A.K. Sen Gupta, J. - (1.) This appeal has been preferred by the Reserve Bank of India against an interim order dated October 7, 1988, passed by a learned Single Judge of this Court on the writ petition filed by the first Respondent challenging, inter alia, the constitutional validity of the Residuary Non -Banking Companies (Reserve Bank) Directions, 1987, framed by the Reserve Bank of India in the exercise of powers conferred by Ss. 45J and 45K of the Reserve Bank of India Act, 1934, as also a purported show -cause notice dated September 23, 1988. By the said interim order, the learned Single Judge had granted an interim order in terms of the prayers (g) and (h) of the writ petition. It was, however, provided that the interim order would not prevent the Reserve Bank of India to have regular inspection of the writ Petitioners' business in accordance with law. By the said order liberty was given to the Reserve Bank of India to apply for variation of the interim order on notice to the writ Petitioners. Prayers (g) and (h) for the sake of convenience are set out herein -below: (g) Injunction restraining the Respondents and each of them, their servants, agents or assigns from giving any effect and/or further effect to the Residuary Non -Banking Companies ( Reserve Bank) Directions, 1987, and the said purported show -cause notice dated 23rd September, 1988, and from taking any steps pursuant thereto or acting in terms thereof and from taking any penal action against the Petitioners on the allegation of violation of the provisions of the said 1987 direction. (h) Stay of the operation. of the Residuary Non -Banking Companies (Reserve Bank) Directions, 1987, and the said purported show -cause notice dated 23rd September, 1988, and all proceedings therein and in respect thereof.
(2.) As already stated, the Reserve Bank of India has preferred an appeal against the said interim order. A stay petition was also moved on behalf of the Reserve Bank of India for stay of operation of the order dated October 7, 1988. Affidavits were filed in the stay petition. After the stay petition was heard for some time, the appeal as well as the stay petition were assigned for final disposal before this Bench. During the course of hearing of the stay petition, an interim order was made on March 23, 1989.
(3.) The first Respondent is a company incorporated under the Companies Act, 1956. The company is engaged, inter alia, in the business of offering various saving schemes to the public at large which are known as endowment schemes. The Company's schemes range from 1 year to 10 years. Under the said scheme, moneys are paid by the subscribers in lumpsum of in instalments and the subscriber after the stipulated maturity period in respect of a particular scheme gets refund of his subscription along with some accretion which is known as 'interest' or 'bonus'. A certificate is issued to the subscriber which constitutes a bilateral contract between the individual certificate holder and the company.;