Banking Regulation Act 1949 > Act > Banking Regulation Act > Summary

BRA 01 March 16, 1949

BANKING REGULATINS A!T 1949
T"e Banking Regulation Act #a$ %a$$e& a$ t"e Banking !om%anie$ Act 1949 an&
came into 'orce #it" e(ect 'rom )arc" 1*+ 1949, Later it$ #a$ c"ange& to t"e
Banking Regulation$ Act 1949 #it" e(ect 'rom )arc" 1+ 19**,
A $"ort note on $ome o' t"e more im%ortant $ection$ are gi-en .elo#, T"e
%articular $ection to #"ic" t"e %oint re'ere$ i$ $tate& at t"e en& o' t"e %oint,
Banking mean$ acce%ting 'or t"e %ur%o$e o' len&ing or in-e$tment o' &e%o$it$
o' money 'rom %u.lic re%aya.le on &eman& or ot"er#i$e an& #it"&ra#a.le .y
c"e/ue+ &ra't$ or&er or ot"er#i$e 01 0i2 0.22,
Banking com%any mean$ any com%any #"ic" tran$act$ t"e .u$ine$$ o'
.anking 010i20c2
Tran$act .anking .u$ine$$ in In&ia 01 0i2 0e2,
3eman& lia.ilitie$ are t"e lia.ilitie$ #"ic" mu$t .e met on &eman&, Time
lia.ilitie$ are lia.ilitie$ t"at are not &eman& lia.ilitie$ 010i20'2
Secure& loan or a&-ance$ mean$ a loan or a&-ance ma&e on t"e $ecurity o'
a$$et t"e market -alue o' #"ic" i$ not at any time le$$ t"an t"e amount o' $uc"
loan or a&-ance$ an& un$ecure& loan or a&-ance$ mean$ a loan or a&-ance not
$ecure&,010i20"2,
4artially $ecure& a&-ance i$ an a&-ance t"at i$ only %artially $ecure&,
Bu$ine$$ a .anking com%any may .e engage& in inclu&e .orro#ing+ kee%ing
locker$+ i$$uing letter$ o' cre&it+ i$$uing an& collecting on tra-eller c"e/ue$ an&
t"e like, 0*012,
No .anking com%any $"all engage in any 'orm o' .u$ine$$ ot"er t"an t"o$e
re'erre& in Section *012 0*052,
Banking com%anie$ carrying on .anking .u$ine$$ in In&ia mu$t u$e at lea$t
one #or& .ank+ .anking+ .anking com%any in it$ name 062,
T"i$ $ection &etail$ re$triction$ on .u$ine$$ o' certain kin&$ $uc" a$ tra&ing o'
goo&$ etc, 072
T"i$ $ection %ro"i.it$ .ank$ 'rom "ol&ing any immo-a.le %ro%erty "o#$oe-er
ac/uire& e8ce%t a$ ac/uire& 'or it$ o#n u$e 'or a %erio& e8cee&ing 6 year$ 'rom
ac/ui$ition o' t"e %ro%erty, RBI may e8ten& t"i$ %erio& .y 9-e year$ 092
T"ere are %ro"i.ition$ on certain em%loyment$ $uc" a$ t"e !"airman an&
3irector$ etc 01:2
4ai& u% ca%ital+ re$er-e$ an& rule$ 11 ; 152
Bank$ are not to %ay any commi$$ion+ .rokerage+ &i$count etc, more t"an
5,1< o' %ai& u% -alue o' one $"are 01=2
A .anking com%any i$ %ro"i.ite& 'rom creating a c"arge u%on any un%ai&
ca%ital o' t"e com%any, 0142, Section 140A2 %ro"i.it$ a .anking com%any 'rom
creating a >oating c"arge on t"e un&ertaking or any %ro%erty o' t"e com%any
#it"out t"e RBI %ermi$$ion,
4ayment o' &i-i&en& .y any .ank i$ %ro"i.ite& until all o' it$ ca%itali$e&
e8%en$e$ "a-e .een com%letely #ritten o( 0112
In or&er to create a re$er-e 'un&+ 5:< o' t"e %ro9t$ $"oul& .e tran$'erre& to
t"i$ 'un& .e'ore any &i-i&en& i$ &eclare& 016 0122
!a$" re$er-e ? Non?$c"e&ule& .ank$ to maintain =< o' t"e &eman& an& time
lia.ilitie$ .y #ay o' ca$" re$er-e$ #it" it$el' or .y #ay o' .alance in a current
account #it" RBI 0172 T"i$ may c"ange 'rom time to time,
4ermit$ .ank$ to 'orm $u.$i&iary com%any 'or certain %ur%o$e$ 0192
No .anking com%any $"all "ol& $"are$ in any com%any+ #"et"er a$ %le&gee+
mortgagee or a.$olute o#ner$ o' any amount e8cee&ing =:< o' it$ o#n %ai& u%
$"are ca%ital @ re$er-e$ or =:< o' t"e %ai& u% $"are ca%ital o' t"at com%any
#"ic"e-er i$ le$$, 019052,
Bank$ may not grant loan to %er$on intere$te& in management o' t"e .ank
05:2
Re$er-e Bank may i$$ue &irecti-e$ to .ank$ to &etermine %olicy 'or a&-ance$
0512
E-ery .ank to maintain a %ercentage o' it$ &eman& an& time lia.ilitie$ .y #ay
o' ca$"+ gol&+ unencum.ere& $ecuritie$ #"ic" may .e 51<?4:< a$ on la$t Ari&ay
o' 5n& %rece&ing 'ortnig"t or a$ &etermine& 'rom time to time0542,
Return o' unclaime& &e%o$it$ to .e $u.mitte& 01: year$ an& a.o-e2 05*2
E-ery .ank "a$ to %u.li$" it$ .alance $"eet a$ on )arc" =1$t 0592,
Balance $"eet i$ to .e got au&ite& 'rom /uali9e& au&itor$ 0=: 0i22
Bank$ mu$t %u.li$" .alance $"eet an& au&itor$ re%ort #it"in = mont"$ 'rom
t"e en& o' %erio& to #"ic" t"ey re'er, RBI may e8ten& t"e %erio& .y 'urt"er t"ree
mont" 0=12
Bank$ are %ro"i.ite& 'rom %ro&ucing any con9&ential in'ormation to any
aut"ority un&er In&u$trial 3i$%ute$ Act, 0=4A2
RBI aut"ori$e& to un&ertake in$%ection o' .ank$ 0=12,
Amen&ment carrie& in t"e Act &uring 197= em%o#er$ !entral Go-ernment to
'rame rule$ $%eci'ying t"e %erio& 'or #"ic" a .ank $"all %re$er-e it$ .ook$ 041?y2+
nomination 'acilitie$ 041BA to BA2 an& return a %ai& in$trument to a cu$tomer .y
kee%ing a true co%y 041B2,
!ertain return$ are al$o re/uire& to .e $ent to RBI .y .ank$ $uc" a$ mont"ly
return o' li/ui& a$$et$ an& lia.ilitie$ 054?=2+ /uarterly return o' a$$et$ an&
lia.ilitie$ in In&ia 0512+ return o' unclaime& &e%o$it$ i,e, 1: year$ an& a.o-e 05*2
an& mont"ly return o' a$$et$ an& lia.ilitie$ 056?12,
Banking Regulation Act 1949 > Bare Act > 4art :1 > 4reliminary
BRA 01 March 10, 1949
TCE BANKING REGULATIN
A!T+ 1949
0D o' 194921E
F1:t" )arc"+ 1949G
AN A!T T !NSLI3ATE AN3 A)EN3 TCE LAH RELATING
T BANKING 5FEEEG
H"erea$ it i$ e8%e&ient to con$oli&ate an& amen& t"e la# relating to .anking
5FEEEGI It i$ "ere.y enacte& a$ 'ollo#$J
4ART I
4RELI)INARK
1, S"ort title+ e8tent an& commencement,? 012 T"i$ Act may .e calle& t"e
Banking =E FRegulationG Act+ 1949,
4E F052 It e8ten&$ to t"e #"ole o' In&ia 1FE E EG,
0=2 It $"all come into 'orce on $uc" &ate *E a$ t"e !entral Go-ernment may+ .y
noti9cation in t"e Lcial GaMette+ a%%oint in t"i$ .e"al',
5, A%%lication o' ot"er la#$ not .arre&,? T"e %ro-i$ion$ o' t"i$ Act $"all .e in
a&&ition to+ an& not+ $a-e a$ "ereina'ter e8%re$$ly %ro-i&e&+ in &erogation o' t"e
