SANDEEP BHALLA Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) The present petition under Article 226 of the Constitution is directed principally against directives dtd. 23/9/2019, 26/9/2019, 3/10/2019, 14/10/2019 and 5/11/2019 issued by the respondent No.1-Reserve Bank of India [hereinafter, "RBI"]. By the aforesaid directives, issued under Sec. 35A of the Banking Regulation Act, 1949 [hereinafter, "BR Act"], the RBI imposed certain restrictions on withdrawals by depositors from their accounts in respondent No. 2 - Punjab and Maharashtra Co-operative Bank Limited [hereinafter, "PMC Bank"].

(2.) The petitioners are account holders in PMC Bank. The petitioner Nos. 2 and 3 are the parents of petitioner No. 1. The petitioner Nos. 2 and 3 hold four fixed deposits in PMC Bank amounting to a total of ?97 lakhs. The contentions in the writ petition are that PMC Bank was established in the year 1984 as an Urban Cooperative Bank [hereinafter, "UCB"]. It was conferred with the status of a Scheduled Bank in the year 2000 and with the status of a MultiState Urban Co-operative Bank in the year 2004.

(3.) According to the petitioners, PMC Bank's annual reports for the year 2018-19 showed deposits in excess of ?11,000 crores, income of almost ?1,300 crores and a profit of almost ?100 crores, with a net ratio of Non-Performing Assets of 2.19%. It is contented that the petitioners, being depositors in PMC Bank, were taken by complete surprise when the RBI issued the impugned directives restricting the permissible extent of withdrawal from the amounts deposited by them in PMC Bank. From the various impugned directives placed on record, it appears that PMC Bank was first restrained from granting loans and advances, making investments, incurring liabilities and disbursing any payments. As far as the petitioners are concerned, the effective restrictions against them were that PMC Bank was restrained from releasing an amount in excess of Rs.1,000.00 from the total balance in each savings account or current account or deposit account. This amount was increased to Rs.10,000.00 and thereafter to Rs.25,000.00 by subsequent directives dtd. 26/9/2019 and 3/10/2019. The amount of ?25,000/- was subsequently increased to ?40,000/- by a directive dtd. 14/10/2019, noting that the financial position of PMC Bank had been substantially impaired due to fraud perpetrated on it by certain persons. While increasing the amount to Rs.50,000.00 by a directive dtd. 5/11/2019, the RBI noted that 78% of the depositors would thus be able to withdraw their entire account balance in PMC Bank.