Calcutta High Court (Appellete Side)
The Peerless General Finance & ... vs Reserve Bank Of India & Ors on 3 March, 2017
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
W.P. No. 11089(W) of 2012
With
CAN 6651 of 2016
The Peerless General Finance & Investment Co. Ltd. & Anr.
Vs.
Reserve Bank of India & Ors.
W.P. No. 5232(W) of 2012
With
CAN 6652 of 2016
All India Peerless Employees' Union & Anr.
Vs.
Reserve Bank of India & Ors.
For the Petitioner : Mr. Amitava Mukherjee, Advocate
In W.P. No. 11089(W) of 2012
For the Petitioner : Mr. Jayanti Kumar Mitra, Sr. Advocate
In W.P. No. 5232(W) of 2012 Mr. S.P. Majumdar, Sr. Advocate
Mr. Amit Kumar Saha, Advocate
For the RBI : Mr. Hirak Kumar Mitra, Sr. Advocate
Mr. Debdutta Sea, Advocate
Ms. Suchismita Chatterjee, Advocate
Mr. Amal Mitra, Advocate
For Respondent No. 10 : Mr. A. Chatterjee, Sr. Advocate
Mr. T. Nag Chowdhury, Advocate Mr. A. Basu, Advocate Hearing concluded on : February 22, 2017 Judgment on : March 3, 2017 DEBANGSU BASAK, J.:-
The two writ petitions along with one application each made in such two writ petition for vacating the subsisting interim order are taken up for hearing analogously.
The writ petitioners seek cancellation of the directive of Reserve Bank of India to the respondent company to transit from Residuary Non-Banking Company (RNBC) business. For the sake of identification, W.P. No. 5232(W) of 2012 being the first in point of time, is referred to as the first writ petition and W.P. No. 11089(W) of 2012 being the second in point of time, is referred to as the second writ petition.
Learned Senior Advocate appearing in support of the first writ petition submits that, the Reserve Bank of India (RBI) had issued the impugned writing dated September 28, 2007, addressed to the Managing Director of the respondent company speaking of a review meeting claimed to be held on September 24, 2007. Referring to such review meeting RBI by the impugned letter dated September 28, 2007, has directed the respondent company to transit from RNBC model to other business model. He submits that, the RBI could not have issued such directive under the provisions of the RBI Act, 1934. He refers to the various definitions and to Sections 45I, 45K, 45M, 45B, 45J and 54A of the RBI Act, 1934 and submits that, the RBI could not have issued such a direction as contained in the impugned writing dated September 28, 2007. He refers to the report of the RBI dated September 2, 2010 where RBI had found that the business of the respondent company was sound. He refers to three Supreme Court decisions in relation to the private company reported at All India Reporter 1987 Supreme Court page 1023 (Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd & Others.), All India Reporter 1992 Supreme Court page 1033 (Peerless General Finance and Investment Co. Ltd & Anr. v. Reserve Bank of India) and 1996 Volume 1 Supreme Court Cases page 642 (Reserve Bank of India & Ors. v. Peerless General Finance and Investment Co. Ltd and Anr.). He refers to various paragraphs of such decisions, and submits that, the Supreme Court had noted that, the business of the respondent company was sound.
Referring to the various provisions of the RBI Act, 1934 learned Senior Advocate for the petitioners submits that, the RBI has the power to regulate the business of the respondent company. In the guise of regulation it cannot issue a direction for closure of the business. He relies upon 1896 Appeal Cases page 88 (Municipal Corporation of the City Toronto v. Virgo) and 1979 Volume 3 Supreme Court Cases page 229 (State of Uttar Pradesh & Ors. v. Hindustan Aluminum Corporation. & Ors.) in support of such contention.
