RESERVE BANK OF INDIA BOMBAY Vs. HARISIDH CO OPERATIVE BANK LIMITED

JUDGEMENT

(1.) Opponent No. 1 is a Co-operative Bank. Opponents No. 2 and 3 are the Joint Managing Director and Director respectively of that Bank. Opponent No. 1 Bank is an insured Co-operative Bank and there is no dispute that sec. 115A of the Gujarat Co-operative Societies Act 1961 (hereinafter referred to as the Act) is applicable to it. The Reserve Bank of India the applicant herein by an order dated 23-7-1987 passed in exercise of the powers conferred on it by sec 11A(3) of the Act directed the District Registrar Co-operative Societies (City) Ahmedabad to supersede the Board of Directors of the opponent No. 1 Bank and to appoint an Administrator to take charge and run the affairs of the Bank for an initial period of two years. The Reserve Bank gave this direction because it was satisfied that the affairs of the opponent No. 1 Bank were being conducted in a manner detrimental to the interest of the depositors and for securing the proper management of the Bank it was necessary to do so. On being required to do so the District Registrar opponent No. 4 passed an order under sec. 115A(3) of the Act on 31-7-1987 superseding the Board of Directors of the opponent No. 1 Bank and appointing opponent No. 5 as an Administrator for a period of two years. Opponents No. 1 to 3 challenged this order passed by the District Registrar by filing Special Civil Application No. 3852 of 1987. By a subsequent amendment the order dated 23-7-1987 passed by the Reserve Bank of India is also challenged.

(2.) Both the said orders are challenged on the ground that they are passed in violation of the principles of natural justice and are without any authority of law. The order passed by the Reserve Bank of India is also challenged on the ground that the Executive Director of the Reserve Bank had no authority to pass such an order and that the said order has been passed mala fide. On 3-8-1987 the learned single Judge of this Court issued notice pending admission and granted an ad-interim stay of the operation and implementation of the order passed by the District Registrar on certain conditions. On 21-8-1987 the learned single Judge who heard the petition for admission issued Rule and confirmed the ad-interim relief granted on 3-8-1987. While granting the interim relief this is what the learned single Judge has observed:

(3.) In the facts and circumstances of the case the questions with regard to interpretation of sec. 115A of the Gujarat Co-operative societies Act read with certain provisions of the Banking Regulation Act 1949 and the provisions of Deposit insurance and Credit Guarantee Corporation Act 1961 are required to be interpreted It is abundantly clear that the questions involved are of importance both from the point of view of the legal aspect as well as from the point of view of wider ramification which they may have on the affairs of all the Co-operative banks in the State and the banking business as such. Moreover. to avoid multiplicity of litigation by way of appeal at interim stage and again after final hearing it would be proper that the matter be referred to Division Bench The petitioners shall take appropriate action to complete the office formalities an or before 25/08/1987 (Mr. K. G. Vakharia learned counsel for the petitioners undertakes to complete the office formalities on or before 25/08/1987 Thereafter it would be open to the parties to request the Division Bench for fixed date of hearing. It is further clarified that it would be open to both the Registrar as well as the Reserve Bank to impose suitable conditions so as to secure proper management of the Bank and protect the interests of the depositors. The pendency of this matter and the interim relief granted shall not come in the way of the Registrar and the Reserve Bank in taking suitable measures so as to secure proper management of the Bank and protect the interest of the depositors.