Bombay High Court
Sunil Prabhat Khare vs Reserve Bank Of India, Through ... on 7 December, 2017
Bench: B.P. Dharmadhikari
pil23.11 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH
PUBLIC INTEREST LITIGATION NO. 23 OF 2011
Sunil Prabhat Khare,
"Laxmi-Keshav", Plot No. 2,
(PAN ABWPK 2189F), RTPS
Road, Laxminagar, Nagpur
(email - [email protected]il.com)
Representing 55000 - odd
depositors of a failed bank -
The Nagpur Mahila Nagari
Sahakari Bank Ltd. - in particular
& the thousands of depositors of
all the failed co-op. Banks from
State of Maharashtra, in general. ... PETITIONER
Versus
1. Reserve Bank of India,
thr. Chief General Manager - in -
Charge, Urban Banks Department,
Reserve Bank of India, Garment
House, Dr. Annie Besant Road,
Worli, Mumbai 400 018.
2. Deposit Insurance & Credit Guarantee
Corporation Ltd., thr. Chief Executive
Officer, Deposit Insurance and Credit
Guarantee Corporation, Reserve Bank
of India Building, Opp. Mumbai Central
Station, Byculla, Mumbai 400 008.
3. State of Maharashtra,
thr. its Chief Secretary, Mantralaya,
Mumbai.
4. The Commissioner,
Co-operation and Registrar of Cooperatives,
New Central Building, 2nd Floor, Opp. B.J.
Medical College Camp, Pune 411 001.
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5. The Nagpur Mahila Nagar Cooperative
Bank Ltd., thr. the Liquidator,
Dharampeth, Nagpur 440 010.
6. The Chief Executive Officer or Manager,
PREMIER AUTO. EMP. COOP. BANK LTD.
Lal Bahadur Shastri Marg, Kurla (W),
Mumbai 400 070, Tel : 022 32972974
Fax : 25040282. Email : jhmpremierbank.
[email protected]
7. The Chief Executive Officer or Manager,
RAJIV GANDHI SAHA. BANK LTD., LATUR
Ganj Golai, Shivaji Road, Latur 413 512
Tel : 02382 253145 Email: www.
[email protected]
8. The Chief Executive Officer or Manager,
SHRI SIDDHIVINAYKA NAG. SAH. BANK
LTD., Prabal, Mohpada, Rasayani,
Dist. Raigad 410 207
Tel : 02192 - 250625, 251535 Fax: 250625
Email: [email protected]/gmail.
com
9. The Chief Executive Officer or Manager,
SHRI SHIVAJI SAHAKARI BANK LTD.,
Rani Laxmibai Road, Gadhinglaj,
Dist. Kolhapur 416 502, Tel : 02327 :
222339/ 2222437 Fax : 225293
Email: [email protected]
10.The Chief Executive Officer or Manager,
SWAMI SAMARTH SAHAKARI BANK LTD.
A1 Chowk, Akkalkot, Salapur 413 206.
Tel : 02181 : 2726904/ 220466
Fax : 220440 Email: [email protected]
11.The Chief Executive Officer or Manager,
ABHINAV SAHAKARI BANK LTD.
Navi peth Rahuri, Tah : Rahuri, Dist.
Ajhmednagar 413 705, Tel & Fax : 02426
234491 Email : [email protected]
co.in CEO Zare 8888323205.
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12.The Chief Executive Officer or Manager,
Dr. BABASAHEB AMBEDKAR NAGARI
SAH. BANK LTD., Milcorner,
Khadkeshwar Road, Aurangabad,
Dist. Aurangabad, Tel : 0240 3225338
Email : [email protected]
13.The Chief Executive Officer or Manager,
LAKSHMI VISHNU SAHAKARI BANK LTD.
Ward No. 9, H.No. 513, Powerloom Asso.
Building, Main Road, Ichalkaranji,
Dist. Kolhapur 416115 Tel: 02324 :
243619/ 2422611 Fax : 243719. ... RESPONDENTS
Shri S.P. Khare, Petitioner-in-person.
Shri S.N. Kumar, Advocate for respondent Nos. 1 & 2,
Shri N.B. Jawade, AGP for respondent Nos. 3 & 4.
Shri S.Y. Deopujari, Advocate for respondent No. 5.