Learned Senior Advocate for the petitioners refers to the writing of the RBI dated September 28, 2007 and submits that, the workers of the respondent company were not heard before a decision for closure of the business of the respondent company was taken. He submits that, the workers are an integral part of the respondent company and are entitled to be heard with regard to its business affairs, at least when it involves the closure of a business. He relies upon All India Reporter 1983 Supreme Court page 75 (National Textile Workers' Union etc. v. P.R. Ramakrishnan & Ors.) in support of such contention. He submits that, RBI ought to have taken the plight of the workers of the respondent company into consideration while issuing the impugned writing, assuming that RBI has the power to issue the impugned writing. He refers to the second Peerless decision and the third Peerless decision in support of his contention that the plights of the workers of the respondent company were noted by the Hon'ble Supreme Court while dealing with the matters regarding the affairs of the respondent company. He submits that, the nature of business of the respondent company is such that, the field workers and the employees of the respondent company have a more significant role to play in the financial wellbeing of the respondent company than any other scenario. It is on the basis of the hard labour and toil of the field workers and the employees of the respondent company that the respondent company has been found to be in a sound financial condition by the RBI itself. The RBI having given a clean chit so far as the business of the respondent company concerned, it ought not to have issued the direction of the impugned writing dated September 28, 2007. He relies upon 1996 Volume 1 Supreme Court Cases page 642 (Reserve Bank of India & Ors. v. Peerless General Finance and Investment Co. Ltd and Anr.) and All India Reporter 1992 Supreme Court page 1033 (Peerless General Finance and Investment Co. Ltd & Anr. v. Reserve Bank of India).
Learned Senior Advocate appearing for the petitioners submits that, the impugned writing dated September 28, 2007 has been issued by a General Manager of the RBI. He refers to Sections 7 and 54A of the RBI Act, 1934 and submits that, a General Manager is not authorized to take a policy decision and to communicate the same to the respondent company. The decision of RBI as communicated by the impugned writing dated September 28, 2007 requires the Board of Governors of RBI to decide thereon.
Learned Advocate appearing for the second writ petitioner adopts the submissions made on behalf of the first writ petitioner.
Learned Senior Advocate for the respondent company submits that, the respondent company subsequent to the filing of the writ petition has taken a decision to abide by the directions contained in the impugned writing dated September 28, 2007. He submits that, the respondent company has taken a decision to exit the RNBC business. Referring to 2002 Volume 5 SCC page 111 (Pradeep Kumar Biswas v. Indian Institute of Chemical Biology) and 2015 Volume 4 Supreme Court Cases Page 670 (K.K. Sakseena v. International Commission on Irrigation and Drainage & Ors.) learned Senior Advocate for the respondent company submits that, the respondent company is not amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. There is no foundational basis pleaded in the writ petition warranting the Court to hold that, the respondent company is an authority within the meaning of Article 12 of the Constitution of India. He submits that, with the decision of the respondent company to exit the RNBC business, the reliefs sought for in the two writ petitions have become academic. He refers to the applications made on behalf of the respondent company for vacating the interim order and submits that, the interim order directing the respondent company not to formulate a Voluntary Retirement Scheme for its employees should be vacated. He submits that, on the company deciding not to carry on RNBC business any further and the reliefs sought for in the impugned writ petition have become academic. The question of granting the interim order in favour of the writ petitioners in a writ petition which was become infructuous does not arise.
Learned Senior Advocate appearing for the RBI, questions the maintainability of the writ petition. He relies upon 2003 Volume 10 Supreme Court page 733 (Federal Bank Ltd. v. Sagar Thomas & Ors.) in support of such contention. He refers to Section 45K(3) and (4) of the RBI Act, 1934 and submits that, the RBI has taken a decision under Section 45K(3) of the RBI Act, 1934 and that, with the acceptance of the respondent company to comply with the directions issued by the RBI as contained in the impugned writing, the necessity to take any steps under Section 45K(4) has not arisen. He submits that, the power to regulate would necessarily mean the power to issue a direction for closure of a business at a future date. In the present case, the RBI has exercised powers under Section 45K(3) of the RBI Act and that the situation has not come to such a pass as to acquire powers under Section 45K(4) of the RBI Act, 1934 to be exercised. Therefore, RBI having vested with sufficient powers under its Act, has exercised the same through the impugned writing. He submits that, the impugned writing is a communication of a decision taken by the Deputy Governor. He refers to the conduct of the parties prior to the impugned writing. He submits that, the proposal for exiting the RNBC was in vogue for a considerable period of time. RBI had taken a decision to close down RNBC business on All India basis. Such decision was taken in public interest. The decision of the respondent company is not specific to it but was taken for every such business carried on in India. The decision so far as the respondent company is concerned, was communicated to the respondent company through the impugned writing. He submits that, before such decision was taken, a number of meetings had taken place in which the plights of the workers were being espoused by the Members of Parliament. He refers to documents in support of such contentions. He refers to the supplementary affidavits filed in the proceedings. He submits, therefore, the workers cannot complain of not being heard during the decision making process as their causes were being espoused by the Members of Parliament. Referring to the three Peerless decisions of the Hon'ble Supreme Court, he submits that, none of those three decisions can be read in the manner as sought to be urged on behalf of the petitioners.
