V.K. Bali, J.
1. Punjab Cooperative 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 videwhich 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 a! 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 the 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 the 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 the 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 the claim that they were in a position to repay all its depositors their money with interest upto date. It was further proposed that the petitioner bank would thereafter stop it; 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 suggestions and objections. 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 the holding that the learned Solicitor General has 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 learned Attorney General appearing on behalf of the Central Government and the learned 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 Government under Section 45(7) of the Act in the light of the comments that the 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.'
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 be considered by the Central Government. Even if it had passed an order under Section 45(7), it may pass a supplementary order. The Supreme Court, then while granting extra 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 thematter. 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 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.
3. It is in these circumstances, that the petitioners have challenged notification dated September30, 1996 issued by respondent No. 1 sanctioning moratorium against the petitioner Bank from the close of business initially for three months and extending the same thereafter for another three months as also notification dated April 7, 1997 communicating reasons for the non- acceptance of objections of the bank as also the notification of Government of India under Section 45(7) of the said Act approving scheme of merger of the petitioner bank with Oriental Bank of Commerce. Petitioners have also challenged the provisions of Section 45(7A) of the said Act.
4. Pursuant to notice issued by this Court, respondents have filed written statements. Whereas Union of India has filed a short reply with a right to file detailed reply at a later stage, respondent No, 2 has filed a detailed written statement. Separate written statement has been filed by respondent No. 5 - Oriental Bank of Commerce. Petitioners have filed replications to the written statements filed on behalf of the respondents.
5. The primary contention that has been raised Mr. Nagpal, learned counsel appearing on behalf of the petitioners is that no post-decisional hearing was at all given to the petitioners, thus, not only violating the principles of natural justice as also the provisions of the Act under which the initial order of moratorium and other orders, as referred to above, were passed but even the undertaking given by the respondents in the inter se proceedings culminating into an order passed by the Supreme Court, relevant part whereof has been reproduced above. This pivotal question has been answered by the respondents by simply stating that in the facts and circumstances of case the petitioners ought to have asked for bearing and the fact that they did not demand such a hearing after decision was rendered by the Hon'ble Supreme Court, it clearly means that they had nothing at all to say in addition to what had been stated by them earlier and, therefore, the respondents were well within their right to pass orders that have been impugned in the present writ which cannot be vitiated on the ground on non-grant of post-decisional hearing.
6. It is pleaded by respondent No. 1 that pursuant to orders passed by the Supreme Court dated March 31, 1997, Annexure P-18, the Central Government, after considering the suggestions/objections of the petitioners, passed order dated April 7, 1997, Annexures P-2 and issued notification dated April 7, 1997 Annexures P-3 regarding merger of the scheme. It is then pleaded that the petitioners are misinterpreting the orders passed by the Supreme Court. The Supreme Court has categorically ruled that the suggestions and objections submitted by the petitioners would be considered by the Central Government, For example, 'since the moratorium is to expire today and the time available for consideration of the objections submitted by the petitioners was short, we consider it appropriate to extend the time for the Central Government to consider the objections and pass an order till April, 1997.' The emphasis is on the objections already submitted and not for issuing a fresh notice to the petitioners to file fresh objections. Nowhere in the order the words 'personal hearing' have been used. The contentions raised by the petitioners in paras 1 to 47 of the grounds are mostly repetitive and are generally that the principles of natural justice have not been complied with and the directions given by the Supreme Court in its order dated March 31, 1997 were not complied with by the Union of India the notification, Annexures P-3. This contention of the petitioners has been denied being totally incorrect. It is further pleaded that before the Supreme Court it was submitted on behalf of the Central Government that the objections submitted by the petitioners against the order of moratorium dated 30.9.1996 as well as the draft scheme framed by RBI under Section 45(4) have to be considered by the Central Government which under Section 45(7) had to be considered by the RBI. The Central Government considered the objections/suggestions of the petitioners in the light of the comments made by RBI on the said objections. It was also submitted that the apprehension of the petitioner that the objections would not be considered was unfounded. The Supreme Court further observed that while considering the objections submitted by the petitioners, the Central Government should give due consideration to the submission made by learned counsel for the petitioners about their being allowed to continue as non-banking company after they had paid off the dues of ail depositors and creditors.
