TMI Blog2021 (3) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank for its revival and also asked the said CKP 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. 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 - there is no merit in the submission of the learned counsel for the petitioner that since no action was taken by the Reserve Bank of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said CKP Bank to revive the said CKP Bank and its financial position by permitting to take steps to merge the said CKP Bank with any other co-operative bank and to take 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. 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 - the power to grant banking licence by the Reserve Bank of India to the banks on the conditions set out in Section 22(3) of the Banking Regulation Act is coupled with duty to cancel such banking licence in case of any breach or violation of such terms and conditions after giving opportunity to such bank to revive and to comply w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 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 and have also impugned the order dated 4th May, 2020 passed by the Commissioner for Co-operation and Registrar of Cooperative Societies thereby appointing a Liquidator of the said CKP Bank. The petitioners in the said Writ Petition have also prayed for a writ of mandamus to issue directions to the Reserve Bank of India to prepare a scheme of reconstruction or amalgamation of CKP Bank with other Co-operative Bank/Banks having sound financial position in the interest of justice under the supervision and control of the Reserve Bank of India, State of Maharashtra and Union of India. In the alternate prayer clause (c), the petitioners have prayed for a writ of mandamus against the Reserve Bank of India and Union of India to provide sufficient financial aid to the said CKP Bank for its revival and to said CKP Bank to be run under the direct supervision and control of the Reserve Bank of India, State of Mahara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 23rd April, 2012, the Board of the said CKP Bank was superseded by the Registrar of Co-operative Societies. On 12th October, 2012, based on the statutory inspection of the said CKP Bank as on 31st March, 2012, the Reserve Bank of India observed that the said CKP Bank had not maintained required CRAR, which was at (-) 6.6%. The gross NPA was assessed at 30.5% and assessed the loss at ₹ 11,761.34 lakhs along with deposit erosion of 5.3%. It was noted by the Reserve Bank of India that TAFCUB had sought imposition of Supervisory Action Framework (SAF). The Reserve Bank of India requested the said CKP Bank to submit an Action Plan to the Reserve Bank of India indicating its plans to reduce the NPAs to reasonable level within a period of one year, followed by statements indicating the progress on a quarterly basis. The said CKP Bank was also called upon to submit plans to Reserve Bank o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs (70.6% of the gross loans and advances) and ₹ 14.013.69 lakhs (55.3% of the net advances) respectively. The additions to NPAs were significantly higher at ₹ 8,357.98/- lakhs as compared to the recoveries of ₹ 1,063.93/lakhs during the year. 10. It is the case of the Reserved Bank of India that since the financial health of the said CKP Bank continued to deteriorate and its affairs were ex-facie being conducted in a manner deterimental to the depositors, the Reserve Bank of India issued a show cause notice dated 11th June, 2015 calling upon the said CKP Bank to show cause as to why the licence granted to the said CKP Bank under Section 22 of the Banking Regulation Act, 1949 should not be cancelled. In the said show cause notice, the Reserve Bank of India observed that it was conclusively established that the said CKP Bank was not in a position to pay its present and future depositors. The affairs of the said CKP Bank were and are being conducted in a manner detrimental to the interest of the deposits. The said CKP Bank did not comply with Sections 11(1), 18, 22(3)(a), 22(3)(b) and 24 of the Banking Regulation Act, 1949. The financial position of the said ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 bank. Credible commitment towards revival from the management was not visible and the said CKP Bank was not satisfying various statutory requirements. The Public interest would be adversely affected if the said CKP Bank was allowed to carry on its business any further. The Reserve Bank of India accordingly exercised the powers conferred on it under Section 22(4) read with Section 56 of the Banking Regulation Act, 1949 and cancelled the banking licence issued to the said CKP Bank on 10th November, 1986 to conduct banking business in India and directed the said CKP Bank to stop conducting all activities including the business of Banking within the meaning of Section 5(b) of the Act and also acceptance and repayment of deposits with immediate effect. 16. The Commissioner for Co-operation and Registrar of Cooperative Societies passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 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 under section 35A of the Banking Regulation Act were in force upto 31st May, 2020 which were effective from the year 30th April, 2014 and extended from time to time. 20. It is submitted that since no action as threatened in the first show cause notice dated 11th June, 2015 was taken by the Reserve Bank of India, it was clear that the reply to the said show cause notice given by the CKP Bank was satisfactory and the allegations which were subject matter of the said show cause notice dated 11th June, 2015 were incorrect and were thus required to be discarded. Similarly since no legal action as threatened by the Reserve Bank of India was taken after receipt of the reply of the CKP Bank to the second show cause notice dated 23rd August, 2017, it was clear that the reply given by the bank was satisfactory and there was no substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Cooperative Societies. He invited our attention to the averments made in paragraph (14) of the affidavit in reply filed by the liquidator and would submit that the liquidator has erroneously admitted that the action on the part of the Reserve Bank of India was correct and thus no appeal was filed by the liquidator against the said order. 