Shyamal Kumar Sen, J. - (1.) In the instant writ petition the petitioners have challenged the legality and validity of the two amendments made by the Reserve Bank of India to the Residuary Non-Banking Companies (Reserve Bank) Directions, 1987, which were framed by the Reserve Bank of India in 1987 in exercise of the powers under Sections 45J and 45K of the Reserve Bank of India Act, 1934. The impugned amendments have been made through two notifications dated April 10, 1993, and April 19, 1993. The impugned amendments purport to have been made under Sections 45J, 45K and 45L of the Reserve Bank of India Act, 1934.
(2.) The petitioner-company carries on the business, inter alia, of offering various small savings schemes to the public at large, Under the said scheme, moneys are paid by the subscribers in lump sum or in instalments and the subscribers get back the said money at the end of a contractually stipulated maturity period along with interest accrued thereon and certain guaranteed accretions and bonus. The petitioner-company invests the subscriptions received from the subscribers in such a manner that it is able to give to the subscriber interest (the minimum rate of which is now fixed by statutory directions of the Reserve Bank) and some guaranteed bonus and other accretions. The schemes of the company carry certain privileges like free accident insurance under a tie-up arrangement with the General Insurance Corporation of India, unit : New India Assurance Co. Ltd. Full particulars of the schemes offered by the petitioner-company will appear from a representative sample annexed to the writ petition.
(3.) It appears from the record that until May 15, 1987, the petitioner-company followed an accounting practice which was popularly known as the actuarial system of accountancy. Under the said system, the company used to transfer a part of the subscriptions received from the certificate holders in the first few years to the profit and loss account, showed the same as income and utilised the same for meeting the working capital requirements of the company like management expenses, staff salaries, agents commission, overheads, etc.;