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of <h1>Court Validates RBI Directions, Upholds Restrictions. Petition Dismissed. Definitions Lawful. Deputy Governor Authority Confirmed.</h1> <h3>A.S.P. Aiyar And Anr. Versus Reserve Bank Of India, Calcutta</h3> A.S.P. Aiyar And Anr. Versus Reserve Bank Of India, Calcutta - AIR 1983 Mad 330, 1984 56 Comp Cas 352 Mad Issues Involved:1. Validity of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973.2. Definition and scope of 'deposit' under the Reserve Bank Directions, 1973 and 1977.3. Impact of the Reserve Bank Directions on the fundamental rights under Article 19(1)(g) of the Constitution of India.4. Authority of the Deputy Governor of the Reserve Bank of India to issue directions.Issue-wise Detailed Analysis:1. Validity of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973:The petitioners challenged the validity of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973. The court referred to Section 45-K of the Reserve Bank of India Act, 1934, which empowers the Reserve Bank to direct non-banking institutions to furnish statements and information regarding deposits. The court noted that the Reserve Bank issued directions in 1966 and subsequently in 1973, which defined 'deposit' and placed restrictions on non-banking companies. The court upheld the validity of these directions, referencing a previous judgment in Mayavaram Financial Corporation Ltd. v. Reserve Bank of India, which validated similar directions issued in 1966. The court found no reason to invalidate the 1973 directions and dismissed the challenge.2. Definition and Scope of 'Deposit' under the Reserve Bank Directions, 1973 and 1977:The petitioners argued that the definition of 'deposit' under the 1977 Directions, which aligns with Section 45-I(bb) of the Act, should render the 1973 Directions invalid. The court examined the definitions provided in both the 1973 and 1977 Directions. The 1973 Directions defined 'deposit' to include any money received by a company, excluding certain specified categories. The 1977 Directions adopted the definition from Section 45-I(bb), which includes any money received by a non-banking institution, excluding amounts raised by share capital or contributed as capital by partners. The court found that the 1977 definition did not invalidate the 1973 Directions and upheld the restrictions placed by the 1973 Directions on non-banking institutions.3. Impact of the Reserve Bank Directions on Fundamental Rights under Article 19(1)(g) of the Constitution of India:The petitioners contended that the 1973 Directions violated their fundamental rights under Article 19(1)(g) of the Constitution, which guarantees the right to practice any profession or carry on any occupation, trade, or business. The court rejected this argument, stating that the Directions did not affect the business operations of the chit fund company but merely restricted its borrowing practices. The court concluded that the restrictions imposed by the Directions were reasonable and did not infringe upon the petitioners' fundamental rights.4. Authority of the Deputy Governor of the Reserve Bank of India to Issue Directions:The petitioners argued that the Deputy Governor of the Reserve Bank of India lacked the authority to issue the 1973 Directions. They referred to Section 7 of the Reserve Bank of India Act, which entrusts the general superintendence and direction of the Bank's affairs to the Central Board of Directors, with the Governor and, in his absence, the Deputy Governor having powers of direction. The court dismissed this argument, noting that the 1973 Directions were issued by the Deputy Governor on behalf of the Reserve Bank of India. The court referenced Regulation 17(1) of the General Regulations, 1949, which empowers Deputy Governors to exercise powers on behalf of the Bank. The court found that the Directions issued by the Deputy Governor were valid.Conclusion:The court dismissed the writ petitions, upholding the validity of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973. The court found that the definitions and restrictions imposed by the Directions were lawful and did not infringe upon the petitioners' fundamental rights. Additionally, the court confirmed the authority of the Deputy Governor to issue such directions on behalf of the Reserve Bank of India.
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