25. It is submitted by the learned counsel that since nothing adverse was found against the CKP Bank and more particularly about the financial condition thereof after the issuance of the second show cause notice, the Reserve Bank of India ought to have issued a fresh show cause notice before passing the impugned order after a period of more than two years from the date of issuing the said show cause notice. There is thus gross injustice done to the depositors having dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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 as the society could not be wound up as a society on such ground. 29. Learned counsel for the petitioners placed reliance on section 13C(b) of the The Deposit Insurance And Credit Guarantee Corporation Act, 1961 and would submit that though by the said order dated 28th April, 2020, the banking licence of the said CKP Bank was cancelled under section 22 of the Banking Regulation Act, 1949, there can be no bar against the said CKP Bank from conducting any other business. The order passed by the Registrar of Co-operative Societies thereby directing to wind up the affairs of the CKP Bank is contrary to section 13C(b) and (c) of the said The Deposit Insurance And Credit Guarantee Corporation Act, 1961. The said CKP Bank was incorporated and registered under the provisions of MCS Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation 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 ought to have directed the Reserve Bank of India to provide financial aid to the respondent no. 2 to respondent no. 6 as prayed in the petition filed by his clients. He placed reliance on section 17 of the Reserve Bank of India Act in support of this submission. 34. Learned counsel invited our attention to the averments made in paragraph (15) of the affidavit filed by the respondent no.5 i.e. Deposit Insurance and Credit Guarantee Corporation (DICGC) and would submit that the respondent no.5 has only sanctioned a sum of ₹ 5 lacs in case of depositors who have deposited more than ₹ 5 lacs. It is submitted that the petitioners would suffer tremendous hardship because of the sanctioned amount of ₹ 5 lacs only as against the amount of larger dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Regulation Act, 1949. The order of handing over charge to the District Deputy Registrar was extended by the Reserve Bank of India from 1st April, 2019 to 31st May, 2020. The financial position of the said CKP Bank however was not improved at all but further deteriorated. There was heavy loss to the tune of ₹ 323 crores to the said CKP Bank. The Reserve Bank of India thus was justified in passing the order dated 28th April, 2020 thereby cancelling the banking licence of the said CKP Bank after giving several opportunities to the said CKP Bank to improve its financial position and to submit revival plan. The management of the said CKP Bank however could not revive financial condition of the said CKP Bank. 39. It is submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bank of Baroda, Tardeo branch, Mumbai by NEFT. Two of the petitioners had deposited more than ₹ 5 lakhs would be paid ₹ 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 has no discretion in the matter when directions are issued by the Reserve Bank of India to supersede and appoint an Administrator, the right of hearing is excluded. She submits that in this case also since the Reserve Bank of India had already cancelled the banking licence of the said CKP Bank and had already issued directions to the Registrar to windup the affairs and business of the said CKP Bank, the Registrar, Co-operative Societies was bound to follow such directives issued by the Reserve Bank of India. She submits that the facts of this case are identical to the facts before this Court in case of Ishwardas Premkumar Choradiya (supra). 43. Ms. Chavan, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 challenged by the said CKP Bank or by any of the members of the said CKP Bank including the appointed Board of Administrator. 47. Learned senior counsel invited our attention to the letter dated 18th July, 2016 and 11th November, 2016 from the said CKP Bank submitting action plan and seeking two years time for implementing such plan. In view of such request made by the said CKP Bank, the Resreve Bank of India did not take any further action contemplated under the first show cause notice. Since, no improvement in the financial condition of the said CKP Bank was shown, in spite of assurance given by the said CKP Bank, the Reserve Bank of India iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel 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 in particular paragraphs 16, 18, 20, 22, 27, 29, 30, 44, 49 and 86 to 90 and would submit that the facts before this Court are identical to the facts before the Andhra Pradesh High Court. The principles of law laid down by the Andhra Pradesh High Court in the said judgment applies to the facts of this case. The issues raised by the petitioners in these three petitions are already negatived by the Andhra Pradesh High Court in the said judgment. Special Leave Petition against the said judgment delivered by the Andhra Pradesh High Court is dismissed. 51. Learned senior counsel placed reliance on the judgment of this Court in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of various fixed deposits with the said CKP Bank are getting the amount to the extent of ₹ 5 lakhs maximum, those who had deposited more than ₹ 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 sanction of the State Government amongst its members in such manner as may be prescribed. 54. Insofar as reliance placed by Mr. Sawant, learned counsel for the petitioner in Writ Petition (Stamp) No. 97828 of 2020 on Section 18A of the MCS Act is concerned, it is submitted by the learned senior counsel that amalgamation of the two co-operative banks cannot be permitted post winding up of one of the co-operative bank. None of the depositors had approached the Registrar under Section 18A of the MCS Act requesting for amalgamation of the said CKP Bank with another co-operative bank before passing of the impugned order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and 20 by the Hon ble Supreme Court in the said judgment were not on the issues fell for consideration of the Hon ble Supreme Court in the said matter and thus no reliance thereon can be placed by the learned senior counsel for Reserve Bank of India. Since, the Reserve Bank of India has acted illegally, this Court has ample power to interfere with the impugned order passed by the Reserve Bank of India. Learned counsel for the petitioner also made an attempt to distinguish the judgment of this Court in case of Veershaiva Cooperative Bank Ltd. (supra) on the ground that the facts before this Court in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal 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 from extending the area of operation / opening of new branches. 