1. This petition styled as Public Interest Litigation has been filed by one Shri Lalit Shah seeking prayer for a direction to the Agriculture and Cooperation Department of the Government of Gujarat to formulate an appropriate scheme for repayment of money of the depositors by way of implementation of One Time Settlement(OTS for short) for the borrowers of the banks in liquidation in conformity with the guidelines of Reserve Bank of India(RBI for short).
2. The case of the petitioner is that he has made deposits with one Charotar Nagrik Sahkari Bank which is a cooperative bank which is under liquidation. RBI has issued guidelines vide communication dated 10.4.2006 to the Secretaries of the States for framing of scheme for OTS to be granted to the borrowers of the various Urban Cooperative Banks. It is also the case of the petitioner that though the State Government formulated a scheme for OTS, for cooperative banks operating in the State of Gujarat, in disregard to the said guidelines issued by RBI excluded from operation of such a scheme, those Cooperative Banks which had gone under liquidation. It is not in dispute that the State Government had issued a separate one time settlement scheme specifically meant for those Cooperative Banks which were under liquidation. Such scheme was framed vide resolution dated 18.5.2007.
3. The case of the petitioner however, is that scheme framed under resolution dated 18.5.2007 which is applicable for Cooperative Banks under liquidation is different and the provisions for OTS are more stringent than the earlier scheme framed by the Government under resolution dated 8.6.2006 covering the Cooperative Banks which are not in liquidation.
4. Appearing for the petitioner, learned advocate Shri Y.N. Oza with Shri Tejas Barot submitted that the State Government could not have discriminated between the Cooperative Banks which are under liquidation and those which are not in liquidation. He submitted that RBI guidelines dated 10.4.2006 made no such distinction and it was therefore, not open for the State Government to make a separate and different scheme for Cooperative Banks under liquidation from one covering those banks which were not in liquidation. He contended that directions issued by RBI under Section 21 and 35 A of the Banking Regulation Act are binding on the State Government since the RBI under the Reserve Bank of India Act as well as under the Banking Regulation Act has exclusive authority to issue such directions and the subject matter was exclusively within the legislative powers of the Union.
4.1 Reliance was placed on the decision of the Apex Court in case of Joseph Kuruvilla Vellukunnel v. Reserve bank of India and others reported in 1962 Supp(3) SCR 632, wherein the Apex Court was pleased to consider at length the nature of powers enjoyed and duties to be perform by RBI under the Reserve Bank of India Act. 4.2 Reliance was placed on the decision in case of Central Bank of India v. Ravindra and others reported in (2002) 1 Supreme Court Cases 367, wherein in paragraph 55(5), the Apex Court observed that the Reserve Bank of India is the prime banking institution of the country entrusted with a supervisory role over banking and conferred with the authority of issuing binding directions having statutory force, in the interest of the pubic in general and preventing banking affairs from deterioration and prejudice as also to secure the proper management of any banking Company. 4.3 Reliance was also placed on the decision in case of Corporate Bank v. D.S. Gowda and another reported in (1994) 5 Supreme Court Cases 213, wherein once again nature of powers of RBI to issue directions were discussed.
4.4 Learned counsel also relied on following decisions to contend that the State Government had no authority to formulate its own scheme for one time settlement for the Cooperative Banks under liquidation since it was the subject matter exclusively within the domain of RBI considering the legislative powers of the Union as per Entry No. 45 of List I.
1) Union of India and another v. Delhi High Court Bar Association and others reported in (2002) 4 Supreme Court Cases 275. 2) State of Maharashtra v. Sant Dnyaneshwar Shikshan Shastra Mahavidyalaya and others reported in (2006) 9 SCC 1 3) Prof. Yashpal and another v. State of Chhatisgarh and others reported in (2005) 5 Supreme Court Cases 420. 4) Bharti Vidyapeeth(Deemed University) and others v. State of Maharashtra and another reported in 2004 11 Supreme Court Cases 755
5. On the other hand, learned Advocate General Shri Kamal Trivedi appearing for the State Government opposed the petition and submitted that the petitioner has not disclosed any public interest. He also submitted that the State Government after careful consideration formulated a suitable scheme for the Cooperative Banks under liquidation to suit the special requirements of such banks. There was no rigid directives from the RBI to formulate OTS Scheme and it was therefore, within the discretion of the State Government to formulate a scheme for those Cooperative Banks which were under liquidation. In any case, OTS Scheme formulated by resolution dated 8.6.2006 under the guidelines issued by RBI was time bound and the scheme is no longer operational as the period for which the scheme was framed is over.