6E F!om%anie$ Act+ 191* 01 o' 191*2G an& any ot"er la# 'or t"e time .eing in
'orce,
!))ENTS
Sco%e o' Section,? Section 5 $tate$ t"at t"e %ro-i$ion$ o' t"e Act $"all .e in
a&&ition to+ an& not+ e8ce%t a$ e8%re$$ly %ro-i&e& un&er t"e Act+ in &erogation o'
any ot"er la# 'or t"e time .eing in 'orce,7E
NS"allO,? It i$ #ell?kno#n %rinci%le t"at in inter%retation o' $tatute$ #"ere t"e
$ituation an& t"e conte8t #arrant$ it+ t"e #or& N$"allO u$e& in a $ection o' a
$tatute "a$ to .e con$true& a$ NmayO,9E
Lia.ility in c"it 'un& tran$action? H"et"er $a-e& .y t"e %ro-i$ion$ o' Sec,=0"2 0B2
o' Tamil Na&u In&e.te& 4er$on$0Tem%orary Relie'2 Act+196*,? T"e c"it 'un&
tran$action i$+ in it$ e$$ence a tran$action o' a kin& #"ic" a .anking com%any
can legitmately un&ertake #it"in t"e go-erning %ro-i$ion$ o' t"e Banking
Regulation Act+ 1949, In t"e in$tant ca$e+ t"e %etitioner+ cannot+ t"ere'ore+ $eek
to take "i$ lia.ility in t"e c"it 'un& tran$action out o' t"e $a-ing %ro-i$ion o'
Sec,= 0"2 0B2 o' t"e Tamil Na&u In&e.te& 4er$on$ 0Tem%orary Relie'2 Act+ 196*,
1:E
4ro-i$ion$ o' ot"er enactment an& t"eir a%%lication are not+ in any #ay
e8clu&e&,? In t"e in$tant ca$e+ t"e %oint 'or con$i&eration i$ #"et"er t"e rate o'
intere$t claime& .y t"e re$%on&ent Bank can .e a $u.Pect?matter o' Pu&icial
$crutiny un&er t"e %ro-i$ion$ o' t"e U$uriou$ Loan$ Act, T"i$ /ue$tion "a$ to .e
an$#ere& aLrmati-ely+ .ecau$e t"ere i$ no %ro"i.ition in t"e Banking Regulation
Act+ 1949+ %reclu&ing t"e !ourt 'rom $crutini$ing t"e rate o' intere$t un&er t"e
%ro-i$ion$ o' t"e U$uriou$ Loan$ Act+ $ince Sec,5 o' t"e Banking Regulation Act
make$ it clear t"at t"e %ro-i$ion$ o' any ot"er enactment an& t"eir a%%lication
are not+ in any #ay+ e8clu&e& .y t"e %ro-i$ion$ o' t"e Banking Regulation Act+
1949, 11E
Em%loyment 'or t"e legal "eir$ o' an em%loyee #"o &ie& in "arne$$,? T"e
%ro-i$ion$ in t"e Banking Regulation Act+ 1949+ are not e8"au$ti-e, Section 5 o'
t"e $ai& Act rea&$ t"at t"e %ro-i$ion$ o' t"e Act $"all .e in a&&ition to an& not+ in
&erogation o' t"e !om%anie$ Act+ an& anot"er la# 'or t"e time .eing in 'orce,
T"u$ t"e %ro-i$ion$ o' t"e Banking Regulation$ Act #ill .e in a&&ition to t"e
%ro-i$ion$ o' t"e ot"er la#$ unle$$ it i$ e8%re$$ly %ro-i&e& ot"er#i$e in t"e Act
it$el',
T"e %etitioner i$ entitle& to claim em%loyment on com%a$$ionate groun&$
irre$%ecti-e o' t"e /ue$tion o' la# rai$e& .y t"e a%%ellant?Bank, Inci&entally+ it
may .e mentione& t"at t"e a%%ellant?Bank "a$ a $c"eme o' it$ o#n 'or making
a%%ointment on com%a$$ionate groun&$ o' legal "eir$ o' it$ em%loyee$, But t"e
$ai& $c"eme i$ not a%%lica.le a$ $uc" to t"e #rit %etitioner a$ in !lau$e 1: o' t"e
Sc"eme t"e em%loyee$ o' t"e tran$'eror Bank #ill .e go-erne& .y t"e $ame
term$ an& con&ition$ o' $er-ice a$ are a%%lica.le to t"em on11t" Augu$t+ 1979
'or a %erio& o' t"ree year$, T"e #rit %etitioner "a$ $tu&ie& u%to 1t" $tan&ar& an&
$"e "a$ t#o minor &aug"ter$ an& one minor $on, S"e "a$ no ot"er $ource o'
income, Cence $"e i$ entitle& to .e a%%ointe& on com%a$$ionate groun&$, E-en i'
"er e&ucational /uali9cation i$ .elo# t"e minimum re/uire& .y t"e a%%ellant?
Bank t"e latter $"all grant a rela8ation o' t"e con&ition$ in "er ca$e "a-ing
regar& to t"e $%ecial 'act$ an& circum$tance$ o' t"e ca$e,15E
1=E F=,Act to a%%ly to !o?o%erati-e Societie$ in certain ca$e$,? Not"ing in t"i$ Act
$"all a%%ly to Q
0a2 a %rimary agricultural cre&it $ocietyI
0.2 a co?o%erati-e lan& mortgage .ankI an&
0c2 any ot"er co?o%erati-e $ociety+ e8ce%t in t"e manner an& to t"e e8tent
$%eci9e& in 4art R,G
!))ENTS
A%%lica.ility to !o?o%erati-e Societie$,? Among$t t"e %ro-i$ion$ in t"e Banking
Regulation Act #"ic" "a-e .een ma&e a%%lica.le to !o?o%erati-e Societie$ un&er
4art R o' t"e $ai& Act t"ere i$ no $ection #"ic" &eal$ #it" any o' t"e 'ollo#ing
matter$+ namely 0a2 t"e cla$$i9cation o' $uc" in$titution$ on t"e .a$i$ o' t"eir
9nancial %o$ition+ 0.2 t"e $ta(?%attern .y t"e $ai& in$titution or 0c2 con&ition$ o'
$er-ice o' t"e em%loyee$ in $uc" in$titution$, Suc" .eing t"e %o$ition+ t"e
contention t"at co?o%erati-e $ocietie$ carrying on t"e .u$ine$$ o' .anking are
go-erne& in re$%ect o' $uc" matter$+ only .y t"e %ro-i$ion$ containe& in t"e
Banking Regulation Act+ 1949+ i$ &e-oi& o' any $u.$tance,14E
A%%lication to $ocietie$,? In t"e 9r$t %lace all %ro-i$ion$ o' t"e Banking Regulation
Act &o not to !o?o%erati-e .ank$, Section = 0c2 o' T"e Banking Regulation Act+
1949 $tate$ t"at not"ing in t"i$ Act $"all a%%ly to 0a2 a %rimary agriculture cre&it
$ociety+ 0.2 a !o?o%erati-e Lan& )ortgage Bank+ an& 0c2 any ot"er !o?o%erati-e
$ociety e8ce%t in t"e manner an& to t"e e8tent $%eci9e&+ in %art R, 4art R make$
$u.$tantial &e%arture 'rom t"e Banking Regulation Act a$ 'ar a$ !o?o%erati-e
.ank$ are concerne&, Some o' t"e $ection$ o' t"e Act on #"ic" t"e learne& $ingle
Pu&ge "a$ relie&+ &o not a%%ly to co?o%erati-e Bank$, T"u$+ 'or e8am%le+ Sec, =1?
B un&er #"ic" amen&ment$ o' %ro-i$ion relating to a%%ointment$ o' managing
&irector$+ etc, are $u.Pect to t"e %re-iou$ a%%ro-al o' t"e Re$er-e Bank+ &o not
a%%ly to a !o?o%erati-e Bank,11E
!"e/ue &ra#n in 'a-our o' 9ctitiou$ %er$on,? H"ene-er a c"e/ue i$ &ra#n in
'a-our or a 9ctitiou$ %er$on+ a &uty i$ ca$t on t"e collecting .ank to %ro-e t"at it
"a& not acte& negligently an& t"at it "a& collecte& t"at amount in goo& 'ait",1*E
4o$t?&ate& c"e/ue,? 4o$t?&ate& c"e/ue i$ one containing a later &ate t"an t"at o'
t"e &eli-ery, T"ere'ore+ it "a$ an im%lie& notice t"at t"ere i$ no %re$ent &e%o$it
to t"e cre&it o' t"e &ra#er an& an im%lie& guarantee t"at t"e 'un&$ #oul& e8i$t
#"en it .ecome$ &ue, T"oug" t"e c"e/ue i$ %aya.le only on a 'uture &ate it may