Learned Senior Advocate for the RBI submits that, the RBI authorities have acted in terms of the RBI Act, 1934. He relies upon All India Reporter 1956 Hyderabad page 91 (Mohd. Fazlur Rahman & Ors. v. Custodian of Evacuee Property & Anr.), All India Reporter 1996 Supreme Court page 646 (Reserve Bank of India & Ors. v. Peerless General Finance & Investment Company Ltd. & Anr.), 1980 Volume 4 Supreme Court Cases page 507 (Srinivasa Enterprises & Ors. v. Union of India & Ors.), All India Reporter 1961 Supreme Court page 1602 (Jyoti Pershad v. Union Territory of Delhi) and All India Reporter 1978 Supreme Court page 771 (Pathumma & Ors. v. State of Kerala & Ors.) in support of such contentions. So far as the power of the General Manager to issue the impugned writing is concerned, learned Advocate for the RBI relies upon Sections 45MC, 54A and 7 of the RBI Act, 1934.
In reply learned Senior Advocate for the first petitioner submits that, the respondent company is to be considered as an authority under Article 12 of the Constitution of India. He relies upon 2015 Volume 16 Supreme Court Cases page 530 (Janet Jeyapaul v. SRM University & Ors.). He refers to the three Supreme Court Judgments with regard to the respondent company and submits that, the Supreme Court has noted that the nature of business carried on by the respondent company is public in nature.
Relying upon All India Reporter 1989 Supreme Court page 1607 (Shri Anandi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust & Ors. v. V.R. Rudani & Ors.), All India Reporter 1987 Supreme Court page 1023 (Reserve Bank of India v. The Peerless General Finance & Investment Company Ltd. & Ors.), 1996 Volume 1 Supreme Court Cases page 642 (Reserve Bank of India & Ors. v. Peerless General Finance and Investment Co. Ltd and Anr.) and All India Reporter 1992 Supreme Court page 1033 (Peerless General Finance and Investment Co. Ltd & Anr. v. Reserve Bank of India) learned Senior Advocate for the first petitioner submits that, the respondent company discharges duties in public nature and they are amenable to the writ jurisdiction of the High Court. He distinguishes the case laws cited on behalf of the RBI as well as the respondent company.
In view of the respective pleadings and the submissions of the parties, the following issues arise for consideration in the two writ petitions:-
(1) Whether RBI acting under the RBI Act, 1934 has the power to direct a company to transit from RNBC business?
(2) If the answer to the first query is in the affirmative, then are the workers of such a company entitled to a hearing before the RBI issues such a direction?
(3) Is the RBI obliged to take the interest of the workers into consideration while issuing a direction under Section 45K(3)? (4) Is the impugned writing bad having been issued by a General Manager of RBI who is not competent to issue directions under the RBI Act, 1934?
(5) To what reliefs, if any, are the parties entitled to?
