- (1.) Leave granted.
(2.) Whether the principles of natural justice have any application at the stage when the Registrar Co-operative Societies, on being so required in writing by the Reserve Bank of India passes an order removing the Committee of Management of a Co-operative Bank and appointing an Administrator to manage its affairs for such period, as may be specified by the Reserve Bank of India This is the question that falls for consideration in this case.
(3.) The facts and circumstances in which the question arises are brief and simple and may be stated thus : On inspection of Kalidasa Cooperative Bank Ltd. (respondent No.16) (hereinafter referred to as the "Cooperative Bank" or "the Bank") made on June 30, 1994 under Section 35 read with Section 56 of the Banking Regulation Act the Reserve Bank of India (the appellant before us) found a number of serious irregularities in its affairs. It sent a copy of the inspection report to the Cooperative Bank and called the members of its board of directors for discussion on the findings in the report. It also forwarded a copy of the inspection report to the Joint Registrar, Cooperative Societies. The Joint Registrar advised the Reserve Bank to make requisition for supersession of the committee of management of the Bank. The Reserve Bank, however, withheld any action in that regard but called the members of the board of directors of the Bank for several rounds of discussions at different levels. The board of directors was repeatedly urged to take stringent actions to improve the financial health of the Bank. Apparently, no remedial measures were taken and the affairs of the Cooperative Bank continued in a state of financial distress. Finally, the Reserve Bank issued a requisition to the Registrar Cooperative Societies, Karnataka on January 22, 2002 requiring him to supersede the board of directors of the Cooperative Bank and to appoint an Administrator for a period of one year as provided under Section 30(5) of the Karnataka Cooperative Societies Act. The requisition was made in public interest and for preventing the affairs of the Bank being conducted in a manner detrimental to the interest of the depositors and for securing proper management of the Bank. ;