Interim stay on deposit restriction where immediate enforcement risked prejudice to depositors, employees, and ongoing regulatory compliance.

Interim protection was granted against an order restraining a residuary non-banking finance company from accepting deposits, because immediate enforcement would have caused serious prejudice to depositors and employees and the company had already placed an action plan before the authority. The record showed that, after the show cause notice, a meeting and reply were given, but no further opportunity was afforded before the order. On that basis, the impugned order was stayed till further orders, while the company was restrained from accepting fresh deposits only beyond June 2010.

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Issues: Whether the impugned order restraining the petitioner from accepting deposits warranted interim stay pending further proceedings.

Analysis: The petitioner was a residuary non-banking finance company regulated under Chapter III-B of the Reserve Bank of India Act, 1934. After the show cause notice, a meeting and reply were given, but no further opportunity was afforded before the impugned order. The order would affect a very large number of depositors and employees, and the petitioner had also placed an action plan before the authority. In these circumstances, the Court found that immediate enforcement of the order would cause serious prejudice and that interim protection was justified.

Conclusion: The impugned order was stayed till further orders, and the petitioner was restrained from accepting fresh deposits only beyond June 2010.

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