The respondent company is an existing company within the meaning of the Companies Act, 1956. The respondent company is engaged in the business of deposit mobilization all over India and has a substantial number of permanent employees. The two writ petitions are at the instance of employees union who seek protection of their rights in view of the inevitable loss of employment consequent upon the implementation of the impugned writing of RBI. By the impugned writing dated September 28, 2007 the RBI has requested the respondent company to transit from RNBC model to other business model. The impugned writing dated September 28, 2007 does not contain anything with regard to the fate of the employees of the respondent company. According to the petitioners, the moment the impugned writing is implemented, there will be a substantial loss of employment so far as the employees of the respondent company are concerned. The RBI should have put in place ameliorative measures to provide for such a situation.
On the authority or the lack of it of RBI to issue the impugned writing dated September 28, 2007 various authorities have been cited.
Municipal Corporation of the City Toronto (supra) is of the view that, a statutory power conferred upon a Municipal Council to make by-laws for regulating and governing a trade does not, in the absence of an express power of prohibition, authorize the making it unlawful to carry on a lawful trade in a lawful manner. Similar view is expressed in Hindustan Aluminum Corporation. & Ors. (supra). It considers the provisions of the Bombay Sales Tax Act, 1959.
Mohd. Fazlur Rahman & Ors. (supra) concerns the Administration of Evacuee Property Act, 1950. On consideration of the provisions of such Act, it is held that, such Act confers jurisdiction upon the custodian to secure and administer evacuee property. The Act also grants powers to take possession, of proper cases in evacuee property though it be joint property.
Srinivasa Enterprises & Ors. (supra) deals with Prize Chits and Money Circulation Schemes (Banning) Act, 1978. It holds that, a total ban under such Act, without affording any protection to genuine prizes chit organizers is not unreasonable and hence not violative of Article 19(1)(g).
Jyoti Pershad (supra) concerns directions issued under the Slum Areas (Improvement and Clearance) Act, 1956. It holds that, if a statute itself or the rule made under it applies unequally to persons or things similarly situated, it would be an instance of a direct violation of the constitutional guarantee and the provisions of the statute or the rule in question would have to be struck down.
Pathumma & Ors. (supra) lays down the guidelines to determine the question of reasonableness of restriction.
The authorities cited on behalf of the writ petitioners and the RBI suggest that, the statute or a rule has to be looked into for the purpose of considering whether or not the exercise of the power impugned in the proceedings is in excess of the statue or the rule as the case may be.
The letter dated September 28, 2007 of RBI is impugned herein. The relevant portion is as follows:-
"This is with reference to the meeting held by the Bank with your company on September 24, 2007. As discussed in the above meeting you may please take the following action.
(i) The company would have four years starting from April 01, 2007 upto March 31, 2011 to transit from RNBC model to other business model.
(ii) Fresh acceptance of any deposit would have a maturity period co-terminus with the end date of the transition period.
(iii) The company may quantify the amount of deposits that had been contracted till March 31, 2007, whose maturity period goes beyond March 31, 2011 and furnish the data to RBI within a period of 15 days.
(iv) The data regarding the deposits contracted after March 31, 2007 and upto October 31, 2007, whose maturity period goes beyond March 31, 2011, may be submitted to us not later than 15 days from October 31, 2007.
(v) The company may seek prior approval of the Reserve Bank of India before making any investment in its subsidiary companies."
So far as the powers of the RBI are concerned, learned Senior Advocates for the parties have referred to various provisions of the RBI Act, 1934. The relevant sections of the RBI Act, 1934 are as follows:-
"45K. Power of Bank to collect information from non-banking institutions as to deposits and to give directions.- (1) The Bank may at any time direct that every non-banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements information or particulars relating to or connected with deposits received by the non-banking institution, as may be specified by the Bank by general or special order. (2) Without prejudice to the generality of the power vested in the Bank under sub-section (1), the statements, information or particulars to be furnished under sub-section (1), may relate to all or any of the following matters, namely, the amount of the deposits, the purposes and periods for which, and the rates of interest and other terms and conditions on which, they are re- ceived.
(3) The Bank may, if it considers necessary in the public inter-
est so to do, give directions to non-banking institutions either generally or to any non-banking institution or group of non- banking institutions in particular, in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
(4) If any non-banking institution fails to comply with any direction given by the Bank under sub-section (3), the Bank may prohibit the acceptance of deposits by that non-banking institution.