Shri D.S. Raut, Advocate for respondent No. 12.
.....
CORAM : B.P. DHARMADHIKARI &
MRS. SWAPNA JOSHI, JJ.
DECEMBER 07, 2017.
ORAL JUDGMENT : (PER B.P. DHARMADHIKARI, J.)
Heard Shri Khare, Petitioner-in-person, Shri Kumar,
learned counsel for respondent Nos. 1 & 2, Shri Jawade,
learned AGP for respondent Nos. 3 & 4 and Shri Raut, learned
counsel for respondent No. 12.
2. The petitioner, an able Advocate practicing in this
Court has raised in public interest an issue arising out of
respondent No. 5 - Cooperative Bank, going out of business.
3. We have on earlier occasion, permitted the
petitioner to file on record written notes of arguments.
Accordingly, written notes were filed on 24.06.2013 and
thereafter the matter remained pending. It appears that the
matter was also heard for some time but then because of
change in roster, it remained part heard. Thereafter, it was
heard by another Bench and it came to be admitted.
4. When the matter was called out before us on
30.11.2017, we briefly heard the parties and found it
convenient not to rely upon written notes of arguments as
Respondent No. 5 - Bank is now under liquidation as per
provisions of the Maharashtra Cooperative Societies Act, 1960.
Its license to carry on business has been cancelled on
30.08.2009. The Reserve Bank of India (Respondent No. 1) has
on 16.09.2004 passed an order and issued certain directions
under Section 35-A of the Banking Regulation Act, 1949. The
order imposes certain riders and restrictions upon Bank as also
depositors/ members. The order has been referred to as one
imposing moratorium on its business.
5. Shri Khare, petitioner-in-person has submitted that
when Section 45 of the Banking Regulation Act, contains
specific provision which enables the authorities to order
suspension of business, the power given under Section 35-A
cannot be usurped by respondent No. 1 to force such
suspension indirectly. He submits that Section 45 being a
special provision must prevail and Section 35-A, therefore,
cannot encroach upon that field. According to him, power
under Section 35-A is a general power while Section 45 allows
a specific power to be used and exercised. Hence, the order
dated 16.09.2004 imposing moratorium is without statutory
sanction and unsustainable. He further submits that respondent
No. 2 - Deposit Insurance and Credit Guarantee Corporation
Limited (hereinafter referred to as Corporation), could not have
thereafter continued to charge insurance premium and that
amount, therefore, needs to be credited back to respondent No.
5 - Bank. His further contention is, benefit of insurance must
be given to all depositors equally i.e. on pro rata basis and few
who could withdraw certain amounts under special schemes
between 16.09.2004 to 30.08.2009, have again been paid
amount of Rs. One lakh each, thereby creating discrimination.
He further submits that respondent No. 2 has used amount of
premium collected by it for its business and, therefore, while
returning amount, it should pay proportionate interest on that
amount. It is lastly contended that respondent No. 5 - Bank
itself violated directions issued by the Reserve Bank of India
and paid less interest from 2003 till 2008. The grounds or
contentions reproduced supra clearly show that after
cancellation of license on 30.08.2009 and commencement of
liquidation proceedings in terms of the Maharashtra
Cooperative Societies Act, most of them are rendered only
academic.
6. In order to find out whether there are any instances
of abuse or misuse of powers by any officer or respondent Nos.
1 & 2, we have specifically invited attention of Shri Khare and
asked him to show necessary facts. Candidly, he submitted that
in present matter, there are no such allegations.
7. The order of moratorium dated 16.09.2004 pointed
out to us is issued on 16.09.2004. Its perusal reveals that it
contains directions under Section 35A of Banking Regulation
Act, 1949 (hereinafter referred to as 1949 Act). It permits a
sum not exceeding Rs. One lakh only in every Savings Bank or
Current Bank or any other account to be withdrawn. It also
stipulates that if such a depositor who is withdrawing amount
has liability to Bank in any manner, the amount must be
adjusted first towards such liability. There are other provisions
also including a provision for payment of premium payable to
respondent No. 2.
