MADURAI DISTRICT URBAN CO OPERATIVE BANK EMPLOYEES UNION MADURAI Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) THE petitioner is a trade union of the employees working in the third respondent bank. In this writ petition they are challenging the order of the Reserve Bank of India (the first respondent) passed under Section 22 of the Banking Regulation Act, 1949. By the said order, the Reserve Bank of India, (the first respondent) cancelled the licence granted to the third respondent for carrying on its banking business which was earlier granted vide an order dated 7.4.1984. By this cancellation, the third respondent is stopped from doing banking business within the meaning of Section 5(b) of the Banking Regulation Act, 1949.

(2.) THE said, order was served on the third respondent. THE third respondent preferred an appeal before the Government of India in terms of Section 22(5) of the Banking Regulation Act as applicable to the Co-operative Societies. THE appeal was taken on file by the Government of India and the Government of India rejected the said appeal and agreed with the order of the Reserve Bank of India. In the order, the Government of India which is the second respondent stated that even prior to the cancellation of licence, the third respondent was kept in the list of "weak banks" and was made to function on rehabilitation scheme ever since 28.3.2001. THEreafter, the third respondent was given reasonable opportunities for turning around the bank for a period of 21/2 years. As the bank had a precarious financial position and was conducting itself in the manner detrimental to the interests of thedepositors, the subsequent revival plan has been found unrealistic and unviable by the Reserve Bank of India.

(3.) BE that as it may, Mr.P.K.Rajagopal, learned counsel for the petitioner Union submits that the Reserve Bank of India had not kept the parameters of Section 22 in mind. They have also not given opportunities as contemplated under 2nd proviso to Section 22(4). This argument is only stated to be rejected. The Reserve Bank of India had taken all steps that are possible in terms of reviving the bank. In fact, an enquiry under Section 35 was ordered. On the basis of the enquiry report, the third respondent was directed to rectify the irregularities found in the inspection report. Thereafter, under Section 35-A, a direction was also given to the Bank. Subsequently, after getting the explanation from the department, further direction was also given to the staff for collecting deposits and finally when no further steps can be taken to revive the bank, the last step of cancellation of licence came to be passed. Therefore, to argue that there was no opportunity to the bank is only an understatement not born out by records.