.e negotia.le, T"ere i$ no %ro"i.ition in t"e Act again$t %o$t?&ating a c"e/ue, I'
a .anker %ay$ t"e amount .e'ore t"e &ue &ate o' a c"e/ue+ "e #ill lo$e t"e
$tatutory %rotection ari$ing 'rom $uc" %ayment,16E
4ro$ecution on &i$"onour o' c"e/ue,? T"e o(en&er a$ %er Sec,1=7+ Negotia.le
In$trument$ Act+ i$ t"e &ra#er o' t"e !"e/ue, ne o' t"e con&ition$ to con$titute
t"e o(ence i$ t"at t"e c"e/ue $"oul& "a-e .een %re$ente& to t"e .ank #it"in $i8
mont"$ o' it$ i$$ue, Anot"er con&ition i$ t"at t"e %ayee $"oul& "a-e ma&e a
&eman& 'or %ayment .y regi$tere& notice a'ter t"e c"e/ue i$ returne& un%ai&,
T"ir& con&ition i$ t"at t"e &ra#er $"oul& "a-e 'aile& to %ay t"e amount #it"in 11
&ay$ o' recei%t o' notice, Unle$$ t"e c"e/ue i$ returne& un%ai& &ue to
in$uLciency o' amount o' money $tan&ing to t"e cre&it o' t"e &ra#er or t"at it
e8cee&$ t"e amount arrange& to .e %ai& 'rom t"e account .y an agreement
ma&e #it" t"e .ank, Section 1=7 o' t"e Act i$ not attracte&,17E
4, 4o#er to $u$%en& o%eration o' Act,? 012 T"e !entral Go-ernment+ i' on a
re%re$entation ma& .y t"e Re$er-e Bank in t"i$ .e"al'+ i$ $ati$9e& t"at it i$
e8%e&ient $o to &o+ may .y noti9cation in t"e Lcial GaMette $u$%en& 'or $uc"
%erio&+ not e8cee&ing $i8ty &ay$+ a$ may .e $%eci9e& in t"e noti9cation+ t"e
o%eration o' all or any o' t"e %ro-i$ion$ o' t"i$ Act+ eit"er generally or in relation
to any $%eci9e& .anking com%any,
052 In a ca$e o' $%ecial emergency+ t"e Go-ernor o' t"e Re$er-e Bank+ or in "i$
a.$ence a 3e%uty Go-ernor o' t"e Re$er-e Bank nominate& .y "im in t"i$ .e"al'
may+ .y or&er in #riting+ e8erci$e t"e %o#er$ o' t"e !entral Go-ernment un&er
$u.?$ection 012+ $o "o#e-er t"at t"e %erio& o' $u$%en$ion $"all not e8cee& t"irty
&ay$+ an& #"ere t"e Go-ernor or &e%uty Go-ernor+ a$ t"e ca$e may .e+ &oe$ $o+
"e $"all re%ort t"e matter to t"e !entral Go-ernment 'ort" #it"+ an& t"e or&er
$"all+ a$ $oon a$ may .e+ .e %u.li$"e& in t"e GaMette o' in&ia,
0=2 T"e !entral Go-ernment may+ .y noti9cation in t"e oLcial gaMette e8tent
'rom time to time %erio& o' any $u$%en$ion or&ere& un&er $u.?$ection 012 or $u.?
$ection 052 'or $uc" %erio&+ not e8cee&ing $i8ty &ay$ at any one time+ a$ it t"ink$
9t+ $o "o#e-er t"at t"e total %erio& &oe$ not e8cee& one year,
042 A co%y o' any noti9cation i$$ue& un&er $u.?$ection 052 $"all .e lai& on t"e
ta.le o' 19E F4arliamentG a$ $oon a$ may .e a'ter it i$ i$$ue&,
1, Inter%retation,? 5:E FIn t"i$ Act+G unle$$ t"ere i$ anyt"ing re%ugnant in t"e
$u.Pect or conte8t+?
51E F0a2 Na%%ro-e& $ecuritie$O mean$?
0i2 $ecuritie$ in #"ic" a tru$tee may in-e$t money+ un&er !l,0a2+ !l,0.2+ !l,0..2+ !l,
0c2+ or !l,0&2+ o' Sec, 5: o' t"e In&ian Tru$t$ Act+ 1775 05 o' 17752I
0ii2 $uc" o' t"e $ecuritie$ aut"ori$e& .y t"e !entral Go-ernment un&er !l,0'2 o'
Sec, 5: o' t"e In&ian Tru$t$ Act+ 1775 05 o' 17752+ a$ may .e %re$cri.e&,G
0.2 N.ankingO mean$ t"e acce%ting+ 'or t"e %ur%o$e o' len&ing or in-e$tment+ o'
&e%o$it$ o' money 'rom t"e %u.lic+ re%aya.le on &eman& or ot"er#i$e+ an&
#it"&ra#al .y c"e/ue+ &ra't+ or ot"er#i$eI
0c2 N.anking com%anyO mean$ any com%any #"ic" tran$act$ t"e .u$ine$$ o'
.anking 55E Fin In&iaG,
E8%lanation,? Any com%any #"ic" i$ engage& in t"e manu'acture o' goo&$ or
carrie$ on any tra&e an& #"ic" acce%t$ &e%o$it$ o' money 'rom t"e %u.lic merely
'or t"e %ur%o$e o' 9nancing it$ .u$ine$$ a$ $uc" manu'acturer or tra&er $"all not
.e &eeme& to tran$act t"e .u$ine$$ o' .anking #it"in t"e meaning o' t"i$ clau$eI
5=E F0c?a2 N.anking %olicyO mean$ any %olicy #"ic" i$ $%eci9e& 'rom time to time
.y t"e Re$er-e Bank in t"e intere$t o' t"e .anking $y$tem or in t"e intere$t o'
monetary $ta.ility or $oun& economic gro#t"+ "a-ing &ue regar& to t"e intere$t$
o' t"e &e%o$itor$+ t"e -olume o' &e%o$it$ an& ot"er re$ource$ o' t"e .ank an&
t"e nee& 'or e/uita.le allocation an& t"e eLcient u$e o' t"e$e &e%o$it$ an&
re$ource$IG
54E 0cc2 N.ranc"O or N.ranc" oLceO+ in relation to a .anking com%any+ mean$
any .ranc" or .ranc" oLce+ #"et"er calle& %ay oLce or $u.?%ay oLce or .y any
ot"er name+ at #"ic" &e%o$it$ are recei-e&+ c"e/ue$ ca$"e&+ or money$ lent an&
'or t"e %ur%o$e$ o' Sec,=1 inclu&e$ any %lace o' .u$ine$$ #"ere any ot"er 'orm
o' .u$ine$$ re'erre& to in $u.?$ection 012 o' Sec,* i$ tran$acte&IG
51E F0&2 Ncom%anyO mean$ any com%any a$ &e9ne& in Sec,= o' t"e !om%anie$
Act+ 191* 01 o' 191*2+ an& inclu&e$ a 'oreign com%any #it"in t"e meaning o'
Sec,191 o' t"at ActIG
5*E F0&a2 Ncorre$%on&ing ne# .ankO mean$ a corre$%on&ing ne# .ank
con$titute& un&er Sec,= o' t"e Banking !om%anie$ 0Ac/ui$ition an& Tran$'er o'
Un&ertaking$2 Act+ 196: 01 o' 196:2+ or un&er Sec,= o' t"e Banking !om%anie$
0Ac/ui$ition an& Tran$'er o' Un&ertaking$2 Act+ 197: 04 o' 197:2G,
56E F0e2 E E E E EG
0'2 N&eman& lia.ilitie$O mean$ lia.ilitie$ #"ic" mu$t .e met on &eman&+ an&
Ntime lia.ilitie$O mean$ lia.ilitie$ #"ic" are not &eman& lia.ilitie$I
57E F0(2 N3e%o$it In$urance !or%orationO mean$ t"e 3e%o$it In$urance
!or%oration e$ta.li$"e& un&er Sec,= o' t"e 3e%o$it In$urance !or%oration Act+
19*1 0DLRII o' 19*12IG
51E F0(a2 N3e-elo%ment BankO mean$ t"e In&u$trial 3e-elo%ment Bank o' In&ia
e$ta.li$"e& un&er Sec,= o' t"e In&u$trial 3e-elo%ment Bank o' In&ia Act+ 19*4
017 o' 19*42I
0(.2 NE8im BankO mean$ t"e E8%ort?Im%ort Bank o' In&ia e$ta.li$"e& un&er Sec,=
o' t"e E8%ort?Im%ort Bank o' In&ia Act+ 1971 057 'o 19712IG
59E F0(c2 NRecon$truction BankO mean$ t"e In&u$trial Recon$truction Bank o'
In&ia e$ta.li$"e& un&er Sec,= o' t"e In&u$trial Recon$truction Bank o' In&ia Act+
1974IG
=:E F0(&2 NNational Cou$ing BankO mean$ t"e National Cou$ing Bank e$ta.li$"e&
