RBI oversight of NBFC affairs remains under notice as Delhi HC seeks status report without deciding merits.

A writ petition sought directions requiring RBI to enquire into an NBFC's affairs, order a special audit, remove its board, and take protective measures under the RBI Act. The Delhi HC noted prima facie concern over the company's management and alleged financial improprieties, but held that the issues required deeper examination in light of pending NCLT and NCLAT proceedings. It therefore confined itself to issuing notice and seeking an updated status report, while expressly stating that no opinion was being expressed on the merits of the petition or the overlapping proceedings.

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Issues: Whether the petition seeking a writ of mandamus to require the Reserve Bank of India to enquire into the affairs of an NBFC, order a special audit, remove the board, and take protective measures under the Reserve Bank of India Act required immediate final adjudication or only issuance of notice and further consideration.

Analysis: The petition was heard against the backdrop of pending proceedings before the National Company Law Tribunal and the National Company Law Appellate Tribunal concerning the same company and overlapping allegations of mismanagement and financial improprieties. The Court recorded a prima facie concern regarding the manner in which the NBFC's affairs were being conducted, but also noted that the issues required deeper examination and could be answered only after the Reserve Bank of India filed its reply and an updated status report. The Court therefore limited itself to issuing notice and seeking a status report, while expressly clarifying that no opinion was being expressed on the merits, including the pending proceedings before the NCLT and NCLAT.

Outcome: Notice issued and the matter was directed to be listed after filing of an updated status report, with no adjudication on merits.

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