TaxTMI 
TaxTMI 
2021 (3) TMI 543
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....T/97828/2020. Ms. Jyoti Chavan, AGP for the Respondent-State in WPL/5797/2020. Mr. Yuvraj D. Patil, AGP for the Respondent-State in WPST/95405/ 2020. Mr. Rajan S. Pawar, AGP for the Respondent-State in WPST/97828/ 2020. JUDGMENT (Per R. D. Dhanuka, J.) :- 1. By Writ Petition (Stamp) No. 95405 of 2020 filed under Article 226 of the Constitution of India, the petitioners have impugned the order dated 28th April, 2020 passed by the respondent no.3 i.e. Reserve Bank of India thereby cancelling the licence of the CKP Co-operative Bank Limited to carry on the banking business in India under Section 22 read with Section 56 of the Banking Regulation Act, 1949 (hereinafter referred as 'the said CKP Bank'). The petitioners in Writ Petition (L) No. 5797 of 2020 have impugned the order dated 22nd Separate, 2020 passed by the respondent no.2 i.e. Department of Cooperation Marketing and Textiles and order dated 4th May, 2020 appointing the Liquidator of the said CKP Bank. 2. The petitioners in Writ Petition (Stamp) No. 97828 of 2020 have challenged the order dated 28th April, 2020 passed by the respondent no.2 i.e. Reserve Bank of India thereby cancelling the licence of the said CKP Bank a....
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.... on the basis of an Inspection Report dated 31st March, 2009 thereby prohibiting the said CKP Bank from opening offsite ATMs/Extension Counters, as well as from extending the area of operation/opening of new branches. On 9th March, 2012, the Reserve Bank of India placed further restrictions on the said CKP Bank directing it to (i) reduce the exposure limit of single and group borrowers to 50% of the prescribed limits and (ii) arrest fresh slippage of loans to NPA and fix accountability for deterioration in the bank's asset portfolio. The Reserve Bank of India further warned the said CKP Bank that if the directions were not strictly complied with, it would face consequent penal action. 6. On 23rd April, 2012, on the basis of deficiency observed during the statutory inspection of the said CKP Bank as on 31st March, 2011, the Reserve Bank of India requested the Registrar of Co-operative Societies to supersede the Board of Directors of the said CKP Bank and to appoint an Administrator in terms of Section 110A (3) of the Maharashtra Co-operative Societies Act, 1960 (for short 'the said MCS Act'). On 7th May, 2012, pursuant to the said requisition made by the Reserve Bank of India on 23....
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....larities were revealed. The real or exchangeable value of paid up share capital and reserves of the said CKP Bank was assessed at (-) Rs. 17,992.71/- lakhs. The said CKP Bank was not having adequate assets to meet its liabilities and was not complying with the provisions of Section 22 of the Banking Regulation Act, 1949. The said CKP Bank also did not comply with the requirement of minimum share capital prescribed in terms of the provisions of Section 11(1) of the Banking Regulation Act, 1949. Bank's CRAR was assessed at (-) 68.9% as against the regulatory requirement of 9%. The deposits of the said CKP Bank had been eroded to the extent of 31.20%. The net loss of the said CKP Bank was assessed at Rs. 11,711.90/- lakhs with the accumulated losses reported by the said bank at Rs. 17,518.23/- lakhs. The gross and net NPAs were assessed at Rs. 27,229.71/- lakhs (70.6% of the gross loans and advances) and Rs. 14.013.69 lakhs (55.3% of the net advances) respectively. The additions to NPAs were significantly higher at Rs. 8,357.98/- lakhs as compared to the recoveries of Rs. 1,063.93/lakhs during the year. 10. It is the case of the Reserved Bank of India that since the financial health ....
