certain irregularities in loan transactions. Long 3 (three) years had elapsed thereafter but the petitioner did not do anything in the matter to meet the requirements. This aspect of the matter has been highlighted in reference to the statements in paragraphs 16, 17 & 18 to the writ petition. Although, the petitioner in their writ petition has stated WP(C) 4226 of 1999 Page 21 of 25 about this letter but nothing has been stated in the writ petition as to what was their follow up action in terms of the said letter.
30. It was again on 29.6.98, the Chairman of the petitioner bank forwarded a fresh proposal as per Entry Point Norms which will go to show that the initial proposal had lost its force. It was in response to the said proposal, the impugned communications had been made about the closure of the proposal.
31. While the first proposal was made under the 1986 licencing policy letter, the later proposal was made under 1993 policy. A new policy came into being w.e.f. 30.8.2000 and in response to which another proposal was made on 25.5.2000, which was returned vide Annexure-A letter dated 27.12.2001. For a ready reference, the said letter is quoted below :-
"Reserve Bank of India Urban Banks Department, P.B. No. 120, Station Road, Panbazar, Guwahati-781001 No. UBD(Guwa)/631/12.02.0017/2001-02 27 December, 2001.
The Registrar of Co-operative Societies, Government of Assam, Industrial Co-op Bank Building, S.S. Road, Lakhtokia, Guwahati-781001.
Dear Sir, Fresh proposal for "In principle" approval for registration of Urban Co-op Bank - The Urban Development Co-operative Branch Ltd, Sivasagar, Assam.WP(C) 4226 of 1999 Page 22 of 25
Please refer to your letter No. CF.28/98/342 dated 29 November, 2001, forwarding a fresh proposal along with relevant documents for "In principle" approval for registration of the Urban Development Co-operative Bank, Ltd., Sivasagar, Assam.
2. On scrutiny, it is observed that no comment has been made from your end in regard to promoters' default to any financial institution / commercial bank / co- operative society / co-operative bank, etc as well as their professional competence, means and standing etc, ability to mobilize requisite capital and membership, as required under the revised guidelines contained in paragraphs 7(a) & 7(b) of our Central office Circular No. NBL.1/08.00.00/2000-01 dated 30 August, 2000 addressed to the Registrars of Co-operative Societies of all States and Union Territories.
3. You will kindly appreciate that it would neither be feasible nor wise to process the case at our end without having the above information and your recommendation in the matter of 'In principle' approval for registration of the bank, in question.
4. In view of the foregoing, we return herewith the fresh proposal of the bank along with the relevant documents for resubmission of the same duly commented / recommended on various aspects of the promoters, as required.
Yours faithfully, Sd/-
( K. Bhattacharya) Dy. General Manager."
32. By the aforesaid letter while returning the proposal, direction was issued for resubmission of the same with relevant documents duly commented / recommended on various aspects. More than two years thereafter, the Deputy RCS, Sivasagar by his letter dated 13.1.2004 addressed to the RCS, Assam furnished certain particulars in respect of the bank. In the mean time, circular letter dated 12.6.04 was issued by the RBI conveying the WP(C) 4226 of 1999 Page 23 of 25 decision, not to accept any fresh proposals for organisation of new UCBs etc.
33. Although, the respondent No.3 had filed affidavit-in- opposition on 21.11.2000. The petitioner responded to the same only on 22.3.2006 by filling its reply affidavit reiterating the stand taken in the writ petition. However, there is no clarification as to the cause of delay in responding to the queries made by the RBI and spending force of the earlier proposals in view of the fresh proposal submitted by it. If the petitioner did not fulfill the required conditions towards getting the registration / licence, this Court cannot issue any direction to grant the same sitting on appeal over the policy decision of the RBI. The example of Nalbari Urban Cooperative Bank Ltd. cannot help the case of the petitioner. Apart from the fact that the said bank was granted licence way back in 1991 and the said fact was not brought on record while filling the writ petition in 1999 but has been brought on record only by filling of affidavit on 11.11.2011 after commencement of hearing on 1.11.2011, the said case cannot help the case of the petitioner. As to under what circumstances, the bank was granted the licence cannot be decided on the basis of the two documents annexed to the said affidavit, which are dated 26.12.90 and 10.5.91, respectively.
34. While by the first document i.e. the letter dated 26.12.90 addressed to the RBI by the Joint RCS, Assam, a request was made WP(C) 4226 of 1999 Page 24 of 25 to review the conditions of registration of banks, by the second document, the licence was granted to the bank in question. Merely because, a licence was granted to a particular bank in a fact situation, which the petitioner claims to be identical with his case, this Court exercising its power of judicial review under Article 226 of the Constitution of India, cannot issue any mandamus to grant the licence on the basis of the proposals which have already spent their force. Presently, there is ban on consideration of any fresh proposal.
35. That apart, the policy decision of the RBI in the matter of granting of licence to a Cooperative Bank cannot be interfered with in absence of any arbitrariness and / or illegality in it. Such matters better be left open to expert bodies like RBI.
36. For all the aforesaid reasons, I do not find any merit in the writ petition and accordingly it is dismissed. Interim order passed on 25.8.99, stands vacated.
37. That shall be no order as to costs.
JUDGE Sukhamay WP(C) 4226 of 1999 Page 25 of 25 WP(C) 4226 of 1999 Page 26 of 25