ORDER
C.K. Thakker, C.J.
1. This appeal is filed by the appellant, Himachal GrameenSanchayka Ltd. ('company', for short) against an order passed by the learned CompanyJudge on 3 September, 2001, in Company Application No. 29 of 2001 in CompanyPetition No. 6 of 2001, titled as Himachal Grameen Sanchayka Ltd. and Anr. v.Reserve Bank of India [since reported as (2002) 1 Comp LJ 546 (HP)]. By the said order,the learned Company Judge allowed the application filed by the Reserve Bank ofIndia ('RBI' for short) under Section 45MC of the Reserve Bank of India Act, 1934(hereinafter referred to as 'the RBI Act') read with Section 450 of the Companies Act,1956 (hereinafter referred to as 'the Act') and ordered appointment of the OfficialLiquidator, attached to this court, with all powers as provisional liquidator of thecompany with a direction to immediately take charge of the company's property,assets, books of accounts and other relevant papers and documents.
2. It was the case of the RBI that the appellant-company is non-banking financialcompany as defined in Clause (f) of Section 45IA of the RBI Act. The company submittedan application in July, 1997, for issuance of certificate of registration for carryingof business for non-banking financial institution under the RBI Act. Inspectionwas carried out regarding financial position of the company by the RBI Act as on 31March, 1997. The inspection was conducted by P.L. Mittal and Company, CharteredAccountants. On inspection, it was found that whereas the net owned fund of thecompany was (-) Rs. 886.66 lakhs as on 31 March, 1997, the public deposits held bythe company were (+) Rs. 737 lakhs as on 31 March, 1999. The capital to riskweighted assets ratio (CRAR) was assessed as 'Nil'. The outside liabilities of the companywere Rs. 1,167.99 lakhs as on 31 March, 1997, as against assets of the companyof Rs. 742.50 lakhs. In the opinion of the RBI, therefore, the company was not solvent.According to the RBI, the company failed to maintain liquid assets as contemplatedby section 45IB of the RBI Act. The company, according to the RBI, also violated concentrationnorms and had high level of non-performing assets (NPA). The companywas found to have invested huge amount in the immovable property. It was discoveredby the RBI that the company had advanced huge sum to Himachal GrameenSanchayka, a partnership firm, Sanchayka Mail, a proprietary concern and SanchaykaIndia Ltd., in which the directors of the company were interested. In the auditreport, it was mentioned that the company had violated various provisions of theNon-banking Financial Companies Acceptance of Public Deposits (Reserve Bank)Directions, 1998. The RBI scrutinised the books of the company on 9 August, 1998,which revealed violation of directions issued by the RBI.
3. Notice was, therefore, issued by the RBI to the company on 24 September, 1999,calling upon the latter to show cause on or before 9 October, 1999, as to why its applicationfor certificate of registration should not be rejected. The company neitheroffered any explanation nor submitted a reply, nor prayed for extension of time before9 October, 1999. It, however, sought extension of time upto 15 December, 1999by an application dated 26 October, 1999, i.e., after the period mentioned in the notice(which was 9 October, 1999) was over.
4. On 7 January, 2000, an order was passed by the RBI rejecting the applicationsubmitted by the company.
4.1 In paragraphs 7 and 8 of the order, it was observed:
'Considering all, the relevant facts, developments and the affairs of the applicantcompany, and taking into consideration the failure of the company to complywith the statutory provisions laid down in Reserve Bank of India Act, 1934, andthe direction issued thereunder, the company failed to satisfy the statutory conditionscontained under Sub-section (4) of Section 45IA of the Act, 1934. Since it ismandatory on the part of the bank to be satisfied that the conditions containedunder Sub-section (4) of Section 45IA of the Act are fulfilled before exercising itspower to grant a certificate of registration, and the bank is not so satisfied for thereasons stated above, the applicant company is not entitled for a certificate ofregistration to carry on the business of a non-banking financial institution as contemplatedunder Section 45-IA of the Act. Hence, the application of the companydeserves to be rejected and, accordingly, the said application is hereby rejected.