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....mplement its action plan for revival, the Reserve Bank of India issued a fresh show cause notice on the basis of statutory inspection of the said CKP Bank as on 31st March, 2016. By the said show cause notice, the Reserve Bank of India called upon the said CKP Bank to show cause as to why its banking licence under Section 22 of the Banking Regulation Act, 1949 should not be cancelled in light of various facts set out in the said show cause notice. 14. On 28th Separate, 2017 and 21st November, 2017, the said CKP Bank replied to the said show cause notice dated 23rd August, 2017 by putting forward a 'Revival Action Plan with Turnaround Strategies'. The said CKP Bank accepted that it was a non-compliance of various statutory obligations including those under the Banking Regulation Act, 1949 on its part. It was contended in the said two letters that the Board/Management was trying their best against all odds. 15. On 28th April, 2020, the Reserve Bank of India passed a detailed order and came to the conclusion that it was evident that financial position of the said CKP Bank was highly adverse and unsustainable. There was no concrete revival plan or proposal for merger with another ban....
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....e and due process of law. There was substantial delay of almost 5 years from the date of first show cause notice dated 11th June, 2015 and almost 3 years from the second show cause notice dated 23rd August, 2017. On this ground itself, both these impugned orders are liable to be quashed and set aside. 19. It is submitted by the learned counsel that the first show cause notice was issued on 11th June, 2015 whereas second show cause notice was issued on 23rd August, 2017. In the impugned order, the Reserve Bank of India has considered alleged facts and allegations subsequent to the issuance of the show cause notices without giving any opportunity to the CKP Bank to deal with those additional facts considered in the impugned order before passing the said order. There was no grave urgency in passing the impugned order dated 28th April, 2020 during the period of lock-down declared by the Central Government as well as by the State Government due to pandemic of Covid 19 without issuing any further show cause notice for subsequent developments relating to facts and allegations post the second show cause notice dated 23rd August, 2017. The directives issued by the Reserve Bank of India und....
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....s addressed by the CKP Bank to the Reserve Bank of India and would submit that though various revival plans were submitted by the management of the CKP Bank to Reserve Bank of India, none of those revival plans were considered by the Reserve Bank of India and illegally cancelled the banking licence of the CKP Bank. The petitioners as well as the large number of persons having deposits more than Rs. 5 lacs with the CKP Bank have been seriously prejudiced with the impugned order passed by the Reserve Bank of India. The affidavit in reply filed by the Reserve Bank of India and the liquidator of the CKP Bank also clearly indicate that there are about 1940 persons having deposits amounting to Rs. 12,564 lacs. 24. It is submitted by the learned counsel that though the liquidator was under obligation to file an appeal against the order passed by the Reserve Bank of India thereby cancelling the banking licence of the CKP Bank and directing the Registrar to wind up the affairs of the said CKP Bank, the liquidator instead of filing an appeal against the said order or other appropriate proceedings, chose to accept the illegal order passed by the Reserve Bank of India and by the Registrar of ....
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....idation under Chapter X of MCS Act. Under the said Chapter X, the mode and manner in which the liquidator is appointed and his functions and powers are prescribed. He submits that in the said impugned order dated 4th May, 2020, there was a specific reference made to sections 103 and 105 of the MCS Act apart from section 110A (1) (ii) of the MCS Act. 28. It is submitted by the learned counsel that the existence of the legal entity of a society registered and incorporated on 21st October, 1915 under the MCS Act cannot and should not be taken away by exercising powers vide impugned order dated 28th April, 2020 by the Reserve Bank of India under section 22(4) of the Banking Regulation Act read with section 110A (1) (ii) of the MCS Act. Under the said provision, the Reserve Bank of India was only empowered to either grant or cancel licence to operate as a bank or control the operations of licenced banks and was not empowered to decide the existence of persons/legal entities registered and incorporated under other laws such as MCS Act. He submits that even if the banking licence of the CKP Bank could have been cancelled by the Reserve Bank of India, the existence of the CKP Bank as well....