5.1 He relied on decision of the Apex Court in case of Oriental Bank of Commerce v. Sunder Lal Jain and another reported in (2008) 2 Supreme Court Cases 280, wherein the order of the High Court issuing mandamus directing the concerned banks for applying the guidelines of the RBI for declaring the account of the petitioner as Non Performing Asset was set aside, observing that in order that a writ of mandamus may be issued there must be a legal right with the party asking for the writ to compel the performance of some statutory duty cast upon the authorities.
5.2 He further submitted that guidelines issued by RBI cannot be termed as directives or statutory guidelines under Section 21 or 35A of the Banking Regulation Act
6. Having thus heard learned advocates appearing for the parties at considerable length, we find that in facts of the present case, it is not necessary to go into the question of legislative powers of the Union or the State with respect to the subject matter under consideration for the reasons recorded here-in-after.
7. We find that RBI guidelines issued under communication dated 19.4.2006 did not provide for a rigid straitjacket formula for preparing OTS Scheme. In paragraph-2 of the said communication, it is clearly stated that the guidelines for one OTS Scheme is forwarded which could be modified to be in the line with the legal position obtaining as per the provisions of the Cooperative Societies Act/Rules. In the later portion of paragraph-2, it is again stated that the State Government may consider the same and issue necessary notification/administrative orders to primary Cooperative Banks under their jurisdiction on the lines indicated.
8. It can thus be seen that the communication itself left sufficient discretion to the State Government to suitably adopt and when need be, modify the terms of the scheme. The State Government after due consideration in its wisdom at the first instance, formulated a OTS Scheme under resolution dated 8.6.2006 covering all the Cooperative Banks which were not in liquidation. Subsequently, a slightly modified scheme was prepared under resolution dated 18.5.2007 covering those Cooperative Banks which were under liquidation. We do not find that by doing so, the State Government committed any discrimination. Cooperative Banks which are under liquidation and those which are not do not form a homogeneous class and action of the State Government treating the two sets of Banks differently would not offend Article 14 of the Constitution.
9. We further find that while adopting resolution dated 18.5.2007 for formulation of OTS Scheme applicable to the Cooperative Banks under liquidation, Government has carefully considered all the aspects. It is recorded inter-alia that it is necessary that faith of the public should be reestablished in the cooperative activities and a suitable atmosphere be created. It is noted that work of recovery of dues of Banks under liquidation is very slow and negligible.
10. Additionally, in the affidavit in reply filed by the State, it is stated inter-alia that there are 65 Cooperative Banks under liquidation. Deposit, Insurance and Credit Guarantee Corporation ('DICGC' for short) is the major stake holder as it stood as guarantor with respect to small deposit holders up to Rupees One Lakh in almost all the banks and therefore without hearing DICGC, no orders can be passed.
11. It can thus be seen that formulation of one time scheme vide resolution dated 18.5.2007 for covering Cooperative Banks under liquidation was a decision of the Government after careful consideration of all relevant aspects. It would not be appropriate on part of this Court to interfere with such exercise of discretion in policy matters which is not shown to be irrational, arbitrary or based on extraneous considerations.
12. Additionally, we also find that the initial scheme framed by resolution dated 8.10.2006 covering Cooperative banks which are not in liquidation has come to an end by afflux of time. It is therefore, not possible to give any directions to the State Government to bring the cases of Cooperative Banks under liquidation on par with the said scheme. It would amount to direction of implementation of the scheme which is no longer in existence. From the affidavit filed by the Government it can be seen that even the Scheme covering Cooperative Banks under liquidations as amended by Resolution dated 10.10.2007, provided for last date for making application up to 18.11.2007 and the last date for disposal of such applications of 18.2.2008. Thus even this scheme at present is not in existence.
13. Significantly, we also find that though the petition is titled as public interest litigation, the petitioner has not disclosed any public interest in the petition. The petitioner claims to be a depositor in a Cooperative bank which is under liquidation. The nature and amount of deposit is also not disclosed.
14. For all these reasons, the petition cannot be accepted. Same is dismissed. Notice is discharged.