[Cites 2, Cited by 0]
Delhi High Court
Rvs Financial Services Limited vs Union Of India Ministry Of Finance ... on 6 April, 2026
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~51
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 06th April, 2026
Uploaded on: 09th April, 2026
+ W.P.(C) 10062/2020 & CM APPL. 32037/2020
RVS FINANCIAL SERVICES LIMITED .....Petitioner
Through: Mr. Abhishek Krishna, Advocate.
versus
UNION OF INDIA MINISTRY OF FINANCE APPELLATE
AUTHORTIY & ANR. .....Respondents
Through: Ms. Arunima Dwivedi CGSC with
Ms. Swati Jhunjhunwala, Ms.
Himanshi Singh and Ms. Monalisha
Pradhan, Advs. for UOI (M:
9810916537).
Mr. Ramesh Babu, Ms. Manisha
Singh, Ms. Tanya Chowdhary and Mr.
Rohan Shrivastava, Advs. for RBI.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE MADHU JAIN
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. The present petition has been filed under Article 226 and 227 of the
Constitution of India by the Petitioner, which is a Non-Banking Financial
Company (hereinafter, 'NBFC'), inter alia, challenging the order dated 22nd
June, 2020 passed by the Respondent No. 1 i.e., the Appellate Authority
which confirmed the order dated 2nd August, 2018 passed by the Reserve
Bank of India- cancelling the registration of the Petitioner as an NBFC. The
order dated 2nd August, 2018 was communicated to the Petitioner vide letter
dated 2nd August, 2018. Further, the challenge in the present petition is also
to the Net Owned Fund (hereinafter 'NOF') notification being Notification
No. 132/CGM(VSNM)-99 dated 20th April, 1999.
3. The brief background of the present case is that the Petitioner had filed
an application for registering itself as an NBFC and it was granted registration
with the Reserve Bank of India (hereinafter, 'RBI') on 4th January, 2003. The
Petitioner was thereafter conducting its business as an NBFC.
4. A revised regulatory framework had come into existence w.e.f. 10th
November, 2014 vide Circular No. 002/03/10.001/2014-15. As per the said
circular, the requirement of minimum NOF of Rs.2 crore was made applicable
to all NBFCs and the deadline for achieving the said NOF was 1st April, 2017.
5. In the present case, as per the RBI, the NOF was not achieved by the
Petitioner and accordingly, a Show Cause Notice (hereinafter, 'SCN') was
issued by the RBI on 2nd May, 2018 to the Petitioner. A reply dated 15th May,
2018 was thereafter filed by the Petitioner to the SCN. The impugned
cancellation order was passed by the RBI on 2nd August, 2018, and the same
appears to have been communicated to the Petitioner on 2nd August, 2018.
6. The case of the Petitioner is that it achieved Rs.2 crore NOF on 22 nd
December, 2019 and the same was within the prescribed time as published by
the RBI. Hence, it deserves to be considered that the NOF was achieved and
the impugned cancellation order passed by the RBI should be set aside and
remanded back to the RBI for fresh consideration.
7. On behalf of the Respondent No. 2-RBI, it is submitted that by the time
the NOF was achieved, the only remedy available with the Petitioner was to
apply afresh as per the extant Rules and Guidelines. Ld. Counsel has also
placed on record similar orders passed by the ld. Single Judge of this Court
where similarly placed NBFCs have been permitted to file fresh applications
for licensing.
8. Mr. Babu, ld. Counsel for the RBI further submits that merely bank
statements or bank balance are not sufficient to show the NOF as there ought
to be an auditor certificate proving that the NOF has been achieved as the
liabilities of the NBFC would also have to be considered apart from infusing
of funds.
9. The Court has considered the matter. There are several petitions which
have been filed by various NBFCs before this Court, wherein the different
orders have been passed from time to time, depending upon the facts of each
case. The broad principle that has been adopted by this Court is that prior to
the passing of the cancellation order, if the NOF has been achieved, the Court
has set aside the impugned order and remanded the matter for fresh
consideration.
10. In the opinion of this Court, even on the date when the RBI had
communicated the letter about the impugned cancellation order through speed
post to the Petitioner, it had not achieved the requisite NOF.
11. Under these circumstances, this Court is of the view that the NOF
having not been achieved despite sufficient time having been given to the
Petitioner, the impugned cancellation order dated 2nd August, 2018 cannot be
set aside or remanded back.
12. It is, accordingly, directed that if any fresh application is filed by the
Petitioner, the same shall be considered by the Respondents in accordance
with the prevalent/extant provisions - however the said application shall be
considered without being influenced by the earlier cancellation order, which
is impugned herein.
13. Petition is disposed of in the above terms. All pending applications, if
any, are disposed of.
PRATHIBA M. SINGH
JUDGE
MADHU JAIN
JUDGE
APRIL 6, 2026/MR/ck