In view of the above, you are hereby directed, in exercise of the powers conferredunder Section 45K of Reserve Bank of India Act, 1934, to furnish the exactamount of deposit liabilities including the accrued interest thereon as on the dateof the said order rejecting your application for issue of certificate of registration.You are also further directed to furnish the complete information about the assetsand properties with necessary detailed particulars held by your company as onthat day along with your plan of action for repayment of entire deposit liabilitieswith fund flow and repayment schedule of deposits. The said information shouldreach this office within a period of thirty days from the date of receipt of this direction.'
4.2 The resultant effect of the order was that the company was held disqualifiedunder Section 45IA to carry on business of a non-banking institution.
5. For completion of facts, it may be stated that on 18 January, 2000, an order waspassed by the RBI under Sub-section (1) of Section 45MB of the RBI Act statingtherein that in the circumstances mentioned in the order, the RBI was satisfied that itwas absolutely necessary to take immediate action to protect the interests of the depositorsin public interest as any delay would cause irreparable damage to the depositors.The company was, therefore, prohibited from accepting further depositswith immediate effect from any person in any person, whether by way of renewal orotherwise. The company was also directed to comply with the order passed by theRBI by taking appropriate steps.
6. On the same day, by a separate order passed under Sub-section (2) of Section45MB of the RBI Act, the RBI also directed the company not to sell, transfer, createcharge, mortgage or deal with in any manner its property and assets without theprior written permission of the RBI until further orders.
7. The company was also directed by the RBI to submit to the RBI within fifteendays from the receipt of the order a resolution passed by the Board of directors of thecompany that it would not alienate any assets of the company without the priorpermission of the RBI except for the purpose of repayment of matured deposits andpayment of interest on deposits.
8. On 7 March, 2000, a communication was addressed by the RBI to the company,inter alia, alleging therein that in spite of rejection of certificate of registration of carryon business, certain irregularities were committed by the company. The companywas, therefore, directed by the RBI, in exercise of powers under Section 45K of theRBI Act, to furnish the exact amount of liabilities including the accrued interestthereon on the date of the order of rejection of the application of the company, i.e., 7January, 2000, and to furnish complete information about the assets and properties ofthe company with necessary detailed particulars along with plan of action for repaymentof entire deposit liabilities with fund flow and repayment schedule of deposits.
9. On 17 May, 2000, a reply was submitted by the company to the RBI explainingthe position of the company. It also enclosed the repayment schedule of maturitiesand properties said to have been attached in certain consumer cases. A request wasmade by the company to grant sufficient time to consolidate its position and to comeout from the legal battle with its investors as well as from the employees. It wasstated:
'we trust that you will consider our case sympathetically and allow us time forfiling balance sheet for the year 1998-99 and other statements mentioned above upto 30 September, 2000, to enable us to come out from the crisis.'
10. It further appears that depositors have approached the RBI and complaintswere made that even though the date of maturity had passed, the amount had notbeen re-paid to them. A communication was addressed to the RBI by the Registrar ofH.P. State Consumer Disputes Redressal Commission, Shimla, on 27 November,2000, stating therein regarding awards passed by the commission and amounts due.Proceedings were also initiated by depositors before the Consumer Forums for gettingthe orders passed by the Commissions executed.
11. In the aforesaid state of circumstances, the RBI filed Company Application No.10 of 2001 in Company Petition No. 6 of 2001 under Section 450 of the Act read withRule 9 of the Companies (Court) Rules, 1959, for appointment of provisional liquidator.
11.1 In paragraph 5, it was stated:
'That the conduct of the respondent as evident from the facts stated in themain company petition is that it is unable to pay debts and that manyawards/attachment orders have been passed against it by various Consumer RedressalForums. Execution of the said awards by only some of the depositorswould be detrimental to the interest of the entire class of depositors of the companyas a whole, more particularly, the poorer and the less informed depositorswho could not afford to approach such forums. It is necessary in the interest ofjustice that all the properties and books of the company are vested in the provisionalliquidator immediately so that the company is prevented from alienatingits assets. Any notice of the application would completely jeopardise the presentwinding up petition, which has been filed by he petitioner as the apex bank inpublic interest, and interest of the financial system of the country. An ex parte orderfor appointment of provisional liquidator by dispensing with notice underSection 450(2) of Companies Act and enabling him to take immediate custody ofall the assets and other relevant records of the company of all the assets and otherrelevant records of the company is necessary in the facts and circumstances of thiscase to protect public interest, and to enable a true state of affairs as regards thefinancial health of the company to be available in this Hon'ble court.'