The Apex Court observed that in case the Central Government had not passed an order under Section 45(7) so far, they would give due consideration to thesaid submissions of the petitioners. A reading of the aforesaid order would clearly show that the intention of the Court was that the final order should be passed by the Central Government instead of RBI after duly considering the objections/suggestions of the petitioners. It is further pleaded that the directions of the Supreme Court were complied with by the Central Government in letter and spirit and objections/submissions of the petitioners and reply of RBI were duly considered before issuing the order dated 7.4.1997 and the merger scheme notified on 7.4.1997. It is the case of respondent No. 1 that the Supreme Court did not direct the personal hearing to be afforded to the petitioner nor was it otherwise required. The cause of the petitioners has been opposed by the other respondents insofar as question of non-grant of post-decisional hearing is concerned, on the same grounds, as have been pressed into service by respondent No. 1 and, therefore, there is no need to detail the same any further in this order.
7. Before we may proceed any further in this matter, it is significant to note that like the petitioner bank, another bank, namely, Bari Doab Bank Ltd. was also amalgamated by passing similar orders of moratorium. The said bank had also similarly filed a writ petition in the Delhi High Court with the same result as in the present case. After final notifications were issued. Bari Doab Bank filed Civil Writ Petition No. 5808 of 1997 in this Court. Concededly, the points raised in the said petition, inclusive of the one, as has been highlight-ended above, and other points in both the petitions are same/similar. The said petition came up for final hearing before a Division Bench of this Court on November 12, 1997 and by a reasoned order, the same has been dismissed. The said bank carried an appeal against the order dated November 12, 1997 in the Supreme Court which was dismissed. The order reads as under :
'Special Leave petition is dismissed.'
Concededly, the judgment rendered by Hon'ble Division Bench of this Court in CWP No. 5808 of 1997 involves the same points as are involved in the present case. Concededly as well, the point with regard to post-decisional hearing has been considered by the Division Bench and negatived. Mr. Bhatt, learned counsel for respondent No. 1, in all his fairness, concedes that inasmuch as the Hon'ble Supreme Court has not passed a speaking order confirming the decision rendered by this Court in CWP No. 5808 of 1997, same cannot be binding between the parties and, therefore, the reasons given by Hon'ble Division Bench of this Court, while negating the contention of the petitioners regarding post-decisional hearing, have to be looked into. In his submission, the reasons given by the Division Bench in CWP No. 5808 of 1997 are such that no exception can possibly be had to the same. Mr. Nagpal, learned counsel for the petitioners on the other hand, vehemently contends that the decision rendered by Hon'ble Division Bench of this Court in CWP No. 5808 of 1997 is not correct and this Court is not bound to follow the same
8. Before we may proceed any further in the matter, it would be relevant to see as to how the crucial question, as referred to above, was debated and what finding have been recorded on the same by the Hon'ble Division Bench in CWP No. 5808 of 1997. The contention of Mr. Salman Khursid, who appeared as counsel for the petitioner in the said writ, has been noted as follows :
'Mr. Salman Khurshid contended that in the circumstances of the case, no ground for imposing the moratorium under Section 45 was made out. The order was wholly unjustified. In any event, an effective post-decisional hearing was required to be given to the petitioner to show that the moratorium was not justified and that no ground, for ordering the amalgamation of the bank with the Oriental Bank of Commerce or the sanctioning of the Scheme was made out.'
9. The contention of Mr. Bhatt, who appeared in the writ aforesaid on behalf of the respondents, as is the case in present writ petition, has been noted in the following manner :
'On the other hand, Mr. Bhatt submitted on behalf of the respondents that reasons for imposition of a moratorium has been disclosed in the written statement to Civil Writ Petition No. 3885 of 1996 which had been filed by the petitioner in the High Court of Delhi. The petitioner could have controverted those reasons by filing objections at the stage of post-decisional hearing. It did not. Still further, even though the petitioner was permitted to raise all objections before the Reserve Bank of India as well as the Central Government, it chose not to do so. In this situation, the petitioner cannot justifiably complain that an effective opportunity was not granted or that it was not aware of the reasons for the impugned action. It was also submitted that the petitioner had initially made a request for being permitted to function as a non-banking company. However, for reasons best known to it, it had rescinded its resolution. Still further, the petitioner could not be permitted to function as a non-banking financial company in view of the amendment in the provisions of the Reserve Bank of India Act. The petitioner itself having failed to avail of the opportunity, it cannot challenge the orders passed by the competent authority.'
10. After noting the contention of the counsel for the parties, the Court framed the question which reads as follows :
'Are the impugned orders vitiated on the ground that the petitioner was not granted an effective post-decisional hearing ?'