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....110A (1)(iii) of the MSC Act. He submits that by the said order, the Commissioner for Cooperation and Registrar of Co-operative Societies had appointed the Board of Administrators of the said CKP Bank in place of the Board of Directors to maintain the affairs of the said bank as per the provisions of the said MCS Act read with MCS Rules and the bye-laws of the bank. 33. Learned counsel invited our attention to section 45 of the Banking Regulation Act and would submit that under the said provision, the Central Government is empowered to direct the Reserve Bank of India to order moratorium of the bank. He invited our attention to the prayer clause (c) of the Writ Petition filed by his clients inter alia praying for framing of a scheme of reconstruction or amalgamation of the said CKP Bank with other bank. He relied upon section 35(1-A) of the Banking Regulation Act and would submit that none of these powers were exercised by the Central Government though the said powers were urgently required to be exercised to save the large number of depositors who had deposited their hard earned money with the said CKP Bank and for the purpose of revival of the said bank. The Central Government o....
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.... said Board of Administrator took charge of the said CKP Bank on 31st May, 2012. The financial position of the said CKP Bank deteriorated in the year 2012-13 due to mismanagement, gross violation of banking norms due to the said CKP Bank not maintaining proper CRR and SLR, financial irregularities. The deposits of the said CKP Bank were decreased by Rs. 469 crores. 37. It is submitted that to avoid further depletion in deposits, the Reserve Bank of India imposed restrictions and ordered moratorium under Section 35A of the Banking Regulation Act, 1949 by letter dated 30th April, 2014 and imposed restrictions on withdrawal limit of Rs. 10,000 to each depositor. The election of the Board of Directors of the said CKP Bank was thereafter held for the period of 2015-16 to 2020-2021. The newly elected Board of Directors carried out the affairs of the said CKP Bank from 23rd April, 2015 to 4th December, 2019. Since 7 Directors of the said CKP Bank resigned, there was insufficient coram of the Board of Directors. 38. The said Authorized Officer took over the charge of the said CKP Bank from 6th December, 2019 during the continuance of restrictions under Section 35A of the Banking Regulati....
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....he claim as on 6th February, 2021 to various depositors. Insofar as the petitioners in Writ Petition (Stamp) No. 97828 of 2020 are concerned, the details of those depositors are also furnished. 41. Learned counsel placed reliance on the affidavit-in-reply filed by the respondent no.5 in Writ Petition (Stamp) No. 97828 of 2020 and submits that respondent no.5 has already indicated the amounts sanctioned by respondent no.5 in respect of the claim for 43720 depositors amounting to Rs. 250,64,03,500.25/-. The claim of the petitioners in the said Writ Petition were included in the said sanction claim and the amount would be disbursed by the Liquidator through the agency bank i.e. Bank of Baroda, Tardeo branch, Mumbai by NEFT. Two of the petitioners had deposited more than Rs. 5 lakhs would be paid Rs. 5 lakhs. 42. Learned AGP placed reliance on the judgment of this Court in case of Ishwardas Premkumar Choradiya v/s. State of Maharashtra, 2002 (4) BCR 1 and in particular paragraph 4 in support of her submission that no show cause notice was required to be issued by the Commissioner for Co-operation and Registrar of Co-operative Societies under Section 110A(3) of the MCS Act, Registrar ....
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....CKP Bank and on the contrary the condition having been deteriorated day by day, the Reserve Bank of India had no alternate than to pass an order for cancellation of banking licence of the said CKP Bank. He submits that the Reserve Bank of India was also justified in issuing the directions under Section 110A of the MCS Act to the Registrar to windup the affairs of the said CKP Bank. The learned senior counsel tendered a copy of those directives issued by the Reserve Bank of India. 46. It is submitted by the learned senior counsel that considering the precarious financial condition of the said CKP Bank with no sign of improvement, the Reserve Bank of India issued various directions thereby restricting various activities of the said CKP Bank so as to obviate any further loss of the bank and its depositors. The Board of Administrator was also appointed since 7th May, 2012. On 21st March, 2013, the Reserve Bank of India had directed the said CKP Bank to explore the option for merger with any other Co-operative bank. No steps were however taken by the management of the said CKP Bank. None of these actions taken by the Reserve Bank of India from time to time against the said CKP Bank was....
