Statutory repayment by liquidator to deposit insurance corporation upheld despite pending full insured claims to depositors.

On a combined reading of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 and the relevant regulations, the Liquidator of an insured bank may repay amounts realised to the Corporation after winding up, subject to the statutory repayment mechanism. The Corporation's liability to depositors arises on winding up, but no provision requires the Liquidator to wait until the entire insured claim is paid to all depositors before making repayment to the Corporation. The only limitation is that sufficient realisations must remain to allow at least one paisa in the rupee to each depositor after expenses. A mandamus cannot be issued to restrain repayment where the statute permits it.

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Issues: Whether, after the winding up of an insured bank, the Liquidator can repay the Corporation amounts realised before the depositors receive the entire insured claim, and whether a mandamus can be issued restraining such repayment.

Analysis: On a combined reading of section 16 and section 21(2)(a) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, and regulation 22 of the Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961, the Corporation's liability to the depositors arises on winding up, while repayment to the Corporation by the Liquidator is governed by the statutory repayment mechanism. The only restriction is that the Liquidator must have sufficient realisations to enable declaration of at least one paisa in the rupee to each depositor after meeting expenses. No provision prohibits repayment to the Corporation until the entire insured amount is distributed to all depositors. A mandamus cannot be issued to compel conduct contrary to the statute.

Conclusion: The challenged repayment to the Corporation was held to be lawful, and the request to restrain such repayment was rejected.

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