This question has been answered by the DivisionBench by observing as follows :
'It is not disputed that in accordance with the orders of their Lordships of the Supreme Court, the petitioner was entitled to post-decisional hearing. It had right to file objections against the draft scheme prepared by the Reserve Bank of Indiaunder Section 45(4). These objections had to be considered by the Central Government under Section 45(7) of the Act in the light of the comments that may be given by the Reserve Bank of India. Curiously, inspite of the grant of such an opportunity by their Lordships of the Supreme Court, the petitioner did not file any objections after the passing of the order dated March 31, 1997. Thus, the grievance as now sought to be made out is wholly unwarranted and unjustified. Mr. Salman Khurshid very adroitly submitted on behalf of the petitioner that the objections had been filed vide letters dated March 17, 1997, March 18, 1997, March 20, 1997 Copies of these three communications are at Annexures P-6, P-7 and P-8 with the writ petition. These communications had been sent by the petitioner to the Reserve Bank of India prior to the hearing of the petition for special leave. It is the admitted position that after the matter was disposed of by their Lordships, the petitioner did not file any objections before the Reserve Bank of India or the Central Government. Still further, in the communication dated March 17, 1997, the petitioner had inter alia stated that the 'voluminous scheme of amalgamation which has been prepared by your esteemed bank, an expert body of India, contains complicated provisions of far reaching implications as well as legal consequences'. The petitioner further stated that 'our Board of Directors does not have amongst themselves any of the legal or financial experts. As such the scheme may be referred to the Chartered Accountants of the Bank already approved by RBI....so as to protect and safeguard the interests of all the depositors, public at iarge, share-holders of the bank, employees and staff of the bank etc.' The petitioner asked for extension of time by four weeks. With regard to the order of moratorium, the petitioner submitted that it has raised several objections regarding the action of the Reserve Bank of India under Section 45(1)----' in CWP No. 3885 of 1996 which may be treated as our preliminary objections at present. The Bank also requested that it may be allowed to function as a non-banking company. It sent another communication on the next day. It was inter alia stated hat the scheme of amalgamation is draconian. It is 'heavily biased in favour of the transferee bank'. Various objections to the scheme were raised. The letter dated March 20, 1997 was only to reiterate the earlier objections and to point out that the compulsory amalgamation with Oriental Bank of Commerce tantamounts to backdoor notionalisation.
A perusal of the record clearly shows that these matters have been duly considered by the competent authority before passing the impugned orders. Learned counsel did not suggest that any of the objections raised by the petitioner had not been considered.
In view of the above, it cannot be said that the petitioner did not have an effective post-decisional hearing. The fault, if any, lay with the petitioner. It had failed to avail of an opportunity which had been clearly granted.
Resultantly, the second question is also answeredagainst the petitioner.'
The portion of the judgment, reproduced above, would manifest that the question was answered against the petitioner in the said case primarily on the ground that the petitioner had failed to avail of an opportunity which has been clearly granted. In the earlier part of the order, reproduced above, it has been mentioned that curiously, in spite of the grant of such an opportunity by the Supreme Court, petitioner did not file any objections after the passing of the order dated March 31, 1997.
11. Mr. Nagpal, learned counsel for the petitioners, in the light of order, Annexures P-18 passed by the Hon'ble Supreme Court, vehemently contends that the orders challenged in the Delhi High Court and Supreme Court were upheld only on the ground that the petitioner was to be granted post-decisional hearing. The Delhi High Court, as it clearly emerges from the order passed by the Supreme Court, had held that 'having regard to the purpose of a moratorium the petitioners could not claim a right to be heard at a stage prior to the passing of an order under Section 45(2)'. The Delhi High Court further held that 'the petitioners will have a post-decisional opportunity of hearing at the stage of filing objections to the draft scheme framed under Section 45(4) when forwarded by the RBI under Section 45(6) of the said Act.' The Supreme Court had found no infirmity in the order passed by the Delhi High Court as it had clearly held that the petitioner will have post-decisional opportunity. That after it was found that there was no infirmity in the order passed by the Delhi High Court, the contention raised by learned counsel representing the petitioner in the Supreme Court was noted. The counsel had submitted that the draft scheme was forwarded by the RBI to the petitioner bank on March 6, 1997 and that objections to the draft scheme as well as the order dated 30.9.1996 for moratorium had been submitted on March 20, 1997. It was further submitted that since the order of moratorium under Section 45(2) of the Act was passed by the Central Government the post-decisional hearing against the said order should be by the Central Government and that the consideration of the objections of the petitioners by the RBI would not satisfy the object of a post-decisional hearing in respect of the order of moratorium passed by the Central Government.
