V.K.BALI, J. - (1.) Punjab Co-operative Bank Ltd., through its Director Shiraj Raj as also Shiraj Raj in his capacity as Director of the said Bank, have filed this petition under Article 226 of the Constitution of India calling in question notifications, Annexures P-2 and P-3 vide which the petitioner bank has been made a party to the scheme of amalgamation/merger and for the imposition of the moratorium.
(2.) Inasmuch, as, we are referring this matter to a larger bench, there is no need to give detailed facts culminating into filing of the present writ. Suffice it to mention that in the year 1996 the Reserve Bank of India (hereinafter referred to as the RBI) moved an application under Section 45(1) of the Banking Regulation Act (for short the said Act). In the said application, after giving some figures about the financial position of the bank, it was stated that some shareholders had filed an application before the Company Law Board and had made some allegations. However, in view of the policy of the RBI to consolidate the banking system and in the interest of the banking system in the country, it was of the view that steps should be taken immediately to merge the bank with any other financially strong bank or invite a financially strong and acceptable business group to take over the management by bringing at least fifty crore rupees as additional capital. It was proposed to impose moratorium under Section 45 of the said Act. A draft of the notification proposed was also enclosed with the said letter. It is further the case of the petitioners that Union of India-respondent No. 1 herein, without applying its mind and without appreciating the actual liquidity position of the bank and other relevant factors, granted sanction without affording any opportunity to show cause or hearing to the petitioner bank. A detailed representation was made on behalf of the petitioner bank to respondent No. 3 against the order of imposing moratorium. The bank had also approached respondent No. 3 to give appointment and personal hearing upon their representation but without any result. Constrained, the petitioners filed writ petition in the Delhi High Court. Notice was issued by the Court to the respondents and time was sought to file reply. The Court was pleased to pass an interim order permitting the respondents to proceed in terms of notification dated September 30, 1996 but final order was not to be passed in pursuance of the moratorium till next date of hearing. On December 26, 1996 Union of India, on the request of respondent No. 2, extended the moratorium orders for another three months. On January 21, 1997 learned Single Bench of Delhi High Court started regular hearing of the matter. During hearing of the matter, it was stated before the Court that the bank was ready and willing to pay all its depositors under the supervision and to the satisfaction of the officers of RBI or the Government of India and that the matter be kept pending by the Court and that the petitioner, after duly paying of its depositors would come before the Court showing bona fide of their claim that they were in a position to repay all its depositors their money with interest up to date. It was further proposed that the petitioner bank would thereafter stop its banking operation and would convert itself to a non-banking finance company. The said proposal was strongly opposed by the RBI. After hearing both the sides, learned Single Bench of the Delhi High Court, directed the Central Government to produce the files before him and after perusing the same, a decision was to be taken as to whether these records were privileged documents as was claimed by the RBI and the counsel appearing for them at the time of hearing. On March 5, 1997 the learned Single Bench of the Delhi High Court, however, dismissed the writ petition. However, it was observed that the petitioners shall have further opportunity to represent their case when the RBI prepares a scheme of amalgamation and invites objections from them and the transferee bank under the provisions of sub-sections (4) and (6) of Section 45 of the said Act. It is further the case of the petitioners that at 12.30 noon on March 6, 1997, respondent No. 2 served a scheme of amalgamation prepared under Section 45(4) of the said Act, on the petitioner bank, even before the copy of judgment was made available to either parties and only seven days' time was given to the bank to submit their suggestion and objection. The petitioner bank filed a Letters Patent Appeal against the order passed by the learned Single Bench of Delhi High Court but the same was dismissed by holding that the learned Solicitor General had stated that petitioners will have a real post decisional opportunity of hearing under Section 45(2) of the said Act. The petitioner bank challenged the decision of the Division Bench of Delhi High Court before the Hon'ble Supreme Court by way of a Special Leave petition under Article 136 of the Constitution of India. It is the case of petitioners that the Hon'ble Supreme Court, heard the matter at length at the motion stage. On the question of post decisional hearing, the Hon'ble Apex Court held as under :- "The Ld. Attorney General appearing on behalf of the Central Government and the Ld. Solicitor General appearing on behalf of the RBI have submitted that the objections submitted by the petitioners against the orders of moratorium dated September 30, 1996 as well as the draft scheme framed by RBI under Section 45(4) have to be considered by the Central Govt. under Section 45(7) of the Act in the light of the comments that are made by RBI on the said objections and that the apprehension of the petitioners that the said objections will not be considered by the Central Government is unfounded. In view of the said submission urged on behalf of the respondents, we are of the opinion that no fault can be found in the matter of post-decisional hearing in respect of the order of moratorium passed under Section 45(2) of the Act."
(3.) Further, on the request of the bank that it wanted to close down the banking business after repaying all its depositors, it was observed that this request of the bank should also be considered by the Central Govt. Even if it has passed an order under Section 45(7), it may pass a supplementary order. The Supreme Court, then while granting extraordinary indulgence, extended moratorium by seven days, i.e., till April 7, 1997 to enable the respondents to give the bank the real post decisional opportunity of hearing on all the aspects of the matter. The petitioner bank filed its first objections on March 12, 1997 and vide this letter, the bank had sought three weeks' time for filing detailed objections. However, it was stated that the pleadings made on behalf of the bank in the writ petition and its rejoinder affidavit may be read as a part of the objections. It was submitted that the bank was ready and willing to repay all its depositors and become a non-banking finance company. The bank submitted detailed objections vide letter dated March 18, 1997 and a copy of these objections was also handed over to the learned Solicitor General of India in the High Court on March 19, 1997. Additional objections were also sent by FAX on March 20, 1997. It is further the case of the petitioners that despite categorical assurance given before the Division Bench of the High Court as well as Supreme Court by the Solicitor General of India, no hearing was given by the RBI while considering the objections. The RBI, it appears, had forwarded some comments to the Central Government which in turn also did not give any hearing to the petitioner bank or any of its depositors and passed the impugned order under Section 45(7) of the said Act accepting the scheme of merger. It is further the case of petitioners that the Central Government did not consider any of the objections of the petitioners despite a statement made by the Attorney General of India before the Hon'ble Supreme Court in Special Leave Petition No. 6904 of 1997.;