[***] (6) Every non-banking institution receiving deposits shall, if so required by the Bank and within such time as the Bank may specify, cause to be sent at the cost of the non-banking institution a copy of its annual balance-sheet and profit and loss account or other annual accounts to every person from whom the non-banking institution holds, as on the last day of the year to which the accounts relate, deposits higher than such sum as may be specified by the Bank."
"45J. Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of money.- The Bank may, if it consider necessary in the public interest so to do, by general or special order, -
(a) regulate or prohibit the issue by any non-banking institution of any prospectus or advertise soliciting deposits of money from the public, and
(b) specify the conditions subject to which any such prospectus of advertisement, if not prohibited, may be issued."
The preamble to the RBI Act, 1934 notes that, it is expedient to constitute a RBI to regulate the issue of Bank notes, keeping of reserves with a view to securing monetary stability and to operate the currency and credit system of the County to its advantage. It notes the requirement to have a modern monitory policy framework and the need to meet the challenges of an increasingly complex economy. Section 45J empowers the RBI to regulate or prohibit issues of prospectus or advertisement soliciting deposit of money. Section 45K deals with the power of RBI to collect information from non-banking institution as to deposit and to give directions. Sub-section (3) of Section 45K allows the RBI, if it considers necessary in the public interest so to do, give directions to non-banking institutions either generally or individually, in respect of matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which such deposits may be received. Sub-section (4) of Section 45K allows the RBI to prohibit the acceptance of deposits by the non-banking institution who has failed to comply with any direction issued under Section 45K(3) of the RBI Act, 1934.
The respondent company is functioning as a non-banking institution. It is amenable to the directions that may be issued by the RBI acting under the RBI Act, 1934 from time to time. Directions issued by RBI with regard to the business carried on by the respondent company had come up for consideration before the Supreme Court as appears from the three judgments in respect of the respondent company passed by the Hon'ble Supreme Court. The right of RBI to issue directions on the respondent company under the RBI Act, 1934 is well recognized. It is an admitted position that, the respondent company is carrying on RNBC business. RBI has the power to regulate RNBC business. Such power flows, inter alia, from Section 45K of the Act of 1934. As noted above Sub-section (3) of Section 45K allows RBI to issue directions to the respondent company. It has done so, in the present case, by the impugned writing. It has asked the respondent company to transit from the business of RNBC within the time stipulated therein. RBI has not asked the respondent company to wind up the entirety of its affairs. It has asked the respondent company not to carry on RNBC business any further beyond the time stipulated therein. The impugned writing of the RBI does not mean that, the respondent company cannot do any other business. All other businesses of the respondent company remain untouched.
The respondent company initially had objected to the impugned writing. Subsequently, the respondent company had accepted the recommendations of the RBI as contained in the impugned writing and had decided to transit from RNBC business. Once the respondent company has accepted to transit from the RNBC business, the situation contemplated under Sub-section (4) of Section 45K has not arisen for the RBI to take a measure therein. Sub-section (4) of Section 45K allows RBI to prohibit the acceptance of deposit by an institution failing to comply with a direction issued to it under Sub-section (3). Such a situation has not arisen till date so far as the respondent company is concerned.
The first issue is, therefore, answered in the affirmative and against the petitioners.
The second and the third issues relate to the rights of workers of the respondent company. The workers claim a right of hearing both before the RBI as well as by the respondent company before a decision is taken either by RBI or by the respondent company in transiting from RNBC business.
In the present case, the RBI has exercised powers under Section 45K(3) of the RBI Act, 1934. The section itself does not provide for a right of hearing to a worker. When a section does not provide for a right of hearing, in a given case, adherence to the principles of natural justice can be read into it.
In the present case, the rights of workers were espoused by the Members of Parliament before the RBI. Right of hearing does not, in all circumstances, mean a right of oral hearing. Consideration of a written representation by the authorities concerned is recognized to be a substantial compliance of the principles of natural justice and a right of hearing being extended to such person.