12. After noticing the contention, as noted above, the Supreme Court then noted the submissions made by the Attorney General of India appearing on behalf of the Central Government and the Solicitor General appearing on behalf of the RBI that the objections submitted by the petitioners against the order of moratorium dated 30.9.1996 as well as the draft scheme framed by the Reserve Bank of India under Section45(4) had to be considered by the Central Government under Section 45(7) of the Act in the light of the comments that are made by the RBI on the said objections and that the apprehension of the petitioners that the said objections will not be considered by the Central Government, was unfounded. It is then contended that from the order passed by the Division Bench of Delhi High Court it would be manifest that the learned Solicitor General submitted that the petitioners will have a real post- decisional opportunity.
13. In the light of the decision rendered by the Delhi High Court and the Supreme Court as also submissions made by learned counsel for the respondents with regard to real post-decisional opportunity of hearing to be granted to the petitioners, Mr. Nagpal further contends that it was not for the petitioners to have sought date and time to make submissions so as to be heard in the matter. It was rather for the respondents to have asked the petitioners if they wanted to be heard in the matter. Nothing was such was done in this case and the respondents decided the matter even without once asking the petitioners to say something if they so wanted after the decision was rendered by the Supreme Court. No post-decisional hearing was given to the petitioner bank either by respondent No. 1 or 2. The petitioners had in fact sent telegrams to respondents 1 and 2 for providing such an opportunity. Certified copies issued by the Telegraph Office dated March 23, 1997 have been appended with the replication as An-nexures PR1/1 and PR 1/2.
14. Mr. Bhatt, learned counsel appearing on behalf of respondents has, however, made submissions in tune with the findings recorded by the learned Division Bench of this Court in CWP No. 5808 of 1997.
15. We have heard learned counsel for the parties at great length and with their assistance gone through the records of the case. With utmost respect to the Hon'ble Judges deciding CWP No. 5808 of 1997 on November 12, 1997, we are of the view that the said decision needs reconsideration. We are not giving detailed reasons as to why, as by now, instructed and guided by the learned counsel for the parties, we are doubting the correctness of the decision rendered by the Hon'ble Division Bench in CWP No. 5808 of 1997 as it would not be appropriate to do so at this stage. Suffice it to say that prima facie we were of the view that the decision recorded by the Hon'ble Division Bench in the writ aforesaid needs reconsideration. We, thus, request Hon'ble the Chief Justice to constitute a larger Bench wherein it may be possible to reconsider the correctness of the decision rendered in CWP No. 5808 of 1997 only with regard to point of post-decisional hearing.
Sd/-V.K. Bali, Judge
January 29, 1999
Sd/- B. Rai, Judge
JUDGEMENT (FULL BENCH)
Jawahar Lal Cupta, J.
16. On September 30, 1996, the Ministry of Finance, Department of Economic Affairs (Banking Division) of the Government of India, imposed a moratorium restraining the Punjab Cooperative Bank Limited and the Bari Doab Bank Limited from transacting any business for a period of three months. By another order, the period of moratorium was extended for three months. On April 7, 1997, the Government rejected the objections filed by the two Banks against the imposition of moratorium and the scheme of merger etc. By another notification of date, the Central Government sanctioned the scheme put up by the Reserve Bank of India for the amalgamation of the two Banks with the Oriental Bank of Commerce. The two orders passed by the Government of India have been produced as Annexures P.2 and P.3 with this writ petition. The petitioners viz. the Punjab Cooperative Bank Limited and one of its Directors pray that these notifications be quashed.
17. One of the aforesaid two Banks viz. the Bari Doab Bank Limited had challenged the orders of moratorium passed on September 30, 1996 as also the two notifications dated April 7, 1997 (Annexures P.2 and P.3 with this petition) through CWP No. 5808 of 1997. This writ petition was listed before a Division Bench of which I was a member. The writ petition was dismissed vide order dated November 12, 1997. The Special Leave Petition filed by the Bari Doab Bank-Limited was also dismissed. Despite that, the Punjab Cooperative Bank Limited is still battling for survival. The petition filed by it is an effort in that direction.
18. This petition was posted for hearing before a Bench consisting of Hon'ble Mr. Justice V.K. Bali and Hon'ble Mr. Justice B. Rai. The primary contention raised on behalf of the petitioners was that the impugned orders were vitiated as 'no post-decisional hearing was at all given'. The contention was controverted on behalf of the respondents. It was inter alia pointed out that the objections filed by the petitioners to the order of moratorium and the scheme for merger had been duly considered before the issue of the impugned notifications of April 7, 1997. It was also pointed out that a similar objection had already been rejected by the Division Bench in the petition filed by the Bari Doab Bank Limited. The Special Leave Petition against the decision of the Division Bench had been dismissed by the Supreme Court.