8. It is not in dispute that there was a rush in the Bank
by the depositors/ members to withdraw their deposits and,
therefore, to quench that situation, directions under Section
35A have been issued. The situation has been looked into by
the Hon'ble Apex Court in paragraph 43 of the judgment in the
case of Ganesh Bank of Kurundwad Ltd. vs. Union of India,
reported at (2006) 10 SCC 645. This business of respondent
No. 5 was not brought to standstill. Its business continued with
restrictions on withdrawal. Restrictions were harsh and may
have caused inconvenience to several depositors and members,
but then it was only to avoid a situation in which first few could
have succeeded in draining the entire cash out of Bank. The
measure, therefore, cannot be viewed as malafide or one
constituting abuse of power. The contention that it amounted
to suspension of business under Section 45 of the 1949 Act,
cannot, therefore, be accepted in present facts.
9. Shri Khare, petitioner-in-person has attempted to
urge that while suspending business as envisaged under Section
45 of 1949 Act, some fetters can be placed upon the depositors
or Bankers. We keep his contention open for appropriate
consideration in suitable facts. Here, the directions under
Section 35A of the 1949 Act, or so called order of moratorium
has outlived itself and hence, we need not comment more in
this respect.
10. Insofar as recovery of premium by respondent No. 2
is concerned, directions under Section 35A of the 1949 Act,
mentioned supra itself contemplated it. Again the Deposit
Insurance and Credit Guarantee Corporation Act, 1961, has
been incorporated for the benefit of depositors and members
like the petitioner. A small amount is paid by a Banker to
safeguard the advances made by it which later on turn out to be
bad debts. Respondent No. 5 - Bank was having license and
though there was restraint on withdrawal, respondent No. 5 -
Bank might be having proceedings for recovery of debts against
several persons. Its advances were, therefore, outstanding and
to safeguard those advances and, therefore, the interest of
ordinary depositors and members, premium needed to be paid.
The recovery of premium by respondent No. 2 by itself cannot
be said to be bad.
11. It is not in dispute that because of those premium
only, after cancellation of license, respondent No. 2 has made
available amount of Rs.47.58 crores and it has been
proportionately allowed to be disbursed. However, from
arguments of Shri Khare, it appears that while permitting
disbursement proportionately, some errors may have taken
place. After 2009, respondent No. 5 is under liquidation and
hence all its assets and properties are still not released. After
realization, respondent No. 2 or depositors/ members can be
paid as per law. Here, as pointed out by Shri Khare, every
person having deposits in excess of Rs. One lakh with
respondent No. 5 has been given amount of Rs. One lakh.
Thus, a person who had deposited amount of Rs.1,10,000/- has
received back Rs. One lakh while a person who has deposited
amount of Rs. Ten lakh or more has also received amount of Rs.
One lakh. Ordinarily, this cannot be treated as refund on pro
rata basis. Normally, the risk ought to have been apportioned
equally, after working out the ratio of deposit of each customer.
12. But then the learned counsel for respondent No. 2
has pointed out that every deposit received by respondent No. 5
- Bank was insured each for Rs. One lakh only and, therefore,
each depositor could be given Rs. One lakh back. He submits
that, therefore, liquidator cannot apportion that amount on pro
rata basis. We need not go into this aspect at this stage.
13. Shri Khare, petitioner-in-person has also pointed
out that under various schemes between 2004 and 2009, about
9000 depositors have already withdrawn amount up to Rs.1.5
lakh. After receipt of Insurance Scheme, again they have been
paid amount of Rs. One lakh. In view of submissions made by
the learned counsel for respondent No. 2, this aspect may also
be need to be kept in mind by the Liquidator while disbursing
the amount. If any amount towards risk or insurance is to be
recovered by respondent No. 5 from respondent No. 2,
Liquidator can look into that aspect. According to the learned
counsel for respondent No. 2, Liquidator has to recover an
amount of Rs. 19 crores roughly for respondent No. 5 and
thereafter its assets and properties and amount recovered is to
be made over to Respondent No. 2. This contention is not
relevant in present matter.
12. We find that subject to charge and right of
respondent No. 2, respondent No. 5 - Liquidator has to pay the
balance left with him on pro rata basis to the depositors/
members of respondent No. 5 - Cooperative Bank. Hence, with
these observations and directions and with liberty to the
petitioner to approach again, if he finds any instance of abuse
or misuse of power or any malpractice, we dispose of the
present Public Interest Litigation. However, in the facts and
circumstances of the case, there shall be no order as to costs.
JUDGE JUDGE
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*GS.
