Gujarat High Court
Veraval People Cooperative Bank Ltd vs Reserve Bank Of India on 17 February, 2005
Author: Jayant Patel
Bench: Jayant Patel
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION No 13881 of 2003
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VERAVAL PEOPLE COOPERATIVE BANK LTD, THRO.DHANSUKHLAL V
Versus
RESERVE BANK OF INDIA
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Appearance:
1. Special Civil Application No. 13881 of 2003
MR HARIN P RAVAL for Petitioner No. 1
MR HV CHHATRAPATI for Respondent No. 1
.......... for Respondent No. 2
MR KP RAWAL, Ld. AGP for Respondent No. 3
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CORAM : HON'BLE MR.JUSTICE JAYANT PATEL
Date of Order: 17/02/2005
ORAL ORDER
Heard Mr.Harin P. Raval, learned Counsel for the petitioner, Mr.S.B.Vakil, learned Counsel with Mr.Chhatrapati, learned Counsel appearing for respondents No.1 and 2 and Mr.K.P.Rawal, learned AGP for respondent No.3.
2. Upon hearing the learned Counsel appearing for the parties, it prima facie appears that as per Reserve Bank of India, the directives are prevailing of putting restriction on charging of penal interest exceeding 2%, whereas the case of the petitioner Bank is that it was entitled to charge 3% as per the bye-laws and when the General Board of petitioner made an attempt to modify the charging of penal interest from 3% to 2%, such resolution was quashed by the learned Nominee. Therefore, the question which may ultimately be required to be examined would be whether the petitioner Bank in bonafide charged the penal interest at the rate of 2% or charged 3% in open defiance to the guidelines issued by the Reserve Bank of India and such question can be concluded at the time of final hearing.
3. In any case, even if there is no intentional defiance, when R.B.I. has issued guidelines not to charge penal interest exceeding 2%, such guidelines prima facie can be said to have statutory effect and is binding to the petitioner Bank. Therefore, the amount of 1% of penal interest charged over and above 2% by the petitioner Bank as penal interest must be secured in such a manner that in the event the petitioner loses in the petition, the amount is made available for refund to the person who have suffered on account of charging of 1% penal interest more.
4. Mr.Vakil, learned Counsel appearing for R.B.I., submitted that the R.B.I. should be allowed to launch prosecution for breach of guidelines issued by it against the concerned Officer of the petitioner Bank and he submitted that whether the breach is bonafide or intentional would not be of much relevance and he further submitted that if the prosecution is not permitted, it may result into expiry of the limitation period for filing prosecution also and, therefore, he submitted that the penal action may not be stayed by this Court. Mr.Vakil also submitted that the interim relief may not be granted by this Court against refund which is ordered by R.B.I. as the same is concerning monetary aspects, and normally this Court would not stay such refund by interim order.
5. Prima facie I find that when the question is yet to be concluded on the aspects of intentional defiance or not, allowing the prosecution to be launched may further perpetuate the issue more particularly when the penalty is yet not imposed upon petitioner. Hence, I find that further penal action by R.B.I. should be stayed with a view to see that no parties are put to any unfair treatment on account of alleged breach which is yet to be finalised. On the aspects of interim relief concerning to the disbursement of the amount, I find that except 2 persons the other persons who have paid 1% more penal interest have yet not complained, nor have demanded for refund. Therefore, if refund is at this stage ordered or allowed and if ultimately the petitioner succeeds in this petition, this Court may not be in a position to pass effective order for recovery of the said amount which is already refunded, since such refund is concerning to number of loanees of the petitioner Bank. Therefore, considering the facts and circumstances, I find that it would be just and proper to ensure that the petitioner deposits such amount with this Court and the said amount can be invested in FDR with a nationalised Bank with a view to see that there may not be any loss of interest pending the finalisation of the petition.
6. In view of the above, I am inclined to pass the following order:
6.1) Rule returnable on 27th June, 2005.
6.2) The interim relief granted earlier shall continue on condition that the petitioner Bank deposits the total amount of 1% of penal interest which has been recovered by it from its loanees during the relevant period, within a period of one month from today with this Court, without prejudice to the rights and contentions in this petition and subject to the final order which may be passed by this Court in this petition. It is further directed that as and when the amount is deposited with this Court, the same shall be invested by the Office, initially for a period of three years encashable at any time with State Bank of India, Gujarat High Court Complex Branch, Sola, Ahmedabad.
17.2.2005 (Jayant Patel, J.) vinod