un&er Sec,= o' t"e National Cou$ing Bank Act+ 1976IG
0g2 Ngol&O inclu&e$ gol& in t"e 'orm o' coin+ #"et"er legal ten&er or not+ or in t"e
'orm o' .ullion or ingot+ #"et"er re9ne& or notI
=1E F0gg2 N)anaging agentO inclu&e$+ ?
0i2 Secretarie$ an& Trea$urer$+
0ii2 #"ere t"e managing agent i$ a com%any+ any &irector o' $uc" com%any+ an&
any mem.er t"ereo' #"o "ol&$ $u.$tantial intere$t in $uc" com%any+
0iii2 #"ere t"e managing agent i$ a 9rm+ any %artner o' $uc" 9rmI
=5E F0"2 N)anaging 3irectorO+ in relation to a .anking com%any+ mean$ a &irector
#"o+ .y -irtue o' an agreement #it" t"e .anking com%any or o' a re$olution
%a$$e& .y t"e .anking com%any in general meeting or .y it$ Boar& o' 3irector$
or+ .y -irtue o' it$ memoran&um or article$ o' a$$ociation i$ entru$te& #it" t"e
management o' t"e #"ole+ or $u.$tantially t"e #"ole o' t"e a(air$ o' t"e
com%any+ an& inclu&e$ a &irector occu%ying t"e %o$ition o' a managing &irector+
.y #"ate-er name calle&JG
==E F4ro-i&e& t"at t"e managing &irector $"all e8erci$e "i$ %o#er$ $u.Pect to t"e
$u%erinten&ence+ control an& &irection o' t"e Boar& o' 3irector$IG
=4E F0"?a2 NNational BankO mean$ t"e National Bank 'or Agriculture an& Rural
3e-elo%ment e$ta.li$"e& un&er Sec,= o' t"e National Bank 'or Agriculture an&
Rural 3e-elo%ment Act+ 1971I
=1E F0i2 E E E E EG
0P2 N%recri.e&O mean$ %re$cri.e& .y rule$ ma&e un&er t"i$ ActI
=*E F0P?a2 NRegional Rural BankO mean$ a Regional Rural Bank e$ta.li$"e& un&er
Sec,= o' t"e Regional Rural Bank$ Act+ 196* 051 o' 196*2IG
=6E F0k2 E E E E E E EG
=7E F0l2 NRe$er-e BankO mean$ t"e Re$er-e Bank o' In&ia con$titute& un&er Sec,=
o' t"e Re$er-e Bank o' In&ia Act+ 19=4 05 o' 19=42IG
=9E F0m2 E E E E E EG
0n2 N$ecure& loan or a&-anceO mean$ a loan or a&-ance ma&e on t"e $ecurity o'
a$$et$ t"e market -alue o' #"ic" i$ not at any time le$$ t"an t"e amount o' $uc"
loan or a&-anceI an& Nun$ecure& loan or a&-anceO mean$ a loan or a&-ance not
$o $ecure&I
4:E F0n?i2 NSmall In&u$trie$ BankO mean$ t"e Small In&u$trie$ 3e-elo%ment Bank
o' In&ia e$ta.li$"e& un&er Sec,= o' t"e Small In&u$trie$ 3e-elo%ment Bank o'
In&ia Act+ 1979IG
41E F0n?a2 N$mall $cale in&u$trial concernO mean$ an in&u$trial concern in #"ic"
t"e in-e$tment in %lant an& mac"inery i$ not in e8ce$$ o' $e-en an& a "al' lak"$
o' ru%ee$ or $uc" "ig"er amount+ not e8cee&ing t#enty lak"$ o' ru%ee$+ a$ t"e
!entral Go-ernment may+ .y noti9cation in t"e Lcial GaMette+ $%eci'y in t"i$
.e"al'+ "a-ing regar& to t"e tren&$ in in&u$trial &e-elo%ment an& ot"er rele-ant
'actor$IG
45E F0n?.2 NS%on$or BankO "a$ t"e meaning a$$igne& to it in t"e Regional Rural
Bank Act+ 196* 051 o' 196*2I
0n?c2 NState Bank o' In&iaO mean$ t"e State Bank o' In&ia con$titute& un&er Sec,=
o' t"e State Bank o' In&ia Act+ 1911 05= o' 19112IG
4=E F0n?&2 N$u.$i&iary .ankO "a$ t"e meaning a$$igne& to it in t"e State Bank o'
In&ia 0Su.$i&iary Bank2 Act+ 1919 0=7 o' 19192+
45E F0n?e2G N $u.$tantial intere$tO+?
0i2 in relation to a com%any mean$ t"e "ol&ing o' a .ene9cial intere$t .y an
in&i-i&ual or "i$ $%ou$e or minor c"il&+ #"et"er $ingly o' taken toget"er+ in t"e
$"are$ t"ereo'+ t"e amount %ai&?u% ca%ital o' t"e com%any+ #"ic"e-er i$ le$$I,
0ii2 in relation to a 9rm+ mean$ t"e .ene9cial intere$t "el& t"erein .y an
in&i-i&ual or "i$ $%ou$e or minor c"il&+ #"et"er $ingly or taken toget"er+ #"ic"
re%re$ent$ more t"an ten %er cent, o' t"e total ca%ital $u.$cri.e& .y all t"e
%artner$ o' t"e $ai& 9rmI
44EF0o2 all ot"er #or&$ an& e8%re$$ion$ u$e& "erein .ut not &e9ne& an& &e9ne&
in t"e !om%anie$ Act+ 191* 01 o' 191*2+ $"all "a-e t"e meaning$ re$%ecti-ely
a$$igne& to t"em in t"e Act,
41E FE E E E EG
!))ENTS
NBankingO Q )eaning o',? H"en t"e Bank act$ a$ an aut"ori$e& &ealer in 'oreign
e8c"ange an& a %er$on can recei-e 'oreign contri.ution$ only t"roug" any one o'
t"e .ranc"e$ o' a .ank+ $%eci9e& in t"e a%%lication 'or regi$tration+ it i$ a
tran$action o' .anking .u$ine$$, NBankingO a$ %er t"e &e9nition in t"e Banking
Regulation Act mean$ t"e acce%tance o' &e%o$it$ o' money 'rom t"e %u.lic
re%aya.le on &eman& or ot"er#i$e, T"e contention t"ere'ore t"at t"e Bank o'
!oc"in #a$ not tran$acting .anking .u$ine$$ #"en it #a$ 'unctioning a$ an
aut"ori$e& &ealer cannot al$o .e acce%te&,4*E
T"e e$$ential c"aracteri$tic o' .anking+ namely+ t"e %o#er to recei-e &e%o$it$
'rom t"e %u.lic #"ic" are re%aya.le in t"e manner in&icate& in Sec,1 012 0.2 o'
t"e Act i$ a.$ent an& merely t"e %o#er o' granting loan$ i$ retaine& an&
e8erci$e& t"at &oe$ not make t"e com%any a .anking com%any, Len&ing o'
money may .e one %"a$e o' a .anking .u$ine$$ .ut it i$ not t"e main %"a$e or
t"e &i$tingui$"ing %"a$e,46E
Sco%e an& a%%lica.ility o',? A &e9nition clau$e i$ al#ay$ $u.Pect to t"e conte8t in
#"ic" t"e #or& i$ u$e&, I' t"e conte8t $o re/uire$ a #or& or e8%re$$ion may .e
gi-en a meaning not co-ere& .y t"e &e9nition clau$e,47E In or&er t"at a .ank
may .e a .anking com%any it i$ in t"e 9r$t %lace nece$$ary t"at it mu$t .e a
Ncom%anyO, T"e State Bank o' Tra-ancore i$ not a Ncom%anyO %ro%erly $o calle&,
It i$ $u.$i&iary .ank #"ic" 'all$ #it"in t"e &e9nition o' Sec,50k2 o' t"e State Bank
o' In&ia 0Su.$i&iary Bank$2 Act+ 1919, It #a$ e$ta.li$"e& .y t"e !entral
Go-ernment in accor&ance #it" t"e Act o' 1919 an& i$ not a Ncom%anyO an&+
t"ere'ore+ not a .anking com%any, It mu$t 'ollo# t"at t"e &ecretal &e.t #"ic" t"e
re$%on&ent i$ lia.le to %ay to t"e a%%ellant i$ not o#e& to a .anking com%any, It
#a$ in&ee& not o#e& to any .anking com%any at all on 14t" Suly+ 196:+ .eing
t"e &ate on #"ic" t"e Act+ came into 'orce,49E
Inter%retation o' Sec, 1 0.2,? Section 1 0.2 o' t"e Banking Regulation Act+ 1949