11.2 A prayer was, therefore, made to dispense with issuance of notice Sub-section(2) of Section 450 of the Act and to enable to RBI to take immediately custody of all theassets and other relevant records of the company for taking appropriate steps.
11.3 In Company Application No. 29 of 2001, a prayer was made by the RBI forexpediting appointment of provisional liquidator, inter alia, on the ground that anews item had appeared in 'Divya Himachal' dated 28 August, 2001, that an orderwas passed by the District Consumer Forum, Shimla, for auctioning the propertiesowned by the company at Shimla and at other places, and auction was fixed on 30and 31 August, 2001. It was stated that if the properties would be auctioned at theinstance of some depositors, 'irreparable loss will be caused to the depositors, whoare poor and who are not able to approach the consumer forum for seeking necessaryreliefs'. It was further stated that 'majority of the depositors who have not approachedthe forum will not get anything out of the said auction'. According to theRBI, it was not in the public interest to allow only a few depositors to recover theirdues at the cost of other depositors, particularly, the less informed and the poor. TheRBI stated that it was satisfied that continuance of the Himachal Grameen SanchayakaLtd., a non-banking financial company, was detrimental to public interest, andalso detrimental to the interest of the depositors of the company.
11.4 In paragraph 11, the RBI stated:
'That the conduct of the respondent as evident from the facts stated in themain company petition is that it is unable to pay debts and that manyawards/attachment orders have been passed against it by various Consumer RedressalForums. Execution of the said awards by only some of the depositorswould be detrimental to the interest of the entire class of depositors of the companyas a whole, more particularly, the poorer and the less informed depositorswho could not afford to approach such forums. It is necessary in the interest ofjustice that all the properties and books of the company are vested in the provisionalliquidator immediately so that the company is prevented from alienatingits assets. Any notice of the application would completely jeopardise the presentwinding-up petition which has been filed by the petitioner as the apex bank inpublic interest and interest of the financial system of the country. An ex parted orderfor appointment of provisional liquidator by dispensing with notice underSection 450(2) of Companies Act and enabling him to take immediate custody ofall the assets and other relevant of the company is necessary in the factsand circumstances of this case to protect public interest and to enable a true stateof affairs as regards the financial health of the company to be available in thisHon'ble court.'
11.5 The following prayers were made by the RBI:
'(i) That in view of the urgency and the risk to the assets of the company andthe interest of the public, the matter may be taken up for passing urgent ordersforthwith.
(ii) That the production of certified copy of the order of the District ConsumerForum be dispensed with.
(iii) That pending the hearing and final disposal of this petition, the OfficialLiquidator, attached to this Hon'ble Court, Himachal Pradesh, or someother fit and proper person be appointed as provisional liquidator of thesaid company to take charge of company's properties and assets, its booksof accounts, papers, vouchers and other documents with all powers underthe Companies Act, 1956.
(iv) That pending the hearing and final disposal of this petition, an ad interiminjunction be granted, restraining the respondent, its servants, agents andassigns from encumbering, transferring alienating and disposing of any ofthe assets of the respondent:
(v) That the District Consumer Forum, Shimla, be directed not to confirm thescale and disburse the proceeds of the auction sale to the parties before itbut to deposit the entire proceeds in this Hon'ble court for being disbursedto all the depositors and creditors of the respondent company in accordancewith the law.
(vi) that such further and other orders may be passed as this Hon'ble courtdeems fit and proper in the facts and circumstances of the case.'
12. The learned Company Judge after hearing the learned counsel for the RBI andtaking into account the circumstances allowed the application and appointed the OfficialLiquidator, attached to the High Court, with all such powers as provisional liquidatorof the company and disposed of the application. The said order passed by thelearned Company Judge of this Court is challenged by the company in the presentappeal.
13. We have heard Mr. Inder Singh, Senior Advocate, instructed by Mr. Y. Pauland Mr. Vijay Thakur, Advocates, for the appellants and Mr. Kuldip Singh, SeniorAdvocate, instructed by Mr. Rajiv Sharma, Advocate, for the RBI.