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....erative Societies was not denuded from exercising the powers, even if the said order was passed after few days after the directives issued by the Reserve Bank of India. 49. It is submitted by the learned senior counsel that since the said CKP bank was already an insured co-operative bank, the Reserve Bank of India rightly exercised the powers to direct the Registrar to windup the said insured co-operative bank. He submits that even on cancellation of banking licence by the Reserve Bank of India, all the existing liabilities as on the date of the cancellation of banking licence which were insured continues even thereafter. Learned senior counsel placed reliance on Section 102 of the MCS Act and would submit that the said power granted to the Registrar for passing an order of winding up is in case of situation under Section 83, 84 or 89A of the MCS Act. The powers of the Registrar under Section 102 are in addition to the powers under Section 110A of the MCS Act and both the powers are different. 50. Learned senior counsel placed reliance on the judgment of Andhra Pradesh High Court in case of Reserve Bank of India v/s. Pattern Surya Prakash Rao and Ors., 2007 SCC OnLine AP 736 and ....
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....f various opportunities, Reserve Bank of India was justified in not preparing scheme of reconstitution of amalgamation. He submits that Section 102 of the MCS Act has no application to the facts of this case. The powers were exercised by the Reserve Bank of India under Section 110A of the MCS Act. Learned senior counsel placed reliance on various averments made by the respondent no.5 in Writ Petition (Stamp) No. 97828 of 2020 setting out the manner in which the claims made by various depositors were approved and the amount sanctioned thereon. He submits that only because of the intervention of the respondent no.5, the depositors of various fixed deposits with the said CKP Bank are getting the amount to the extent of Rs. 5 lakhs maximum, those who had deposited more than Rs. 5 lakhs. 53. It is submitted that in any event in case there being any surplus left after distribution of all the assets amongst the creditors after liquidation proceedings are over, the depositors may get the balance amount. In support of this submission, he relied on Section 110A of the MCS Act which provides for the disposal of the surplus assets by the Liquidator of the said CKP Bank subject to previous san....
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....KP Bank has no right to challenge any interim directions issued by the Reserve Bank of India from time to time in last 10 years but to challenge only the final order of cancelling the banking licence under Section 22(4) of the Banking Regulation Act, 1949. The Liquidator of the said CKP Bank did not challenge the final order of cancellation of the banking licence by the Reserve Bank of India deliberately. He submits that the order passed by the Reserve Bank of India thereby cancelling the banking licence and the order directing the Registrar to windup the affairs of the said CKP Bank were passed on the same date i.e. 28th April, 2020. The right of appeal against the order of cancellation of banking licence was 30 days. The said CKP Bank lost its right of appeal against the order cancelling the banking licence against the said CKP Bank by the Reserve Bank of India. The remedy available to the said CKP Bank under Section 22(5) of the Banking Regulation Act, 1949 is defeated. 59. Learned counsel for the petitioner made an attempt to distinguish the judgment of Supreme Court in case of Joseph Kuruvilla Vellukunnel (supra) on the ground that various observations made in paragraphs 16 a....
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....anagement of the said CKP Bank. However, there was no improvement in the financial condition of the said CKP Bank and on the other hand the same further deteriorated. REASONS AND CONCLUSION : 62. We shall decide the question whether in the facts and circumstances of the case, the Reserve Bank of India was justified in exercising powers under section 22 read with section 56 of the Banking Regulation Act to cancel the banking licence of the CKP Bank and was further justified in directing the Registrar of Co-operative Societies to take steps to wind up the said CKP Bank or not. 63. A perusal of the record summarized aforesaid clearly indicates that the Reserve Bank of India had been pointing out large number of irregularities on the part of the CKP Bank in conducting the affairs of the said CKP Bank thereby causing tremendous financial loss to the depositors, erosion of assets including the depositors, CKP Bank not maintaining the required CRAR during the period between 2009 and 2019. As far back as on 30th November, 2009, the Reserve Bank of India had addressed a letter to the CKP Bank thereby prohibiting the said CKP Bank from opening offsite ATMs / extension counters as well as ....
