C/M Brahmawart Commercial Cooperative ... vs Union Of India And 7 Others
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Allahabad High Court

C/M Brahmawart Commercial Cooperative ... vs Union Of India And 7 Others on 6 November, 2024

Bench: Anjani Kumar Mishra, Jayant Banerji

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


?Neutral Citation No. - 2024:AHC:173370-DB 
 
Reserved on 16.07.2024
 
Delivered on 06.11.2024
 
Court No. - 3
 

 
Case :- WRIT - C No. - 30268 of 2018
 
Petitioner :- C/M Brahmawart Commercial Cooperative Bank Ltd. And Another
 
Respondent :- Union Of India And 7 Others
 
Counsel for Petitioner :- Krishna Mohan Misra,Sri H.R. Misra (Sr. Advocate)
 
Counsel for Respondent :- A.S.G.I.,C.S.C.,Sanjay Kr. Om
 

 
Hon'ble Anjani Kumar Mishra,J.
 

Hon'ble Jayant Banerji,J.

1. After hearing learned counsel for the parties, the judgment was reserved with the observation that parties could furnish written arguments, if desired. No written arguments have been filed.

2. Challenge in the writ petition is to three orders. Two orders are dated 03.07.2018 passed by the respondent Nos. 4 and 5 while the third is order dated 28.06.2018 passed by the respondent No. 8 appointing a liquidator of the petitioner-society.

3. The order dated 28.06.2018 (Annexure No. 8 to the writ petition) is a letter of the General Manager, Reserve Bank of India, addressed to the Assistant Commissioner and Registrar (Banking), Co-operative Societies, U.P., Lucknow, wherein it has been communicated that by the order dated 26.06.2018, signed by the Executive Director of the Reserve Bank of India, a decision has been taken in accordance with the Insurance Credit Guarantee Corporation Act, 1961, especially Section 2(gg) and Section 13 read with Section 65 and 90-B(ii) of the Cooperative Societies Act cancelling the licence of the petitioner. Orders are required to be issued ceasing the operations of Brahmawart Commercial Co-operative Bank Ltd., the petitioner, and for appointment of a liquidator.

4. The copy of the order of Reserve Bank of India, dated 26.06.2018, on the basis of which, the aforenoted communication is issued, is filed as Annexure 2 to the writ petition.

5. Also under challenge is the order dated 03.07.2018 (Annexure 6 to the writ petition ) passed by the respondent No. 4. This document in fact is a communication addressed to the Joint Commissioner and Joint Registrar, Cooperative, U.P, Kanpur Division, Kanpur communicating the orders dated 26.06.2018 passed by the Executive Director, Reserve Bank of India and the letter dated 28.06.2018 stating that the banking licence of the petitioner has been cancelled and therefore, a liquidator is to be appointed in accordance with Section 90-B(ii) of the Cooperative Societies Act.

6. The other order dated 03.07.2018 is the order passed by the respondent No. 5 (Annexure No. 1 to the writ petition) whereby the liquidator has been appointed.

7. From the facts stated above, it is clear that the impugned orders are all consequential orders or communications issued consequent to the order of the Executive Director, Reserve Bank of India, dated 26.06.2018. This order in its operative portion reads as follows:-

"Accordingly, by virtue of powers conferred on RBI under Section 22(4) of the Act, the licence issued on July 28, 2008 to Brahmawart Commercial Co-operative Bank Ltd., Kanpur, Uttar Pradesh, to conduct banking business in India, under section 22 of the Act is hereby cancelled. This order makes it obligatory on the part of the bank to stop conducting all business and 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."

8. In accordance with the order aforesaid, is letter No. DCBR.CO.AID/RLC-05/12.28.003/2017-18 dated 26.06.2018 which reads as follows:-

"The Reserve Bank of India, being satisfied that the affairs of Brahmawart Commercial Co-operative Bank Ltd., Kanpur, Uttar Pradesh are being conducted in a manner detrimental to the interest of its depositors, and the bank is not in a position to pay its present and future depositors, has cancelled the licence issued to the bank for carrying on banking business in India, under section 22 read with section 56 of the Banking Regulation Act, 1949. Reserve Bank of India is satisfied:

(i) that the bank has failed to comply with the requirements of section 11(1) read with section 56 of the Banking Regulation Act, 1949;

(ii) that the bank has become disentitled to carry on the business of banking in India, by reason of the cancellation of its licence to it by the Reserve Bank of India, under section 22(1) read with section 56 of the Banking Regulation Act as it has failed to comply with the requirements of section 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) of the Act;

(iii) that continuance of the bank is prejudicial to the interests of its depositors; and

(iv) it is necessary in public interest and for preventing the affairs of the bank being conducted in a manner detrimental to the interests of its depositors to wind up the affairs of the bank;

and, therefore, hereby requires the Registrar of Co-operative Societies, State of Uttar Pradesh to wind up the affairs of the bank, in terms of sections 90-B(ii) of the Uttar Pradesh Co-operative Societies Act, 1965 read with section 13 D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 and to make an order for winding up of Brahmawart Commercial Co-operative Bank Ltd., Kanpur, Uttar Pradesh and appoint a Liquidator thereof."

9. In paragraph 14 of the writ petition, it is admitted by the petitioner that against the order dated 26.06.2018, a statutory appeal has been preferred before the Central Government, i.e., the Secretary, Finance (Banking), Government of India, under Section 22(5) of the Banking Regulations Act. Nothing has been stated as to what transpired in the appeal, either in the writ petition or during the course of the arguments.

10. Primarily, the crux of the writ petition is that the Registrar, Cooperative Society, has not passed an order of winding up under Section 72 of the Act, 1965 and has straightaway appointed a liquidator. Reliance has been placed upon Section 72 and 73 of the Act for this purpose.

11. It is not in dispute that the petitioner was primarily engaged in the Banking business. This business can only be conducted consequent to grant of a licence by the Reserve Bank of India. The licence, duly granted to the petitioner, has been cancelled by the order dated 26.06.2018 and against the same, the petitioner has preferred an appeal.

12. The communication sent to the Executive Director, consequent to the order of cancellation, categorically states that the Reserve Bank of India is satisfied and it is necessary in the interest of public and depositors to wind up the affairs of the petitioner.

13. After the said observation, as also the direction in the operative portion of the order dated 26.06.2018, quoted here-in-above, an order of winding-up would be a corollary because winding up would be on the basis of the observations and the findings referred by the Reserve Bank of India, which alone is competent to record the said findings in accordance with Section 56 of the Banking Regulation Act, 1949 as also Section 22, thereof.

14. The directions in the order and communication of the Reserve Bank, in our considered opinion, cannot be gone into in this petition as the petitioner was availing a statutory alternative remedy.

15. The impugned orders, being merely consequential orders, even if the same suffer from some technical defects, this Court does not consider it appropriate to interfere as, in our considered opinion, substantial justice has been done by the orders impugned.

16. For the same reason, no good ground for interference is made out.

17. The writ petition is accordingly, dismissed.

Order Date :- 6.11.2024

Aditya Tripathi