&e9ne$ T.anking a$ acce%ting 'or t"e %ur%o$e o' len&ing or in-e$tment+ o'
&e%o$it$ o' money 'rom t"e %u.lic+ re%aya.le on &eman& or Tot"er#i$e an&
#it"&ra#al .y c"e/ue$+ &ra't$+ or&er or ot"er#i$e, n t"e %ro%er inter%retation
o' t"e a.o-e clau$e+ t"ere'ore+ i$ t"at e8em%tion #"ic" "a$ .een contem%late&
.y Sec,7:?4052 0a2 0i2 i$ in re$%ect o' t"e Banking a$ &e9ne& un&er Sec,1 0.2 o'
t"e Banking Regulation$ Act+ 1949, 1:E
)erely .ecau$e t"e %etitioner$ t"e co?o%erati-e $ocietie$ in /ue$tion are
re/uire& to a&-ance loan$ to t"eir mem.er$+ t"ey &o not cea$e to .e co?
o%erati-e $ocietie$ go-erne& .y t"e Act nor can t"ey .e treate& a$ .anking
com%anie$, It i$ al$o not %o$$i.le to "ol& t"at t"e$e acti-itie$ o' t"e %etitioner$
amount to N.ankingO a$ contem%late& un&er t"e Banking Regulation Act+ 1949+
ina$muc" a$ t"e$e co?o%erati-e $ocietie$ are not e$ta.li$"e& 'or t"e %ur%o$e o'
&oing N.ankingOa$ &e9ne& in Sec,1 0.2 o' t"e Banking Regulation Act+ 1949, 11E
Branc" or .ranc" oLce,? T"e &i(erent .ranc"e$ or .ranc" oLce$ &o not "a-e
un&er t"e $ai& Act+ $e%arate or &i$tinct %er$onality an& t"ey cannot .e
con$i&ere& a$ $e%arate entitie$, All oLcer$ o' t"e Banking com%any tran$acting
.u$ine$$ at any %articular .ranc" or .ranc" oLce acting on .e"al' o' t"e Banking
!om%any an& in t"at regar&+ accor&ingly+ t"e Banking !om%any in-e$t$ $uc"
oLcer$ #it" re/ui$ite %o#er$ an& aut"oritie$ o' #"ic" t"e $ole re%o$itory i$ t"e
Banking !om%any it$el',15E
Bank Q Te$t 'or &eci&ing it$ negligence,? ne o' t"e te$t$ o' &eci&ing #"et"er t"e
Bank #a$ negligent t"oug" not al#ay$ conclu$i-e+ i$ to $ee #"et"er t"e Rule$ or
in$truction$ o' t"e Bank #ere 'ollo#e& or not,1=E
Ainancial in$titution,? TBank$U are 9nancial in$titution$ #"ic" are engage& in
im%ro-ing t"e >o# o' tra&e+ mo-ement o' commerce an& e8%an$ion o' .u$ine$$
an& t"ere.y im%ro-ing t"e $ocio?economic con&ition o' t"e %eo%le,14E
In or&er to attract t"e %ro-i$ion o' t"e 3e.t Reco-ery Act+ it mu$t .e a &e.t
o#ing to a Bank or 9nancial in$titution &uring it$ .u$ine$$ acti-itie$ a$ $"o#n
un&er Sec, 10.2 an& 0c2 o' t"e Banking Regulation Act,11E
Banking !om%any,? )erely .ecau$e t"e a%%ellant co?o%erati-e $ociety a&-ance&
loan$ to it$ nominee an& carrie& out ot"er 9nancial tran$action$+ it &i& not
.ecome a .anking com%any or cea$e to .e a co?o%erati-e $ociety,1*E
NBanking com%anyO mean$ any com%any #"ic" tran$act t"e .u$ine$$ o' .anking
in In&ia, Cence 4unPa. National Bank i$ a com%any #"ic" tran$act$ .u$ine$$ o'
.anking in In&ia,16E
A !o?o%erati-e Bank &oe$ not 'all in t"e category o' a N.anking com%any,O17E
19E F1?A, Act to o-erri&e memoran&um+ article$+ etc,? Sa-e a$ ot"er#i$e
e8%re$$ly %ro-i&e& in t"i$ Act+?
0a2t"e %ro-i$ion$ o' t"i$ Act $"all "a-e e(ect not#it"$tan&ing anyt"ing to t"e
contrary containe& in t"e memoran&um or article$ o' a .anking com%any+ or in
any agreement e8ecute& .y it+ or in any re$olution %a$$e& .y t"e .anking
com%any in general meeting or .y it$ Boar& o' 3irector$+ #"et"er t"e $ame .e
regi$tere&+ e8ecute& or %a$$e&+ a$ t"e ca$e may .e+ .e'ore or a'ter t"e
commencement o' t"e Banking !om%anie$ 0Amen&ment2 Act+ 1919 0== o' 19192I
an&
0.2any %ro-i$ion containe& in t"e memoran&um+ article$+ agreement or re$olution
a'ore$ai& $"all+ to t"e e8tent to #"ic" it i$ re%ugnant to t"e %ro-i$ion$ o' t"i$ Act+
.ecome or .e -oi&+ a$ t"e ca$e may .e,G
!))ENT
Statutory agreement$ Q H"at amount$ to,? T"e &irecti-e$ i$$ue& .y t"e Re$er-e
Bank+ no &ou.t+ "a-e $tatutory 'orce, T"ey lay &o#n t"e gui&eline$ a.out t"e
met"o&ology o' o%eration$+ %olicy+ %roce&ure an& rate o' intere$t in 9nancing or
a&-ancing loan$ to -ariou$ cla$$e$ o' %er$on$, But t"e loan tran$action$ entere&
into .y t"e e8ecuti-e$ o' .anking in$titution$ in t"e u$ual cour$e o' t"eir
.u$ine$$ are not $tatutory agreement$ t"ey are Pu$t commercial tran$action$
go-erne& .y t"e gui&eline$ lai& &o#n .y t"e Re$er-e Bank, T"ere'ore it coul& not
.e urge& t"at $ince t"e loan tran$action$ entere& into .y .ank$ #it" t"eir
cu$tomer$ are go-erne& .y $tatutory &irecti-e o' t"e Re$er-e Bank+ t"e
tran$action$ .ecome $tatutory agreement$ an& !ourt cannot a%%ly t"e U$ury
Act$ to $cale &o#n t"e intere$t c"arge& in -ie# o' t"e o-erri&ing e(ect gi-en to
t"e Banking Regulation Act un&er Sec, 1?A, *:E
AT NTESJ
1 Aor Statement o' .Pect$ an& Rea$on$+ $ee GaMette o' In&ia+ 1947+ 4t, R+ %%,
=11 an& =15I 'or Re%ort o' Select !ommittee+ $ee i.i&,+ 1949I 4t,R+ %%,41 to 47,
E8ten&e& to 3a&ra an& Nagar Ca-eli .y Reg,* o' 19*=+ Sec,5 an& Sc",1 0#,e,',
1$t Suly+ 19*12 an& to Goa+ 3aman an& 3iu .yReg,11 o' 19*=+ Sec,= an&
Sc"e&ule 0#,e,', 1$t Sune+ 19*42I Lak$"a&#ee% I$lan&$ .y Reg,7 o' 19*1 0#,e,',1$t
cto.er+ 19*62, En'orce& in Sikkim #,e,',11t" 3ecem.er+1976 -i&e S,,1::7 0E2+
&ate& 11t" 3ecem.er+ 1976, Not"ing in t"i$ Act 0e8ce%t Sec,=4?A2 $"all a%%ly to
t"e In&u$trial 3e-elo%ment Bank o' In&ia+ -i&e Act 17 o' 19*4+ Sec,=4,
5 T"e #or& Tcom%anie$U omitte& .y Act 5= o' 19*1+ Sec,1:0#,e,',1$t )arc"+19**2,
= Su.$, .y i.i&,+ Sec,11+ 'or N!om%anie$O 0#,e,', 1$t )arc"+ 19**2,
4 Su.$+ .y Act 5: o' 191:+ Sec,5+ 'or $u.?$ection 052,
1 T"e #or&$ Ne8ce%t t"e State o' Sammu an& Ka$"mirO omitte& .y Act *5 o'
191*+ Sec,5 an& Sc"e&ule,
* 1*t" )arc"+ 1949I $ee Noti9cation No, A,4 04*2?Al,49+ &ate& 1:t" )arc"+ 1949+
GaMette o' In&ia+ 1949+ 4t, I+ %,=5*,
6 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NIn&ian !om%anie$ Act+ 191=
06 o' 191=2O0#,e,', 14t" Sanuary+ 19162,
7 State o' Kerala -, ),T, 3e-e$$ia+ A,I,R, 1966 S,!,==1 at %,===I Cemangini
Ainance an& Lea$ing 04,2 Lt&, R, Tamilna&u )ercantile Bank Lt&,+ 0199*2 =
