Supreme Court: In an appeal against the order where the Madras High Court had after giving detailed findings on merits, relegated to the statutory remedy of filing the appeal before Appellate Authority (Alternative Remedy) under section 45 IA (7) of Reserve Bank of India Act 1934, the bench of Arun Mishra and MR Shah, JJ ordered that the proceedings before the Appellate Authority will not be affected by the findings recorded by the High Court. It said,
“Since the petitioner has been relegated to the statutory remedy of filing the appeal, the observation made by the High Court shall not come in the way of the petitioner.”
The Court was hearing the case wherein the RBI had cancelled the registration of petitioner company Nahar Finance and Leasing Limited for non-compliance of the minimum criteria of net owned fund. Hence,
- a Writ petition was filed by the said company challenging the order of the cancellation of registration on the ground of natural justice as the cancellation order showed that the RBI rejected the replies of the company in one line.
- The single judge granted time for compliance.
- RBI filed a Writ Petition against the order of the Single Judge.
- Division bench set aside the judgment of the Single Judge after deciding the matter on merits and relegated the parties to Appellate Authority (Alternative Remedy) under section 45 IA (7) of Reserve Bank of India Act 1934.
Advocate Swarnendu Chatterjee, in his plea, had argued that the High Court has,
“put a full stop which is akin to civil death of the petitioner companies even when it was relegating the matter to the appellate authority.”
The Madras HC verdict in Viswapriya Financial Services and Securities Limited V. Executive Director, Reserve Bank of India, No 1932 of 2015 was also referred to wherein the Honourable Division Bench remitted the matter to the Appellate Authority but refrained from giving any finding on merit and especially on similar issue regarding opportunity of being heard prior to cancellation of registration under section 45 IA (6) of Reserve Bank of India Act, 1934 was also not given as the bench was remitting the matter to the Appellate Authority envisaged under subsection 7 to section 45 IA of Reserve Bank of India Act, 1934. Pertinently the honourable Division Bench therein had directed the Appellate Authority to consider the matter independently without being influenced by the judgments of learned Single Judge and Division Bench.
[Nahar Finance and Leasing Ltd v. Regional Director, RBI, Special Leave to Appeal (C) No(s).17243-17245/2019, order dated 29.07.2019]