National Textile Workers' Union (supra) is concerned with a right of hearing of workers in respect of a winding up of a company incorporated under the provisions of the Companies Act, 1956. In the present case, the respondent company has not been directed to be wound up under the RBI Act, 1934. A power under Section 45K(3) of the RBI Act, 1934 has been exercised by RBI to direct the respondent company to transit from RNBC business. It is not the same thing as directing winding up of the respondent company.
The three Peerless cases receiving consideration by the Hon'ble Supreme Court although notes the involvement of workers in the respondent company, it does not say that the workers of the respondent company are entitled to a right of hearing either by the RBI in issuing directions under the RBI Act, 1934 or the respondent company before taking a decision to abide by such directions of RBI issued under the provisions of the RBI Act, 1934.
The rights of the workers of the respondent company have not been demonstrated or established to have been infringed by the decision of the respondent company to accept the directions contained in the impugned writing issued by the RBI. It has not been brought to the notice of the Court that, any worker has been retrenched or any condition of the employment of the workers has been reworked to the prejudice of the worker concerned by the respondent company while accepting the directions contained in the impugned writing or in implementing the same. The workers collectively as well as an individual worker have forai available to them for the purpose of ventilating their grievances and having redressal of any rights infringed by the respondent company. In the present case, there is some substance in the contentions of the RBI to the effect that, RBI was trying to address a larger malaise in the society vis-à-vis the RNBC business. Taking such wider perspective, RBI had issued the impugned direction. The impugned direction has not been demonstrated to be inimical to any cause of the workers of any company. Furthermore, the interest of the society at large supersedes the interest of the individual worker or for that matter of the respondent company or a group of workers of the respondent company. The workers apprehend that, with the implementation of the directions contained in the impugned writing, they would lose their employment. The impugned direction is with regard to transiting of the business. It is not and cannot be read to be saying that, the RBI has directed closure of all business activities of the respondent company. It might well be possible for the respondent company to accommodate the workers in any other business of the respondent company on terms which are not inimical to the interest of the workers. Unless an individual instance is brought to the notice of the Court, the infringement of any right of any workers vis-à-vis his employment, it would be improper on the part of the Court to act on speculation, conjectures and surmises.
It is urged by the writ petitioners that, the respondent company is an authority or an instrumentality within the meaning of Article 12 of the Constitution of India and that, since it is so independent of the validity of the action impugned by the RBI, the Court should issue directions on the respondent company to formulate a scheme to take care of the workers while transiting from RNBC business.
The respondent company is not a Government company under Section 617 of the Companies Act, 1956. It is engaged in a nature of business which makes it obligatory on its part to abide by the directions issued by the RBI under the RBI Act, 1934. In its usual course of business, the respondent company has dealings with the public at large. It is obliged to comply with the directions issued by regulatory authority such as the RBI in the conduct of its business.
The question whether the respondent company is an authority under Article 12 of the Constitution of India is required to be decided.
Federal Bank Ltd. (supra) is of the view that, merely because some regulatory provisions are applicable to a company incorporated under the provisions of the Companies Act, 1956 which is not a Government company within the meaning of Section 617 thereof, such a company does not come within the purview of Article 12 of the Constitution of India. The Federal bank is held not to be amenable within the writ jurisdiction. Janet Jeyapaul (supra) is of the view that, where a legal entity discharges a function of public nature, it is to be considered as an authority under Article 12 of the Constitution of India and a writ petition directed against such legal authority would be maintainable under Article 226 of the Constitution of India. None of the three Peerless cases decided by the Hon'ble Supreme Court of India as referred to by the learned Senior Advocate for the petitioner, was concerned, with the issue as to whether or not the respondent company is an authority within the meaning of Article 12 of the Constitution of India. Such issue was not raised and was not answered by their Lordships.