19. The Bench noticed that one of the questions which was considered by the Bench on the case of Bari Doab Bank was :-
'Are the impugned orders vitiated on the ground that the petitioner was not granted an effective post-decisional hearing ?'
20. The Bench further noticed that the aforesaid question had been answered against the Bank 'primarily on the ground that the petitioner had failed to avail of an opportunity which had been clearly granted.' Their Lordships were doubtful about 'the correctness of thedecision rendered by the....Bench in CWP No. 5808 of 1997....' on the question of post-decisional hearing. Thus, the matter has been placed before this Bench for the consideration of the issue of post-decisional hearing.
21. The factual position in this case is not materially different form the case of the Bari Doab Bank Limited. The petitioner Bank was established in the year 1905. While the Petitioner-Bank was conducting its business, the Reserve Bank of India had filed an application under Section 45(1) of the Banking Regulation Act, 1949 seeking an order of moratorium. The Government of India had accepted the request. Vide order dated September 30, 1996, the. Central Government had imposed a moratorium on the Petitioner-Bank upto December 31, 1996. The Petitioner-Bank was restrained from granting loans or advances, incurring liability or making investments etc. The Petitioner-Bank as also the Bari Doab Bank Limited had approached the Delhi High Court through two separate writ petitions. Both, including CWP No.4046 of 1996 filed by the Petitioner-Bank were dismissed by a learned Single Judge of the Delhi High Court vide order dated March 5, 1997.
22. The Reserve Bank of India proposed a scheme for the amalgamation of the Petitioner-Bank as also the Bari Doab Bank Limited with the Oriental Bank of Commerce Limited. A copy of that scheme was served on the Petitioner-Bank on March 5, 1997. The Bank was called upon to file its objections. The Petitioner-Bank filed a Letters Patent Appeal which was dismissed by a detailed order on March 20, 1997 by a Division Bench consisting of Hon'ble The Chief Justice Mr. M. Jagannadha Rao (As his Lordship then was) and Hon'ble Mr. Justice Manmohan Sarin. It appears that simultaneously, the Petitioner-Bank had filed objections dated March 18, 1997 against the proposed scheme which had been served on it on March 5, 1997.
The Petitioner-Bank also approached the Supreme Court through SLP (C) No. 6904 of 1997. A Bench consisting of Hon'ble Mr. Justice S.C. Agarwal and Hon'ble Mr. Justice G.T. Nanavati had disposed of the SLP vide order dated March 31, 1997. Their Lordships had found 'no infirmity' in the view taken by the High Court that 'the petitioner will have post-decisional opportunity at the stage of filing objections to the Draft Scheme framed under Section 45(4) when forwarded by the RBI under Section 45(6) of the Act.' In view of the statement made on behalf of the RBI that 'the objections submitted by the petitioner against the order of moratorium dated September 30, 1996 as well as the draft scheme framed by the RBI under Section 45(4) have to be considered by the Central Government under Section 45(7) of the Act in the light of the comments that are made by the RBI on the said objections', their Lordships were also pleased to observe that the apprehension of the petitioner that the 'said objections will not be considered by the Central Government is unfounded....' and that 'no fault can befound in the matter of post- decisional hearing in respect of the order of moratorium passed under Section 45(2) of the Act.' Their Lordships were pleased to make certain other observations and extend the moratorium 'till April 7, 1997.' It was thereafter that the Central Government had passed the two orders dated April 7, 1997, copies of which have been produced as Annexures P.2 and P.3 with this writ petition. The petitioners pray that these notifications 'at Annexure P.2 and Annexure P.3' be quashed.
23. Detailed written statements have been filed on behalf of the respondents. It is not necessary to notice the pleadings in detail Suffice it to say that the Petitioner-Bank's challenge to the validity of the orders has been controverted.
24. Counsel for the parties have been heard.
25. Mr. R.K. Jain contended that the view taken by the Division Bench in the case of Bari Doab Bank Limited can be challenged despite the dismissal of the Special Leave Petition. He further submitted that even though the statute does not in terms require the grant of oral hearing, still keeping in view the fact that important rights were involved and that the court had directed the grant of post-decisional hearing, the Central Government was bound to afford an opportunity of oral hearing to the petitioner-Bank. The failure to do so vitiates the impugned orders. Counsel further contended that the Central Government had acted in violation of the principles of natural justice in not calling upon the petitioner-Bank to appear and make its submissions.