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....d that real or exchangeable value of paid up share capital and reserves of the said CKP Bank was at (-) 17992.71 lakh. The said CKP Bank did not have adequate assets to meet its liabilities which was not in compliance with the provisions of section 22 of the Bank Regulation Act. 67. The said CKP Bank also did not comply with the requirement of minimum share capital in terms of the provisions of section 11(1) of the Banking Regulation Act. The CRAR of the said CKP Bank was assessed at (-) 68.9% as against regulatory requirement of 9%. The deposits of the said CKP Bank had been eroded to the extent of 31.20%. The net loss of the said CKP Bank was assessed at 11711.90 lakh with the accumulated losses reported by the said CKP Bank at 17518.23 lakh. The NPA were higher at 8357.98 lakh as compared to the recoveries of 1063.93 lakh during the year. 68. In the year 2015 when the Reserve Bank of India did not find any improvement in the financial condition of the said CKP Bank and since the said CKP Bank did not comply with various directives issued by the Reserve Bank of India since last several years, the Reserve Bank of India issued show cause notice on 11th June, 2015 as to why the li....
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.... Individual depositors amount upto Rs. 5 lakh is insured and safe which can be refunded to the depositors. There are total 131985 depositors having deposited about Rs. 485.25 crore. Out of those 130855 depositors having deposited, an amount of Rs. 364.79 crores are eligible for refund upto Rs. 5 lakh as per DICGC norms. There are only 1130 depositors whose amount is more than Rs. 5 lakh. The deposit amount of more than Ra.5 lakh is not insured above Rs. 5 lakhs under DICGC Act and cannot be refunded at this stage. The total amount of 1130 depositors is Rs. 120.45 crores. Out of that Rs. 58 crores being less than Rs. 5 lakh of individual depositors is insured. The Liquidator has already started liquidation proceedings. 72. The first stage of sending the proposal to the DICGC for sanction of claim list of the depositors has started. There are 1,31,985 depositors but after clubbing the single entity depositors number arrived is at 1,02,551. The Liquidator has already submitted the claim list along with KYC details of the depositors as on 23rd October, 2020 in respect of the total depositors 47,819 amounting to Rs. 298.27 crores. The audit work of the said claim list is in process by ....
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.... Bank to submit an option for merger. The said CKP Bank did not take any steps to improve the financial condition and on the contrary made the financial condition of the said CKP Bank in miserable state of affairs. In these circumstances, the Reserve Bank of India was not required to wait indefinitely having waited for about ten years for revival of the CKP Bank. There was no further requirement of issuance of any fresh show cause notice after issuance of second show cause notice on 23rd August, 2017 and before passing the impugned order dated 28th April, 2020. The Reserve Bank of India had postponed the action in view of the request made by the CKP Bank as and by way of last indulgence. 77. The Reserve Bank of India was not required to give any hearing to the depositors before passing the order of suspension of the banking licence of the said CKP Bank. It is not the case of the said CKP Bank that principles of natural justice were violated by the Reserve Bank of India at any sage from 2009 onwards. The submission of the learned counsel for the petitioner that there was no urgency in passing the impugned order on 28th April, 2020 during the period of lock down is without any merit....