!om%,L,S,5=7 0!,L,B,2,
9 Amal !"an&ra 3utt -, Secon& A&&itional 3i$trict Su&ge+ 019792 1 S,S,!, 1 at %,
6I State o' C,4, -, Sun&er$"an Kumar 0199:2 1 E,A,R, 11 at %, 17 0C,4,2I Agya Ram
-, State o' U,4,+ 199: 0562 A,!,!, 59 at %, =I 4ro%o$e& 3"ar#a& 3i$tt, E8,
Ser-icemenU$ !o?o%, Society Lt&, -, State+ A,I,R, 199= Knt, 116 at %, 119,
1: Raramani 3a-i&+ ! -, Bank o' )a&urai+ A,I,R, 197= )a&, 11 at %%, 1*+16,
11 )ut"ai -, Syn&icate Bank+ 4ollac"i+ 1977 Bank S, * at %, 17,
15 In&ian Bank -, K, U$"a+ 199* 0=2 Bank,L,S, 5** at %, 16= 0)a&,2,
1= Su.$, By Act 5= o' 19*1+ Sec 15+'or t"e 'ormer $ection 0#,e,', 1$t )arc"+
19**2,
14 G, Go%inat"an Nair -, State o' Kerala+ A,I,R, 1966 Ker, =* at %,=7,
11 S"armrao Rit"al !o?o%erati-e Bank Lt&, -, 4a&u.i&ri 4atta."iram B"at+199=
012 Bank L,S,=1= at %,=*:,
1* Syn&icate Bank -, Unite& !ommercial Bank+ 019912 6: !om%, !a$, 647 at
%%,614+611 0Knt,2,
16 )anoP K, Set" -, K,S,Aernan&eM+ 1991 052 Bank !,L,R, =71 at %%, =79+=9: 0Ker,2,
17 N,!, Kumarae$an -, Ammeera%%a+ 1991 052 Bank !,L,R, =41 at %, =44 0Ker,2I
A.&ul Sama& -, Satya Narain )a"a#ar+ 1991 012 A,I,!r,L,R, 4:5 at %,4:4 04,;C,2+
RaPi- Kumar -, State o' U,4, 1991 All, L,S, 994 at %,991I $#al I$%at U&yog -,
Salem Steel Su%%lier$+ 1991 012 A,I,!r,L,R, 97= at %, 976 0)a&,2,
19 Su.$, .y t"e A,, 191:+ 'or Nt"e 3ominion legi$latureO,
5: Su.$, .y Act 11 o' 19*=+ Sec, * 'or N012 In t"i$ ActO 0#,e,', 1$t Ae.ruary+ 19*42,
51 Su.$, .y Act No,1 o' 1974+ Sec,1=0#,e,', 11t" Ae.ruary+19742,
55 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nin any StateO,
5= In$, .y Act 17 o' 19*7+ Sec,5 0#,e,', 1$t Ae.ruary+ 19*92,
54 In$, .y Act == o' 1919+ Sec,5 0#,e,', 1$t cto.er+ 19192,
51 Su.$, .y i.i&,+ Sec,50ii2+ 'or !l,0&2+ 0#,e,', 1$t cto.er+ 19192,
5* In$, .y Act No,1 o' 1974+ Sec,1= 0#,e,', 11t" Ae.ruary+ 19742,
56 !lau$e 0e2+ omitte& .y Act 15 o' 191=+ Sec,5,
57 In$, .y Act 46 o' 19*1+ Sec,11 an& Sc", II 0#,e,', 1$t Sanuary+ 19*52,
59 In$, .y Act No,*5 o' 1974+ Sec,61 an& Sc", III 0#,e,', 5:t" )arc"+ 19712,
=: In$, .y Act No,1= o' 1976+ Sec,1* an& Sc", III 0#,e,', 9t" Suly+ 19772,
=1 In$, .y Act 17 o' 19*7+ Sec,5 0#,e,', 1$t Ae.ruary+ 19*92,
=5 Su.$, .y Act == o' 1919+ Sec,5+ 'or !l,0"2 0#,e,', 1$t cto.er+ 19192,
== A&&e& .y Act 17 o' 19*7+ Sec,5 0#,e,', 1$t Ae.ruary+ 19*92,
=4 In$, .y Act *1 o' 1971+ Sec,*1 Sc", II+ 4t,II 0#,e,', 1$t )ay+ 19752,
=1 !lau$e 0i2 omitte& .y Act == o' 1919+ Sec,5 0#,e,', 1$t cto.er 19192,
=* In$, .y Act *1 o' 1971+ Sec,*1 Sc", II+
=6 !lau$e 0k2 omitte& .y Act+== o' 1919+ Sec, 5 0#,e,', 17t" cto.er+ 19192,
=7 In$, .y Act 1 o' 1974+ Sec, 1= 0#,e,', 11t" Ae.ruary+ 19742,
=9 !lau$e 0m2 omitte& .y Act+== o' 1919+ Sec,5 0#,e,',1$t cto.er 19192,
4: In$, .y Act No,=9 o' 1979+ Sc",II+ 4t,III+ 0#,e,',6t" )arc"+199:2,
41 In$, .y Act 17 o' 19*7+ Sec,5 0#,e,', 1$t Ae.ruary+ 19*92,
45 In$, .y Act 1 o' 1974+ Sec, 1= 0#,e,', 11t" Ae.ruary+ 19742,
4= !lau$e$ 0n?.2 an& 0n?c2 re?lettere& a$ !l$, 0n?&2 an& 0n?e2 .y i.i&,0#,e,', 11t"
Ae.ruary+ 19742,
44 In$, .y Act == o' 1919+ Sec,5 0#,e,', 1$t cto.er+ 19192,
41 Su.?$ection 052 omitte& .y t"e A,,+ 191:,
4* Bi$"i% o' Kottayam -, Union o' In&ia+ A,I,R, 197* Ker, 15* at %, 159I Santa
Sa"kari Bank Lt&, -, State o' )a"ara$tra+ 019912 75 !om%, !a$, 6:6 0Bom,2,
46 Lak"i Ram -, State o' Caryana + 1979 012 All In&ia !r, L,R, 1176 at %, 117904 ;
C2I Sagannat" -, Bank o' In&ia+ 019942 7: !om%, !a$, 497 0),4,2I Ne# Bank o'
In&ia -, B"u%in&er Sing"+ 019942 7: !om%, !a$, 1:1 04 ; C2I !anara Bank -,
Tecom Engineer+ 019942 7: !om%, !a$, =51 0Ker,2I State Bank o' Bikaner ; Sai%ur
-, N,I,S,R, !or%oration+ 019912 75 !om%, !a$, 147 0RaP,2,
47 B"art Steel Tu.e$ Lt&, -, State o' Caryana+ A,I,R, 1966 4unP, 579 at %, 59=
49 State Bank o' Tra-ancore -, )o"amme& )a"amme& K"an+ 019752 15 !om%,
!a$, 49: at %,49*,
1: !ommi$$ioner o' Income Ta8 -, !o, %, Su%%ly ; !ommi$$ion S"o% Lt&,+ 199=
012 Bank, !,L,R, === at %,==6J199= 05:42 I,T,R, 61= at %,617 0RaP,2I Rimal !"an&ra
Gro-er -, Bank o' In&ia+ 05:::2 1 S,!,!, 155 at %,1=1JA,I,R,5::: S,!, 5171J5:::
012 S,T,5760S,!,2J5:::042 S,L,T, 5:5J5::: 052 !,L,T, 5*4 0S,!,2,
11 R,S,S,S, Niyamit"a -, State o' Karnataka+ 019912 65 !om, !a$, 4:9 at %%, 414
0Knt,2,
15 Sag&am.e Nil#a& !om%any -, 4unPa. National Bank+ G#alior+ 1991 052 Bank
!,L,R, 11: at %%,117+ 119 0),4,2,
1= In&ian -er$ea$ Bank -, In&u$trial !"ain !oncern+ 1991 Bank S,517 at %,554
0S,!,2 J 1991 Banker$ S, 517 0S,!,2 J 0199:2 1 S,!,!,474,
14 S,K,Agar#ala -, Union o' In&ia+ 5::1 012 Gau"ati L,S, 17= at %,194I A$$ociate&
Tim.er In&u$trie$ -, !entral Bank o' In&ia+ 05:::2 6 S,!,!, 9= at %,1:: J
A,I,R,5::: S,!,5*79J 5::: 092 S,T,16J5::: 0*2 S,L,T, 1*1 0S,!,2 J 5::: 0=2 S,!,S,
5=5,
11 In&u$trial 3e-elo%ment Bank o' In&ia -, Kri$"na Ailament$ Lt&,+ 05:::2 4
)",L,S,4=1 at %,4=1,
1* Rya-a$aya Se-a Sa"akara Sang"a Niyamit"a -, State o' Karnataka+ 019912 65
!om%, !a$, 4:9 at %,414 0Knt,2I A$$ociate& Tim.er In&u$trie$ -, !entral Bank o'
In&ia+ 05:::2 6 S,!,!, 9= at %,96I A,I,R, 5::: S,!,5*79J5::: 092 S,T, 0S,!,2 16 J
5::: 0*2 S,L,T, 1*1 0S,!,2 J 5::: 0=2 S,!,S, 5=5,
16 All In&ia Ne# Bank o' In&ia Em%loyee$ Ae&eration+ Ne# 3el"i -, Union o' In&ia+
A,I,R, 5::1 All,5:1 at %,5:7I Nort" Ea$t Ainance !or%oration Lt&, -, Union o' In&ia+
05:::2 1:1 !om%, !a$, =6= at %,=91 0Sikkim2,
17 4"oeni8 Im%e8 -, State o' RaPa$t"an+ A,I,R, 1997 RaP, 1:: at %, 1:=,
19 In$, .y Act == o' 1919+ Sec,5 0#,e,', 1$t cto.er+ 19192,
*: Go#&a+ 3,S, -, !or%oration Bank+ A,I,R, 197= Knt, 14= at %,116,
Banking Regulation Act 1949 > Bare Act > 4art :5 > Bu$ine$$ o' Banking
!om%anie$
BRA :5 )arc" 1:+ 1949
4ART II
BUSINESS A BANKING !)4ANIES