26. Mr. K.N. Bhatt, appearing for the respondents controverted the claim made on behalf of the petitioners. He contended that the petitioner-Bank has not made any prayer for the quashing of the order dated September 30, 1996 by which moratorium had been imposed. The Statute does not envisage oral hearing. Despite that, the petitioner-Bank was allowed the opportunity of post-decisional hearing with regard to the imposition of the moratorium. It had chosen to say nothing in addition to the objections which had been filed on March 20, 1997. These objections having been considered, the Petitioner- Bank has no cause to complain of the violation of the principles of natural justice. No prejudice had been caused. No ground for interference is made out.
27. The short question that arises for consideration is - Have the respondents acted in violation of the principles of natural justice ?
28. While considering this question, the fact that the Banking Companies Act, 1949 was passed predominantly to safe-guard the interests of the depositors and the State, has to be kept in view. Even though the name of the Act was later changed to the Banking Regulation Act, 1949, the basic legislative intent has remained unaltered. In this situation, the principles of natural justice and the provisions of the statute have to be harmonised.
29. The principles of natural justice belong more 'tothe common consciousness of mankind than to juridical science,' These arc 'general principles of law common to civilised communities.' Simply put, the rules of natural justice are not more than the principles of fair-play. These are meant to promote justice. To ensure fairness of procedure. However, these cannot be subjected to 'legal strait-jackets'. The requirements vary with the circumstances of each case. It is basically recognised that a party should not 'suffer in person or in purse without an opportunity...' However, in a situation requiring promptitude, the application of the principles of natural justice can be limited. Equally, the possibility of obstructive conduct can furnish an adequate justification for the exclusion of the rule of hearing. As was observed by Lord Denning in R. v. Secretary of the Stale for Home Department, Exp. Mughal (1974) Queen's Bench 313, 325, 'the rules of natural justice must not be stretched too far. Only too often people who have done wrong seek to invoke 'the rules of natural justice' so as to avoid the consequences.'
30. The principles of natural justice have repeatedly fallen for consideration of their Lordships of the Supreme Court. It has been repeatedly held that the applicability depends upon the context and the facts of each case. The objective is to ensure a fair deal. In State Bank of Patiala and others v. S.K. Sharma, 1996(3) SCC 364, it was observed as under :-
'29. The matter can be looked at from the angle of justice or of natural justice also. The object of the principles of natural justice - which are now understood as synonymous with the obligation to provide a fair hearing - is to ensure that justice is done, that there is no failure of justice and that every person whose rights are going to be affected by the proposed action gets a fair hearing...'
Again in Union of India and another v. Jesus Sales Corporation, 1996(4) SCC 69. it was observed as under :-
'However, under different situations and conditions the requirement of compliance of the principle of natural justice vary. The courts cannot insist that under all circumstances and under different statutory provisions personal hearing have to be afforded to the persons concerned. If this principle of affording personal hearing is extended, whenever statutory authorities are vested with the power to exercise discretion in connection with statutory appeals, it shall lead to chaotic conditions, when principles of natural justice require an opportunity to be heard before an adverse order is passed on any appeal or application, it does not in all circumstances mean a personal hearing. '
It is in the above background that the issue as noticed above has to be considered.
31. On behalf of the petitioners, it was contended that the respondents were bound to afford an opportunityof oral hearing to them. Is it so ?
32. The sequence of events has been noticed above. Vide order dated September 30, 1996, the Central Government had imposed a moratorium under Section 45(2). This was to be effective upto December 31, 1996. A copy of this order has been placed on record as Annexure P.1. On December 26, 1996, the period of this moratorium was extended for another three months. This order has not been placed on the paper-book of the case. The petitioner-Bank had filed CWP No. 4046 of 1996 to challenge this order. This writ petition was dismissed by the learned Single Judge vide order dated March 5, 1997. The petitioner-Bank had filled LPA which was dismissed on March 20, 1997. The petitioner-Bank had then filed the SLP.