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....10 A (iv) of the MCS Act, if an order for winding up of the bank is made with the previous sanction in writing or on the requisition of the Reserve Bank of India, such action shall not be liable to be questioned in any manner. 80. Under section 110 A (v) of the MCS Act, the liquidator or the insured co-operative bank or the transferee bank, as the case may be, shall be under an obligation to repay the Deposit Insurance Corporation established under the Deposit Insurance Corporation Act, 1961, in the circumstances, to the extent and in the manner referred to in section 21 of the Deposit Insurance Corporation Act, 1961. Merely because an order is passed by the Reserve Bank of India cancelling the banking licence of a bank under section 22 of the Banking Regulation Act, the existing liability of the Deposit Insurance Corporation to pay to the depositors as per the provision of the said Deposit Insurance Corporation Act on the date of passing such order does not come to an end. The submission of the learned counsel for the petitioner that on order of winding up of the bank, such bank is ceased to be an insured co-operative bank and that no order could be passed by the Registrar of Co-....
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....ty, there is no merit in this submission of the learned counsel for the petitioners. In our view Ms.Chavan, learned AGP for the State Government is right in her submission that the main object of the CKP Bank was to carry on banking business and thus banking licence having been cancelled by the Reserve Bank of India, Reserve Bank of India was fully justified in directing the Registrar of Co-operative Societies under section 110 A of the MCS Act to wind up the affairs of the said CKP Bank. 84. Similarly, there is no merit in the submission of the learned counsel for the petitioners that the said CKP Bank could have conducted any other business even after banking licence of the said CKP Bank was cancelled by the Reserve Bank of India or that the said order passed by the Registrar, Cooperative Societies is contrary to section 13 (C)(b) and (c) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961. Learned counsel for the petitioners could not dispute that the main object of formation of the said CKP Bank was to carry on banking business. Be that as it may, no such grievance has been made by the Liquidator of the said CKP Bank by filing any appropriate proceedings in any....
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....d orders which are in public interest has passed the said order of cancellation of the banking licence of the said CKP Bank and was right in not exercising such powers under section 45 of the Banking Regulation Act. 88. Insofar as reliance placed on section 35 (1) (A) by Mr. Sawant, learned counsel for the petitioners in support of the submission that the Reserve Bank of India ought to have exercised powers to secure proper management of any banking company by directing to frame the scheme of reconstitution of amalgamation of the said CKP Bank with other bank is concerned, in our view, no such case was made out by the said CKP Bank. Several opportunities were given by the Reserve Bank of India to seek merger of the said bank with another co-operative bank, however the said CKP Bank miserably failed to merge it with another co-operative bank. The Reserve Bank of India did not find it in public interest to order such amalgamation of the said CKP Bank with other bank and thus rightly did not exercise such powers under section 35 A of the MCS Act. 89. Insofar as reliance placed on section 18 A of the MCS Act by Mr.Sawant, learned counsel for the petitioner is concerned, the said CKP ....
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....efore this Court that the Liquidator of the said CKP Bank has already taken steps jointly with the respondent no.5 and has already crystallized the claims of the fixed depositors. 92. The learned AGP rightly placed reliance on the judgment of this Court in case of Ishwardas Premkumar Choradiya (supra) in support of her submission that the Registrar, Co-operative Societies was not required to issue the show cause notice to the Directors for supersession of Board of Directors. This Court in the said judgment has held that under Section 110A of the MCS Act, the Reserve Bank of India was justified in issuing directions to windup the affairs of a cooperative bank. The directions under the said provisions issued by the Reserve Bank of India to the Registrar, Co-operative Societies are binding. Once directions are issued by the Reserve Bank of India, the Registrar has no discretion in the matter but to supersede and appoint an Administrator. The right of hearing is thus excluded. We are in agreement with the views expressed by the learned Single Judge of this Court in the judgment in case of Ishwardas Premkumar Choradiya (supra). 93. In our view, the Registrar of Co-operative Societies ....