Pradeep Kumar Biswas (supra) lays down the test to determine which body will fall within the meaning of State as in Article 12 of the Constitution of India. K.K. Sakseena (supra) is of the view that, a legal entity is a State within the meaning of Article 12 of the Constitution of India, if the nature and extent of duty imposed on such a body is of public nature. Shri Anandi Mukta (supra) is of the view that, the issue of mandamus is not confined to statutory authorities and instrumentalities of the State only. It can also be issued to any other person or authority performing public duty. Such a duty need not be imposed by statute.
Carrying on RNBC business cannot be said to be discharge of a public function. Exposure to the public at large by the very nature of the business carried on, ipso facto, does not mean the company involved is an authority within the meaning of Article 12 of the Constitution of India. In the present case, it has not been substantiated that, the respondent company discharges any function of public nature. As noted above, the impugned action of the RBI is in relation to a RNBC business of the respondent company from which the respondent company has been directed to transit.
In view of the discussions above, it cannot be said that the respondent company is an authority or an instrumentality within the meaning of Article 12 of the Constitution of India.
The second and the third issues are, therefore, answered accordingly.
A General Manager of RBI had issued the impugned writing. The impugned writing contains directions while exercising powers under Section 45K(3) of the RBI Act, 1934. The fourth issue relates to the competence of a General Manager of RBI to issue such a writing containing directions in exercise of powers under Section 45K(3) of the RBI Act, 1934.
Sections 7 and 54A of the RBI Act, 1934 are relevant in this context. They are as follows:-
"7. Management.-- (1) The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest.
(2) Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank.
(3) Save as otherwise provided in regulations made by the Central Board, the Governor and in his absence the Deputy Governor nominated by him in his behalf, shall also have powers of general superintendence and direction of the affairs and the business of the Bank, and may exercise all powers and do all acts and things which may be exercised or done by the Bank."
"54A. Delegation of powers.--
(1) The Governor may, by general or special order, delegate to a Deputy Governor, subjects to such conditions and limitations, if any, as may be specified in the order, such of the powers and functions exercisable by him [***] under this Act or under any other law for the time being in force as he may deem necessary for the efficient administration of the functions of the Bank.
(2) The fact that a Deputy Governor exercises any power or does any act or thing in pursuance of this Act shall be conclusive proof of his authority to do so."
The business and affairs of the RBI are entrusted to a Central Board of Directors. The Central Board of Directors is empowered to exercise all powers and do all acts and things which may be exercised or done by the RBI. Section 54A recognizes delegation of power by the Board to a Deputy Governor. Sub-section (2) of Section 54A provides that, the very fact that a Deputy Governor has exercised any power or has done any acts or things in pursuant to the RBI Act, 1934 shall be conclusive proof of his authority to do so. In the present case, the RBI has produced documents to substantiate that, the directions contained in the impugned writing had received the consideration of the Deputy Governor of the RBI. The General Manager has merely communicated the decision taken by the Deputy Governor with regard to the respondent company. The directions contained in the impugned writing are essentially a decision taken by the Deputy Governor in respect of the respondent company pursuant to various meetings preceding the same between the officials of the respondent company and the RBI.
In the facts of the present case, the directions issued by the RBI as contained in the impugned writing are not decision of the General Manager but of a Deputy Governor of the RBI. In such circumstances, the impugned writing cannot be said to be bad as not being issued by a person who does not have the requisite competence to issue the same. A General Manager of the RBI is entitled to issue communications on behalf of the RBI as appearing from a notification dated August 11, 2012 issued under the provisions of Regulation 18 of the RBI General Regulations, 1949.
The fourth issue is, therefore, answered accordingly. So far as the fifth issue is concerned, the two writ petitions being W.P. No. 11089(W) of 2012 and W.P. No. 5232(W) of 2012 being without merits are dismissed. With the dismissal of the two writ petitions the subsisting interim orders in such two writ petitions are vacated. Consequently, CAN 6651 of 2016 and CAN 6652 of 2016 are allowed. No order as to costs.
Urgent certified website copies of this judgment, if applied for, be made available to the parties upon compliance of the requisite formalities.
[DEBANGSU BASAK, J.]