*, Aorm$ o' .u$ine$$ in #"ic" .anking com%anie$ may engage,? 012 In a&&ition to
t"e .u$ine$$ o' .anking+ .anking com%any may engage in any one or more o'
t"e 'ollo#ing 'orm$ o' .u$ine$$+ namely J

0a2 t"e .orro#ing+ rai$ing+ or taking u% o' moneyI t"e len&ing or a&-ancing o'
money eit"er u%on or #it"out $ecurityI t"e &ra#ing+ making acce%ting+
&i$counting+ .uying+ $elling collecting an& &ealing in .ill$ o' e8c"ange+ "un&i$+
%romi$$ory note$+ cou%on$+ &ra't$+ .ill$ o' la&ing+ rail#ay recei%t$ #arrant$+
&e.enture$+ certi9cate$+ $cri%$ an& ot"er in$trument$+ an& $ecuritie$ #"et"er
tran$'era.le or negotia.le or notI t"e granting an& i$$uing o' letter$ o' cre&it+
tra-ellerU$ c"e/ue$ an& circular note$I t"e .uying+ $elling an& &ealing in .ullion
an& $%ecieI t"e .uying an& $elling+ o' 'oreign e8c"ange inclu&ing 'oreign .ank
note$I t"e ac/uiring "ol&ing+ i$$uing on commi$$ion+ un&er#riting an& &ealing in
$tock+ 'un&$+ $"are &e.enture$+ &e.enture $tock+ .on&$+ o.ligation$+ $ecuritie$
an& in-e$tment$ o' all kin&$I t"e %urc"a$ing an& $elling o' .on&$+ $cri%$ or ot"er
'orm$ o' $ecuritie$ on .e"al' o' con$tituent$ or ot"er$+ t"e negotiating o' loan$
an& a&-ance$I t"e recei-ing o' all kin&$ o' .on&$+ $cri%$ or -alua.le$ on &e%o$it
or 'or $a'e cu$to&y or ot"er#i$eI t"e %ro-i&ing o' $a'e &e%o$it -ault$I t"e
collecting an& tran$mitting o' money an& $ecuritie$I