Their Lordships were pleased to notice the fact that 'the learned Judges.... of the Delhi High Court have held that having regard to the purpose of a moratorium, the petitioners could not claim a right to be heard at a stage prior to the passing of an order under Section 45(2) but have held that the petitioners will have post-decisional opportunity at the stage of filing objections to the draft scheme framed under Section 45(4) when forwarded by the RBI under Section 45(6) of the Act.' The Lordships had not found 'any infirmity in the ... view of the High Court'. Thus, the petitioners were entitled to post-decisional opportunity 'at the stage of filing objections to the draft scheme...' It may also be noticed that counsel for the petitioners had stated that 'objections to the draft scheme as well as the order dated September 30, 1996 for moratorium have been submitted on March 20, 1997.' It was submitted that 'since the order of moratorium under Section 45(2) of the Act was passed by the Central Government, the post-decisional hearing against the said order should be by the Central Government and that the consideration of the objections of the petitioner by the RBI would not satisfy the object of a post-decisional hearing in respect of the order of moratorium passed by the Central Government.' On behalf of the respondents, it was stated by the Attorney General and the Solicitor General that 'the objections submitted by the petitioners against the order of moratorium dated September 30, 1996 as well as the draft scheme framed by the RBI under Section 45(4) have to be considered by the Central Government under Section 45(7) of the Act in the light of the commands that arc made by the 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 this submission, their Lordships were pleased to observe 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.'
33. On a perusal of the order passed by their Lordships, it appears that the petitioners had not sought a fresh opportunity to be invited to file any objections or to be given an oral hearing to urge any new grounds against the imposition of moratorium. In fact, the only apprehension expressed by the petitioners was that theobjections against the moratorium may not be considered by the Central Government. No fresh opportunity beyond the consideration of objections was sought. In any case, it was not the claim of the petitioners that the Bank had to be given a notice or that it had to he given an opportunity of oral hearing. Thus, the contention sought to be raised on behalf of the petitioner that the post-decisional hearing meant a fresh notice and opportunity cannot be sustained.
34. On behalf of the respondents, it was vehemently contended by Mr. Bhatt that the petitioners have not challenged the order of moratorium. No prayer for quashing the order dated September 30, 1996 by which the moratorium had been initially imposed has been made despite the fact that a copy of this notice has been produced as Annexure P.1. It is undoubtedly so. Still further, it is the admitted position that the moratorium was extended for a period of three month vide order dated December 26, 1996. Even a copy of this order has not even been produced. No prayer for its quashing has been made. In this situation, the petitioners' grievance that the order of moratorium is vitiated as the post-decisional hearing has not been given, cannot be sustained.
35. In view of the above, it is clear that the Petitioner-Bank had only prayed for the consideration of the objections filed by it on March 20, 1997. It was not even suggested by Mr. Jain that the objections had not been considered. That being so, it is clear that the directions given by their Lordships of the Supreme Court had been fully complied with. No cause for grievance subsists.
36. Irrespective of this. we are also of the view that right to oral hearing is not an essential ingredient of natural justice in every case. Basically, the question has to be decided on the facts of each case. There are two factors which need to be noticed in the present case, firstly under the statute, the order of moratorium can remain in operation only for a limited period. The process as contemplated under Section 45 has to be completed within the period of six months. The grant of a right to oral hearing in every case may enable the concerned party to unduly obstruct and delay the proceedings with the result that the process of law may defeat the very purpose of law.
37. Secondly, it is clear on the record that the order of moratorium was to expire on March 31, 1997. The respondents had to decide the case by that date. While disposing of the SLP, their Lordships of the Supreme Court had extended the operation of the order of moratorium till April 7, 1997. It was also observed that in case an order had already been passed, the Central Government shall be at liberty to pass a supplemental order. The obvious implication was that the objections filed by the petitioners against the scheme proposed by the RBI as also to the moratorium should be duly considered by the Central Government. It was not even remotely indicated in the order that any notice or further opportunity had to be given to the Bank.Thus, the contention as now sought to be raised is clearly an after-thought.
38. Even if this aspect of the matter is ignored, it is the admitted position that the petitioners did not file any objections suggesting that the moratorium had been wrongly imposed after the decision of the case by their Lordships of the Supreme Court. The Bank did not make any request to seek any information. The petitioners sought no opportunity whatsoever. It is not the petitioner-Bank's case that it had not become aware of the grounds on which the moratorium had been imposed or that it wanted to say something beyond what had already been submitted. In fact, even before the Supreme Court, it was clearly stated by the petitioners that the objections to the moratorium had been filed on March 20, 1997. That having been done, the Central Government was only required to consider those objections. That was done. Nothing more was required. Nothing more had to be done. .
39. There is another aspect of the matter. Despite being asked, counsel for the petitioners was unable to show that the Bank had really anything to submit and that if an opportunity is now granted, it would result in some change in the decision. Learned counsel could not even give ah indication of what the petitioners may be able to say if an opportunity were to be granted. In this situation, we are satisfied that no prejudice has been caused.
