Alchemist Holdings Ltd. & ANR v. Govt. Of India & ORS
$~11 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 4986/2016 ALCHEMIST HOLDINGS LTD. & ANR ..... Petitioners Through Mr. Prateek Jalan, Ms. Sonia Dube, Mr. Shatadru Chakraborty, Mr. Rahul Kriplani, Mr. Ankit Yadav and Ms.
Harshita Verma, Advs.
versus GOVT. OF INDIA & ORS ..... Respondents Through Mr. Manish Mohan, CGSC with Ms.
Manisha Saroha, Adv for R-1.
Mr. Ramesh Babu M.R., Ms. Swati Setia and Mr. Gautam, Advs for R-2.
CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR
O R D E R
% 01.08.2017 The petitioner is aggrieved by the order dated 24.06.2014 passed by respondent No. 2 (Reserve Bank of India). He is also aggrieved by the subsequent order dated 03.05.2016 which was passed by the Statutory Appellate Authority of respondent No. 2. Contention is that both these orders are illegal and liable to be set aside.
The main grievance of the petitioner is that the principle of audi alteram partem has not been adhered to; principles of natural justice having been violated which are in fact ordained and contained in the legislation i.e. Section 45 1A (6) of the Reserve Bank of India Act, 1934; the said orders are liable to be set aside. Learned counsel for the petitioner had drawn attention of this Court to the said Statutory
provisions. Section 45 1A (6) and particularly the two provisos contained therein have been highlighted. They read herein as under:- "Provided that before cancelling a certificate of registration on the ground that the non-banking financial company has failed to company with the provisions of clause (ii) or has failed to fulfil any of the conditions referred to in clause (iii) the Bank, unless it is of the opinion that the delay in cancelling the certificate of registration shall be prejudicial to public interest or the interest of the depositors or the non-banking financial company, shall give an opportunity to such company on such stream as the Bank may specify for taking necessary steps to comply with such provision or fulfillment of such condition: Provided further that before making any order of cancellation of certificate of registration, such company shall be given a reasonable opportunity of being heard."
Learned counsel for the petitioner points out that although a show cause notice dated 24.07.2013 had been issued by respondent No. 2 to the petitioner but this show cause notice did not contain the essential element that the petitioner company had been granted an opportunity to take steps to comply with their shortcomings as is contained in the first proviso. Additionally, it is pointed out that the second proviso of sub-Section 6 has also been violated as no opportunity of hearing has been granted to the petitioner; much less a reasonable opportunity.
On advance notice, learned counsel for the respondents have put in appearance. This submission of the learned counsel for the petitioner has been put to learned counsel for respondent No. 2. His submission is that pursuant to the show cause notice (dated 24.07.2013) issued by respondent No. 2 to the petitioner, he had filed
his reply dated 16.08.2013. Attention has been drawn to the aforenoted document. Submission of the learned counsel for respondent No. 2 being that the first proviso which necessarily ordained that an opportunity to the petitioner company shall be granted to take steps to comply with the conditions of non fulfilment on the basis of which his certificate was sought to be cancelled is contained in the show cause notice and this is implicit from the reading of the same. This Court endorses this submission of the learned counsel for respondent No. 2.
This Court notes that this show cause notice states that the petitioner is directed to show cause as to why the certificate of registration granted to the petitioner should not be cancelled in accordance with the provisions contained in Section 45 1A (6) of the RBI Act; this show cause has to be answered within a stipulated time period. This Court is of the view that the first proviso contained in Section 45 1A (6) stands met with. However the second proviso which necessarily mandates that an opportunity of hearing should be granted to the petitioner before an order of cancellation is made has not been complied with. This is in fact conceded by the learned counsel for respondent No. 2.
It is an admitted position that no personal hearing has been granted to the petitioner before the order for the cancellation of his certificate was issued on 24.06.2013. This is clearly a violation of the second proviso of Section 45 1A (6). Principles of natural justice have been violated. This principle of natural justice is contained in the aforenoted statutory provision itself.
the petitioner.
Impugned orders are liable to be set aside. Both the orders i.e. orders dated 24.06.2014 and 03.05.2016 are accordingly set aside. At this stage, learned counsel for respondent No. 2 submits that a personal hearing will be afforded to the petitioner and after the personal hearing is afforded, respondent No. 2 will pass a speaking order. The said directions be complied with within a period of three months from today. Till that time, status quo be maintained by the parties. This Court has been informed that the petitioner is no longer functioning as a non-banking financial corporation. This position shall be maintained till the disposal of the case of the petitioner which as noted supra shall be within a period of three months from today. Needless to reiterate that this will be after a personal hearing is granted to the petitioner.
Petition disposed of in the above terms.
Order be given dasti under signatures of the Court Master. INDERMEET KAUR, J AUGUST 01, 2017