14. Mr. Singh, learned senior counsel for the appellant, raised many objections. Hecontended that the order passed by the learned Company Judge is proper, illegaland unlawful. The counsel submitted that it was incumbent on the learned CompanyJudge to issue notice to the company as required by Sub-section (2) of Section 450 ofthe Act and to afford opportunity of hearing. Since it was not done, the order is inconsistentwith the violative of statutory provisions and is liable to be set aside. Accordingto he learned counsel, the provisions of Sub-section (2) of Section 450 havealso not been complied with and no 'special reasons' have been recorded in writingas to why the Company Court thought it fit to dispense with the notice. It is alsourged that irrespective of the statutory provisions of Section 450(2) of the Act, principlesof natural justice and fair play also required issuance of notice and affording ofopportunity of hearing. Since it was not done, the order deserves to be quashed andset aside being violative of fair play in action. The counsel contended that the relevantand germane factors have not been considered by the RBI as well as by thelearned Company. Judge and irrelevant and extraneous circumstances have beentaken into account, which had vitiated the action of the RBI and also the order passedby the learned Company Judge.
15. Even on merits, no case had been made out for appointment of provisionalliquidator and that too without hearing the company, submitted the counsel. Thecompany contended that the date of maturity had not come and the depositors werenot entitled to claim any amount before due date. Had an opportunity been affordedby the learned Company Judge, the company would have satisfied and convincedthe court that no such order could have been passed as prayed by the RBI.
16. A grievance was also made by the counsel that the RBI for taking impugnedaction of cancellation of certificate took into account audit reports and other materials,copies of which were never supplied to the company. It is settled law, urged thecounsel, that if an authority intends to rely on material, the same has to be suppliedto the opposite party so as to enable it to offer explanation, if any. By not doing so,the RBI has acted illegally, arbitrarily and unreasonably.
17. Mr. Singh also stated that it was the case of the RBI itself that notice was issuedto the company in September, 1999, and the order was passed rejecting the applicationof the company on 7 January, 2000. There was considerable delay on thepart of the RBI in approaching this court for appointment of provisional liquidator,inasmuch as the present petition was filed on 17 April, 2001. Even thereafter, therewas a long delay. The order impugned in the present appeal by the company wasmade by the learned Company Judge as late as on 3 September, 2001. Thus, there wasinterval of more than 4 1/2 months between the date of filing of the petition by the RBIand passing of the order by the learned Company Judge. If notice could have beenissued to company, no prejudice would have been caused to the RBI, submitted Mr.Singh. On all these grounds, according to the counsel, the order passed by thelearned Company Judge is liable to be set aside by remitting the matter to the learnedCompany Judge by issuing directions to issue notice, to afford opportunity of hearingto the company and to decide the matter afresh.
18. Mr. Singh, learned Senior Advocate, on behalf of the RBI, on the other hand,supported the order passed by the learned Company Judge. According to him, actionwas taken by the RBI in consonance with law after observing principles of naturaljustice and fair play. He stated that notice was issued to the company on 24 September,1999, and the company was called upon to show cause as to why applicationshould not be rejected. The company was to submit such explanation on or before 9October, 1999. Neither was explanation offered nor was extension sought before thatperiod. It was only on 26 October, 1999, that time was sought upto 15 December,1999. The company did not care to enquire whether the application was granted andtime was tended. The RBI was constrained to pass an order on 7 January, 2000. Thecounsel stated that even upto the date of order, no explanation was submitted by thecompany. Thus, there was sufficient time for the company. The action was taken on 7January, 2000. It was also submitted on behalf of the RBI that the company was intimatedabout he irregularities committed by it. The depositors also made grievance tothe RBI that they had not been repaid the amount, to which they were entitled. Accordingto the counsel, from the record it was clear that the date of maturity hadcome. Even though the orders were passed by the RBI on 18 January, 2000, underSub-section (1) of Section 45MB as well as Sub-section (2) of Section 45MB of the RBIAct restraining the company from taking any amount by way of deposit and/ordealing with the property, the company did not comply with those orders. Meanwhile,certain awards were made by the Consumer Commission, and in some cases,payment was also made to depositors. Taking into account those circumstances, theRBI considered it to be its duty to take appropriate action, which was in the largerinterest of other depositors, particularly, poor and [those] unable to approach theConsumer Forums. If in the light of all the facts and circumstances, in applicationwas made by the RBI and the learned Company Judge was satisfied, and an orderwas passed in exercise of power under Sub-section (2) of Section 45-O, it cannot besaid that the Company Judge had committed any illegality, which deserves interferencein the appeal. The counsel, therefore, submitted that the appeal deserves to bedismissed.
