VINAYAK LOCAL AREA BANK LIMITED Vs. RESERVE BANK OF INDIA
HIGH COURT OF DELHI
VINAYAK LOCAL AREA BANK LIMITED
RESERVE BANK OF INDIA
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HIMA KOHLI, J. -
(1.) By this judgment and order we propose to dispose of the present appeal which is filed by the appellant/respondent no. 3 in the writ petition, being aggrieved by the judgment and order dated 5th December, 2005 passed by the Learned Single Judge whereby the writ petition by respondent No.1, Reserve Bank of India was allowed and the impugned order therein dated 14th September, 2004, being an order on second review petition preferred by the appellant herein, was held to be non-est and was therefore quashed.
(2.) The brief facts relevant for disposing of the present appeal are that in November 1996, the appellant applied to respondent no.1, namely, the Reserve Bank of India (RBI), under Section 22 of the of the Banking Regulation Act, 1949 (hereinafter referred to as `the Act') for grant of a licence to it to commence banking business. In January, 1999 the RBI, conveyed its approval in principle for the promotion of a local area bank subject to various terms and conditions and finally on 28th July, 2000, granted a licence to the appellant to carry on banking business. It was an express condition of the said licence that the appellant would always maintain a minimum paid up capital of Rs. 5 crores as per the requirement of the RBI Guidelines regarding capital adequacy.
(3.) However, various irregularities, and in particular the non- maintenance of minimum capital as was required by the RBI Guidelines, were noticed during on-site supervisory visits on two occasions, which were duly intimated to the appellant. In spite of regular reminders, the appellant did not restore the original minimum capital of Rs.500 lacs which was an essential requirement for grant of the licence and accordingly a Notice to Show Cause was issued to the appellant on 4.7.2001.;
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