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.... mean that the 'right to hearing is excluded'. The Supreme Court in the said judgment approved the view taken by a learned Single Judge of this Court in case of Ishwardas Premkumar Choradiya (supra) and the judgment of Division Bench of this Court in case of L.V. Sasmile v/s. State of Maharashtra, 1992 CTJ 729. The judgment of the Hon'ble Supreme Court in case of Reserve Bank of India v/s. M. Hanumaiah and Ors. (supra) and the judgment of Division Bench of this Court in case of Shri Bhagwat Munjabhau Shelke v/s. State of Maharashtra (supra) applies to the facts of this case. We are respectfully bound by the said judgments. 96. Learned Single Judge of this Court in case of Namdeo s/o Natha Sanap and Anr. v/s. The State of Maharashtra and Ors., 2015(1) Mh.L.J. 838 after adverting to the judgment of this Court in case of Ishwardas Premkumar Choradiya (supra), L.V. Sasmile (supra) and judgment of Supreme Court in case of Reserve Bank of India v/s. M. Hanumaiah and Ors. (supra) held that powers of Reserve Bank of India under Section 110A of the MCS Act are absolute and cannot be stressed upto granting an opportunity of hearing to the office bearers of the bank. We are in agreement of t....
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....ulation Act, the Reserve Bank of India to cancel the banking licence on one of the circumstances enumerated under Section 13-D(a)(b) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The Reserve Bank of India is required to direct the Competent Authority to windup an eligible cooperative bank registered as such under the provisions of the said Act. It is held that once the Reserve Bank of India requires the Competent Authority to windup the bank, there is no discretion left with the Competent Authority except to windup the bank. 100. It is held that issuance of notice to only person who was likely to be aggrieved would not have made any difference whatsoever in the ultimate decision making of the Registrar and the same would have been an empty formality. The Hon'ble Supreme Court dismissed the Special Leave Petition against the judgment of Andhra Pradesh High Court in case of Reserve Bank of India v/s. Pattern Surya Prakash Rao and Ors. (supra). We are in respectful agreement with the views expressed by the Andhra Pradesh High Court in the said judgment and do hereby apply the principles laid down therein to the facts of this case. 101. Under Section 22(3) of t....
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....ake various steps for its revival. The said CKP Bank however did not take any steps to comply with those directions issued by the Reserve Bank of India giving ample opportunity under Section 22(3) of the Banking Regulation Act. The statement of objects and reasons of the Amendment Act 52 of 1953 of the Banking Regulation Act clearly indicates that the Banking Companies Act was passed to ensure proper administration of the Banking Companies in India. In our view, the Reserve Bank of India has rightly exercised its powers and had complied with its duty under Section 22(4) of the Banking Regulation Act by cancelling the banking licence of the said CKP bank in the facts and circumstances of this case. 104. The Division Bench of this Court in case of Veershaiva Cooperative Bank Ltd. (supra) has held that the authorities have to take into account relevant factors and on objective assessment of functioning of the bank can cancel the licence. If there is no illegality, irrationality or procedural improbability in the decision making process and the decision of the Reserve Bank of India having been taken in the best interest of depositors, Court cannot interfere with the decision making pr....
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....nce with Section 22(4) of the Banking Regulation Act and if such order is in public interest and in the interest of bank and its depositors, Court cannot interfere with such decision making process of the Reserve Bank of India. The principles of law laid down by the Supreme Court in case of Joseph Kuruvilla Vellukunnel (supra) applies to the facts of this case. We are respectfully bound by the said judgment. 108. Supreme Court in case of Peerless General Finance and Investment Co. Limited and Anr. v/s. Reserve Bank of India, (1992) 2 SCC 343 has held that the Reserve Bank of India which is Banker's Bank is a creature of statue. It is large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bona-fides of the Reserve Bank of India in issuing the directions which were issued under Sections 45-J and 45-K of the Reserve Bank of India Act by exercising powers enabling in it in that behalf under those provisions in the public interest. Its objective is to ensure monetary stability in India and to operate and regulate the credit system of the country. It has to maintain a delicate balance between the need to preserve and ma....