19. Having heard the learned counsel for the parties, in our opinion, it cannot besaid that by passing the impugned order and making appointment of provisionalliquidator, the learned Company Judge has acted contrary to law or the order is otherwisevulnerable.
20. It is, no doubt, true that an action of winding up of the company is a seriousone and appointment of provisional liquidator ought to be taken carefully and cautiously.It is also correct that, as a rule, before appointing a provisional liquidator, thecourt shall issue notice to the company and afford reasonable opportunity of makinga representation.
21. Section 450 of the Act, which provides for appointment of provisional liquidator, reads thus:
'Appointment and power of provisional liquidator.- (1) At any time after thepresentation of a winding up petition, and before the making of a winding up order,the court may appoint the official liquidator to be liquidator provisionally.
(2) Before appointing a provisional liquidator, the court shall give notice to thecompany and give a reasonable opportunity to it to make its representations, ifany, unless for special reasons to be recorded in writing, the court thinks fit todispense with such notice.
(3) Where a provisional liquidator is appointed by the court, the court maylimit and restrict his powers by the order appointing him or by a subsequent order;but otherwise, he shall have the same powers as liquidator.
(4) The official liquidator shall cease to hold office as provisional liquidator,and shall become the liquidator of the company, on a winding up order beingmade.
21.1 A bare reading of the above section makes it obligatory on the CompanyJudge to issue notice and afford opportunity to the company to make representationbefore appointment of provisional liquidator 'unless, for special reasons to be recordedin writing, the court thinks fit to dispense with such notice'. The question, therefore, is notwhether the court has power to dispense with the notice and order appointment ofprovisional liquidator, but whether special reasons have been recorded by the CompanyJudge in writing.
22. The counsel for the company placing reliance on the decisions in Punjab PicturesLtd., Karnal v. Jhabar Mal Gangadhar Chokani AIR 1949 EP 139; State of Orissa v. Dr.(Miss) Binapani Dei and Ors. AIR 1967 SC 1269 ; Smt. Maneka Gandhi v. Union of Indiaand Anr. AIR 1978 SC 597 ; Swadeshi Cotton Mills, etc. v. Union of India etc., etc. (1982)1 Comp LJ 309 (SC) : AIR 1981 SC 818, contended that an order passed in violation ofprinciples of natural justice is void ab initio and cannot be said to be an order in theeye of law. He also drew our attention to Kiran Singh and Ors. v. Chaman Paswan andOrs. AIR 1954 SC 340 for the proposition that when the court has no jurisdiction,territorial or pecuniary or in relation to subject matter of the suit, the order is non estin law and null and void.
23. So far as the proposition laid down in the above cases is concerned, the otherside did not dispute and, in our opinion, rightly. In the instant case, however, in ourview, it cannot be said that the order passed by the learned Company Judge waswithout jurisdiction. The legislature, which enjoined on the Company Judge to issuenotice by using the expression shall, with the same pen and ink, enabled him to dispensewith such notice and opportunity to make representation to the company, 'ifhe thinks fit for special reasons to be recorded in writing' to do so. In the instant case,in our opinion, the learned Company Judge has recorded reasons, which can be saidto be special reasons within the meaning of Sub-section (2) of Section 450 of the Act.
23.1 The learned Company Judge stated:
'Having heard Mr. Rajiv Sharma, learned counsel for the petitioner and takinginto consideration the entirety of the circumstances, as detailed in the position andthe application on the affidavit of Sh. Sardana Singh, General Manager, Departmentof Non-Banking Supervision, Reserve Bank of India, Chandigarh, and thefact that the bank has satisfied itself that respondent company is unable to pay itsdebts and has prohibited the company from receiving deposits vide its orderdated 18.1.2000 (Annexure IX) and the fact that certificate of registration has beedeclined to the company by the petitioner-bank vide orders dated 7.1.2000 (AnnexureVIII), petitioner-bank, in my view, is prima facie entitled to ask for windingup of the respondent company.