64. The Reserve Bank of India had thereafter on 9th March, 2012 placed various restrictions on the said CKP Bank thereby directing the CKP Bank to reduce exposure limit of single and group borrowers to 50% of the prescribed limits and arrest fresh slippage of loans to NPA and fix accountability for deterioration in the Bank s asset portfolio. The said CKP Bank was warned that if the directions of the Reserve Bank of India were not complied with by the said CKP Bank it would face consequential penal action by the said CKP B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 licence granted to the said CKP Bank should not be cancelled. The said CKP Bank requested for two years time to improve its working and financial condition and/or enable to have a successful merger with another Co-operative Bank. The CKP Bank thereafter submitted an action plan on 18th July, 2016 and 11th November, 2016. The Reserve Bank of India thereafter granted various permission to raise share capital from non-members, sale of properties, reduction of interest rate etc. The said CKP Bank however, did not show any progress on the revival plan on any front. 69. The Reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors is ₹ 120.45 crores. Out of that ₹ 58 crores being less than ₹ 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 ₹ 298.27 crores. The audit work of the said claim list is in process by the Auditors appointed by the DICGC. As soon as the DICGC sanctions the claim list, actual refund of the depositors amount be started. 73. We have also perused the affidavit in reply filed by the DICGC in Writ Petition (Lodging) No.97828 of 2020. The said DICGC also opposed the writ petition on various grounds. It is stated in the said affidavit that under the provisions of sections 16(1), 27 (2) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 the Corporation has sanctioned the claim for 43,720 depositors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The deteriorating financial condition of the said CKP Bank has been already highlighted in great detail in the aforesaid paragraphs. In our view, there is no merit in the submission of the learned counsel for the petitioner that since no action was taken by the Reserve Bank of India pursuant to the show cause notices dated 11th June, 2015 and 23rd August, 2017 for substantial period, the alleged deficiencies on the part of the said CKP Bank in not complying with the requisitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation 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-operative Societies under the direction of the Reserve Bank of India is totally misconceived. 81. The Deposit Insurance Corporation in its affidavit has not denied its liability to pay to the depositors of the CKP Bank upto to ₹ 5 lakh depending upon the amount of deposit as per its policy. When this Court raised a query upon the learned counsel for the petitioners whether it was his case that the said Deposit Insurance Corporation was not liable to pay any amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs 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 Court of law. 85. Insofar as the submission of the learned counsel for the petitioners that the Registrar, Co-operative Societies ought to have followed the mandatory procedure under sections 102 and 103 of the MCS Act before passing the order of winding up is concerned, this submission of the learned counsel is contrary to section 102 of the MCS Act. The powers of passing the order of winding up by the Registrar under section 102 of the MCS Act can be exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany 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 Bank did not make out any case of merger of the said CKP Bank with any other bank. No such application was even otherwise made by the said CKP Bank to the Registrar for seeking merger of the said CKP Bank with any other Co-operative Bank. Reliance thus placed by the learned counsel on the said provision is misplaced. 90. Insofar the judgment of this Court in case of Chandrapur Zilla Sahakari Krushi and Gramin Bahuudeshiya Development Bank Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 while passing an order of winding up of the said CKP Bank rightly did not exercise the powers under Section 102 of the MCS Act but had complied with the mandatory directions issued by the Reserve Bank of India under Section 102 of the MCS Act. The Registrar of Co-operative Societies has no discretion to either issue a show cause notice or to give any hearing to the said CKP Bank or to any of the depositors. Reliance placed by Mr. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (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 the views expressed by the learned Single Judge in case of Namdeo s/o Natha Sanap and Anr. (supra). 97. In our view, the order passed by the Registrar, Co-operative Societies thereby winding up the affairs of the CKP Bank is not a quasi-judicial order but is executive order, passing of which order neither contemplate any show-cause notice nor any personal hearing. 98. In our view, in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 the Banking Regulation Act, the Reserve Bank of India has to be satisfied by an inspection of the books of the company or otherwise that various conditions set out therein are satisfying before granting any banking licence. Under Section 22(4) of the Banking Regulation Act, the Reserve Bank of India is empowered to cancel a licence granted to a banking company, if the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 process. 105. We have minutely perused the correspondences exchanged between the Reserve Bank of India and the said CKP Bank, since 2009 till the revocation of the banking licence by the Reserve Bank of India which are brought on record by the parties. Upon perusal of the record, it is clear that the Reserve Bank of India has acted in Public interest and also in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 maintain the credit structure of the country by strengthening the rupee as well as apparent creditworthiness of the banks operating in the country and the interest of the depositors. The Reserve Bank of India occupies place of pre-eminence to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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