40. It may also be noticed that the petitioner-Bank and the Bari Doab Bank are placed in an identical situation. The orders passed in case of both the Banks are one. They had fought together. The decision in one of the two cases has already been affirmed by their Lordships of the Supreme Court by dismissing the SLP. Would it be fair to reopen the whole case at this stage despite the fact that it may lead to contradictory decisions? In the circumstances of the case, I feel satisfied that it would not be proper to do so.
41. In view of the above, there appears to be no infirmity in the order passed by the Division Bench in CWP No, 5808 of 1997. It is held that the action in the present case is not violative of the principles of natural justice. The petitioners were afforded a due and reasonable opportunity.
The case shall now be placed before the Division Bench for further proceedings.
V.K. Bali, J.
42. I have gone through the judgment recorded by my learned brother, Jawahar Lal Gupta, J. and fully concur with the view expressed by His Lordship regarding personal/oral post-decisional hearing, yet 1 would like to append a small note.
43. Vide orders dated January 29, 1999, sitting with B. Rai, J. (as His Lordship then was), view was expressed that the decision recorded by Division Bench of this Court in CWP No. 5808 of 1997 decided on November 12, 1997 needs reconsideration. A request was, thus,made to Hon'ble the Chief Justice to constitute a larger Bench wherein it may be possible to reconsider the correctness of decision rendered in CWP No. 5808 of 1997. This is how the matter has come up before a Full Bench of this Court.
44. There is no need to reiterate the facts as the same have been given in sufficient details in the judgment prepared by Jawahar Lal Gupta, J. as also reference order dated January 29, 1999 for the purpose of deciding the question referred to the Pull Bench. Suffice it, however, to say that it is the reasons recorded in judgment rendered in CWP No. 5808 of 1997, over-ruling the objection of the petitioner with regard to post-decisional hearing that could be and indeed are subject matter of debate before the Pull Bench. In the reference order dated January 29, 1999, such reasons have been extracted in their entirety. The substance of the reasons, that resulted into answering the question against the petitioner were that petitioner had failed to avail of an opportunity which had duly been granted as no objections were filed after passing of order dated March 31, 1997 by the Supreme Court. I am of the considered view that, on the strength of reasons given in the judgment in CWP No. 5808 of 1997 alone, contention of learned counsel for the petitioner with regard to personal/oral post-decisional hearing could not be negated. While so observing, I would immediately hasten to add that, on the strength of the reasons that have been given now and which are in addition to the ones given in judgment record in CWP No. 5808 of 1997, no occasion arises to reconsider the correctness of decision rendered in writ petition aforesaid.
45. What I would like to further add in this note is that while making a reference to the larger Bench, we were conscious of the fact that a similar writ petition, i.e. CWP No. 5808 of 1997 had since been dismissed and so was the fate of Special Leave Petition preferred against the said judgment and yet, while making a mention to these facts, we had thought it proper to make a reference to the larger Bench. It may be relevant to mention here that against order dated January 29, 1999, Special Leave Petition bearing No. 8746 of 1999 was filed in the Hon'ble Supreme Court wherein following order was passed on July 23, 1999 :-
'This Special Leave Petition is completely misconceived. The same is dismissed.'
46. Obviously, while filing the SLP, it ought to have been pleaded and so argued that in the case of Bari Doab Bank Ltd., the view expressed by the Division Bench in CWP No. 5808 of 1997 was affirmed in SLP, ever though the same was dismissed in limine without passing a speaking order. That being the situation, despite the fact that the view expressed by Division Bench in CWP No. 5808 of 1997 and, in particular, dealing with post-decisional hearing, had assumed finality in Bari Doab Bank's case, petitioner in the present case could have yet pleaded to take a different view. The effect of dismissal of SLP in limine, has since already been discussed in reference order dated January 29, 1999 and thus needs no reiteration.
V.M. Jain, J.
47. I have gone through the judgments rendered by learned brothers Jawahar Lal Gupta, J. and V.K. Bali, J. I fully agree with the view expressed by brother Jawahar Lal Gupta. J.
48. In view of the above, we find that the decision of the Division Bench in CWP No. 5808 of 1997 (Bari Doab Bank v. Union of India) decided on November 12, 1997 is correct. It is also held that there is no violation of the principles of natural justice in the instant case.
49. The case shall now be placed before the Division Bench for decision.
50. Order accordingly.