Section 450 of the Companies Act provides for the appointment of a provisionalliquidator without issuance of notice to the company for special reasons.
Taking into consideration, the averments made in the petition and application,detailed above, I am satisfied that it is necessary to appoint a provisional liquidatorwithout issuance of notice to the respondent company to protect and preservethat assets of the company pending the orders of winding up in larger public interest,particularly, in the interest of majority of the depositors of the respondent-companyand also for the reasons that the assets of the respondent-company arenot transferred, alienated or otherwise dealt with save and except in the interestof the depositors.'
23.2 The above order makes it clear that the learned Company Judge before passingthe order and before exercising powers of Section 450 of the Act, took into consideration'the entirety of the circumstances', as detailed in the petition and the applicationon the affidavit of Shri Sardana Singh, General Manager, Department ofNon-Banking Supervision, Reserve Bank of India, Chandigarh. He also noted that thebank had satisfied itself that the respondent-company was 'unable to pay its debtsand had prohibited the company from receiving deposits', etc. The learned CompanyJudge was conscious of the fact that the certificate of registration was declined to thecompany and taking into account all attenuating [extenuating?] circumstances, in hisview, the RBI was prima facie entitled to ask for winding up of the company.
24. Keeping in mind, all the facts and circumstances, the learned Company Judgeproceeded to observe that he was satisfied that it was necessary to appoint provisionalliquidator without issuance of notice to the company to protect and preservethe assets of the company pending the orders of winding up in larger public interest,particularly, in the interest of majority of the depositors of the company as also forthe reason that the assets of the company are not transferred, alienated or otherwisedealt with save and except in the interest of the depositors.
25. As held by the Supreme Court in Birajmohan Das Gupta v. State of Orissa andOrs. AIR 1967 SC 158 principles of natural justice would apply to the first date fixedfor hearing. Thereafter, if the matter is adjourned, it is not necessary to give furthernotice for the adjourned date.
26. In the instant case, notice was issued by the RBI on 24 September, 1999, andtime was granted up to 9 October, 1999. Neither was a reply submitted nor was extensionsought. It was, therefore, not necessary for the RBI to wait for any reply or foran application for extension. The order passed by the RBI, hence, cannot be said to beillegal or contrary to law.
27. To us, the order is also in consonance with Sub-section (2) of Section 450 of theAct as special reasons have been recorded by the learned Company Judge for dispensingwith he notice required under Sub-section (1) of Section 450 of the Act. If it isso, obviously, it cannot be said that the provisions of the Act have not been compliedwith or the order is violative of principles of natural justice or fair play.
28. It is, no doubt, well settled the apart from statutory provisions, if an actionadversely affects rights of a party or results into civil consequences, natural justicehas to be complied with. In other words, principles of natural justice do not supplantthe law of the land, but supplement it. At the same time, it cannot be ignored thatthere may be cases, where immediate and preventive action is required to be takenand, in such cases, strict application or observance of rules of natural justice may notbe insisted upon. The reason being that the party sought to be affected thereby cannotbe said to have been treated in an unfair manner. In the instant case, from therecord, it is amply clear that the RBI had issued notice to the company before rejectingthe application made by the company. Notice was issued and the company wascalled upon to offer explanation, if any, within the stipulated period. It was the companywho defaulted in submitting reply. Within the stipulated period, neither wasthe reply submitted nor was extension sought. Even, thereafter, when the extensionwas sought, it did not care to enquire from the RBI whether extension was granted ornot. In any case, even during that time, i.e., 15 December, 1999, no explanation wasoffered. The RBI in the light of the allegations levelled and circumstances mentioned,passed an order on 7 January, 2000. On 18 January, 2000, two orders were passedunder Section 45MB(1) as well as [45MB[(20 of the RBI Act. Even thereafter, the companycontinued its activities with impunity ignoring the directions issued by the RBI.Certain awards were passed by the Consumer Commission and some depositorswere able to recover the amount, properties of the company were sought to be attachedand auctioned and with a view to protect interest of large number of depositors,the RBI came forward and applied to the court for appointment of provisionalliquidator, and narrated the circumstances, which compelled the RBI to seekappointment of provisional liquidator without issuing notice to the company. In ouropinion, it cannot be said that in the light of cumulative facts and circumstances, nopower could have been exercised under Sub-section (20 of Section 450 of the Act andno order of appointment of provisional liquidator could have been passed by thelearned Company Judge, ex parte.
29. Mr. Singh submitted that the so called reasons said to have been recorded bythe learned Company Judge cannot be said to be 'reasons', much less 'special reasons'.We are unable to uphold the said contention. When it was stated that thelearned Company Judge took into consideration entirety of the circumstances as detailedin the petition and the application that the RBI was satisfied that the companywas unable to pay its debts and in the larger public interest, and to protect the interestsof majority of depositors, the action was required to be taken, 'special reasons'can be said to exist as well as recorded and the action was in conformity with law.
30. Almost a similar question arose before the High Court of Gujarat in PiramalFinancial Services Ltd. v. Reserve Bank of India (2001) 5 Comp LJ 228 (Guj) : (2001) 104Comp Cas 299 (Guj). There also, an order was passed by a Company Judge underSub-section (2) of Section 450 of the Act and provisional liquidator was appointedwithout issuing notice to the company.
30.1 The said order was challenged before the Division Bench in appeal. It wascontended before the Division Bench that 'special reasons' were not recorded by theCompany Judge. The Company Judge observed in the order dispensing with noticeunder Sub-section (2) of Section 450 by stating that having gone through the avermentsmade in the application, he was satisfied that the powers under Sub-section (2)of Section 450 were required to be exercised. The Division Bench, upholding the order,observed that when it was stated by the Company Judge that having gonethrough the averments made in the application, the Company Judge was satisfied, itcan be said that all the averments made by the applicant were considered by theCompany Judge, and on the basis of those averments and allegations, the power wasexercised. The order, therefore, could be said to be in conformity with Section 450(2)of the Act.
31. In our opinion, in the light of what was stated in the order, and particularly, inparagraphs extracted hereinabove by us, there was application of mind by thelearned Company Judge, who had taken into account relevant facts and circumstancesas mentioned in the petition as well as application made by the RBI and variousorders passed by the RBI. The learned Company Judge was also aware that theRBI, taking into account the larger interest of majority of depositors, vis-a-vis assets ofthe company, exercised power, which was in conformity with law.
32. As observed by the Supreme Court in Joseph Kuruvilla Vellukunnel v. ReserveBank of India and Ors. (1963) 1 Comp LJ 56 (SC) : AIR 1962 SC 1371, the Reserve Bankis a banker's bank, and lender of the last resort'. Its objective is to ensure monetarystability in India and to operate and regulate the credit system of the country. It has,therefore, a perform a delicate balance between the need to preserve and maintainthe credit structure of the country by strengthening the rule as well as apparentcreditworthiness of the banks operating in the country, and the interest of the depositors.The RBI thus, according to apex court, occupies a place of 'pre-eminence' toensure the monetary discipline and to regulate the economy or the credit system ofthe country as an 'expert body'.
32.1 If the RBI has been made sole judge to decide whether affairs of a particularbanking company were being conducted prejudicially to the interests of the depositors,normally, a court of law would not interfere with the decision of such body andorder of winding up of such company on the application of the RBI. Such a provision,therefore, in the opinion of the Supreme Court (majority), could not be held ultravires or unconstitutional.
33. A similar vie was taken by the Supreme Court in the subsequent decision inPeerless General Finance and Investment Co. Ltd. and Anr. v. Reserve Bank of India,(1992) 1 Comp LJ 351 (SC) : AIR 1992 SC 1033.
34. Regarding supply of records and materials also, our attention was invited bythe learned counsel for the RBI to Section 45NB of the Act, which relates to disclosureof information. It declares that any information relating to non-banking financialcompany contained in any statement of return submitted by such company underthe provisions of Chapter III-B or obtained through audit or inspection or otherwiseby the bank shall be retreated as confidential and shall not, except otherwise providedin the section, be disclosed'.
35. Again, the action has been taken by the RBI in larger public interest and takinginto account the interest of large number of depositors. Considering all the facts andcircumstances, the learned Company Judge exercised power under Sub-section (2) ofSection 450 of the Act and, in our opinion, the company cannot make grievanceagainst such order.
36. For the foregoing reasons, the appeal deserves to be dismissed and is, accordingly,dismissed. Notice discharge. No costs.