0.2 acting a$ agent$ 'or any Go-ernment or local aut"ority or any ot"er %er$on or
%er$on$I t"e carrying on o' agency .u$ine$$ o' any &e$cri%tion inclu&ing t"e
clearing an& 'or#ar&ing o' goo&$+ gi-ing o' recei%t$ an& &i$c"arge$ an&
ot"er#i$e acting a$ an attorney on .e"al' o' cu$tomer$+ .ut e8clu&ing t"e
.u$ine$$ o' a 1E Fmanaging agent or $ecretary an& trea$urerG o' a com%anyI

0c2 contracting 'or %u.lic an& %ri-ate loan$ an& negotiating an& i$$uing t"e $ameI

0&2 t"e e(ecting+ in$uring+ guaranteeing+ un&er#riting+ %artici%ating in managing
an& carrying out o' any i$$ue+ %u.lic or %ri-ate+ o' State+ munici%al or ot"er loan$
or o' $"are$+ $tock+ &e.enture$+ or &e.enture $tock o' any com%any+ cor%oration
or a$$ociation an& t"e len&ing o' money 'or t"e %ur%o$e o' any $uc" i$$ueI

0e2 carrying on an& tran$acting e-ery kin& o' guarantee an& in&emnity .u$ine$$I

0'2 managing+ $elling an& realiMing any %ro%erty #"ic" may come into t"e
%o$$e$$ion o' t"e com%any in $ati$'action or %art $ati$'action o' any o' it$ claim$I

0g2 ac/uiring an& "ol&ing an& generally &ealing #it" any %ro%erty or any rig"t+
title or intere$t in any $uc" %ro%erty #"ic" may 'orm t"e $ecurity or %art o' t"e
$ecurity 'or any loan$ or a&-ance$ or #"ic" may .e connecte& #it" any $uc"
$ecurityI

0"2 un&ertaking an& e8ecuting tru$t$I

0i2 un&ertaking t"e a&mini$tration o' e$tate$ a$ e8ecutor+ tru$tee or ot"er#i$eI

0P2 e$ta.li$"ing an& $u%%orting or ai&ing in t"e e$ta.li$"ment an& $u%%ort o'
a$$ociation+ in$titution$+ 'un&$+ tru$t$ an& con-enience$ calculate& to .ene9t
em%loyee$ or e8?em%loyee$ o' t"e com%any or t"e &e%en&ent$ or connection$ o'
$uc" %er$on$I granting %en$ion$ an& allo#ance$ an& making %ayment$ to#ar&$
in$uranceI $u.$cri.ing to or guaranteeing money$ 'or c"arita.le or .ene-olent
o.Pect$ or 'or any e8"i.ition or 'or any %u.lic+ general or u$e'ul o.PectI

0k2 t"e ac/ui$ition+ con$truction+ maintenance an& alteration o' any .uil&ing
#ork$ nece$$ary or con-enient 'or t"e %ur%o$e$ o' t"e com%anyI

0l2 $elling+ im%ro-ing+ managing+ &e-elo%ing+ e8c"anging+ lea$ing+ mortgaging+
&i$%o$ing o' or turning into account or ot"er#i$e &ealing #it" all or any %art o'
t"e %ro%erty an& rig"t$ o' t"e com%anyI

0m2 ac/uiring an& un&ertaking t"e #"ole or any %art o' t"e .u$ine$$ o' any
%er$on or com%any+ #"en $uc" .u$ine$$ i$ o' nature enumerate& or &e$cri.e& in
t"i$ $u.?$ectionI

0n2 &oing all $uc" ot"er t"ing$ a$ are inci&ental or con&uci-e to t"e %romotion or
a&-ancement o' t"e .u$ine$$ o' t"e com%anyI

0o2 any ot"er 'orm$ o' .u$ine$$ #"ic" t"e !entral Go-ernment may .y
noti9cation in t"e Lcial GaMette+ $%eci'y a$ a 'orm o' .u$ine$$ in #"ic" it i$
la#'ul 'or a .anking com%any to engage,

052 No .anking com%any $"all engage in any 'orm o' .u$ine$$ ot"er t"an t"o$e
re'erre& to in $u.?$ection 012,


!))ENTS

Sco%e o' t"e $ection,? Section * o' t"e Act %ro-i&e$ ela.orately 'or a #i&e -ariety
o' .u$ine$$ #"ic" a .anking com%any may engage it$el' in, A 'air con$i&eration
o' t"i$ $ection a$ #ell a$ t"e &e9nition o' N.ankingO in t"e Banking Regulation
Act+ 1949+ #oul& "a-e no &ou.t in any oneU$ min& t"at c"it 'un& tran$action
in&ulge& in .y a .anking com%any at any rate %artake$ t"e c"aracter o' a
.anking acti-ity,5E

Grant o' o-er&ra't 'acilitie$,? Section * o' t"e Banking Regulation Act+ 1949
&e$cri.e$ t"e 'orm$ o' .u$ine$$ #"ic" can .e con&ucte& .y a .anking com%any
in a&&ition to t"e .u$ine$$ o' .anking, H"en t"e .ank i$ engage& in &i(erent
ty%e$ o' .u$ine$$ a$ mentione& in t"i$ $ection+ it $ a%%arent t"at #"en t"e .ank
i$ granting t"e o-er&ra't 'acilitie$ to it$ client #"ic" i$ a cu$tomer+ it i$ %ro-i&ing
$er-ice to "im,=E

)oratorium on t"e .ank in 'orce Q H"et"er t"e .ank can tran$act .u$ine$$ a$ an
aut"ori$e& &ealer in 'oreign e8c"ange un&re Aoreign E8c"ange Regulation Act,?
Un&er Sec,* o' t"e Act a .anking com%any may engage in any ot"er .u$ine$$+
$%eci9e& t"erein in a&&ition to t"e .u$ine$$ o' .anking, T"u$ t"e Bank can .uy
an& $ell 'oreign e8c"ange inclu&ing 'oreign .ank note$+ collect an& &eal in .ill$ o'
e8c"ange+ recei-e -alua.le on &e%o$it or 'or $a'e cu$to&y an& tran$act $e-eral
'orm$ o' .u$ine$$, T"e moratorium contem%late& un&er Sec,41 012 o' t"e Act i$
Nin re$%ect o' a .anking com%anyO an& not con9ne& to .anking .u$ine$$ only,
)oratorium+ a$ t"e #or& $igni9e$ i$ a $u$%en$ion o' acti-ity+ a tem%orary .an on
t"e %er'ormance o' a legal o.ligation, Section 41 0=2 o' t"e Banking Regulation
Act t"ere'ore enPoin$ t"at t"e Banking !om%any $"all not &uring t"e %erio& o'
moratorium make any %ayment to any &e%o$itor or &i$c"arge any lia.ilitie$ or
o.ligation$ to any cre&itor+ e8ce%t a$ ot"er#i$e &irecte& .y t"e !entral
Go-ernment, T"e acti-ity o' t"e .anking com%any i$ t"u$ $u$%en&e& an& t"e
Bank cannot tran$act any .anking .u$ine$$ or e8c"ange in ot"er 'orm$ o'
.u$ine$$, T"e 'act t"at 'or certain ty%e$ o' .u$ine$$+ a 'urt"er aut"ori$ation or
%ermi$$ion i$ in$i$te& un&er t"e 'oreign 0$ic2 &oe$ not a(ect t"e content o' t"e
%o#er o' moratorium $anctione& un&er Sec,41 o' t"e Banking Regulation Act an&
&oe$ not aut"oriMe any .u$ine$$+ .anking or ot"er#i$e+ &uring t"e o%eration o'
t"e moratorium, T"e Bank i$ in $tatu$ /uo &uring t"i$ %erio&, T"u$+ #"en t"e
moratorium on t"e Bank i$ in 'orce+ t"e Bank cannot tran$act .u$ine$$ a$ an
aut"ori$e& &ealer in 'oreign e8c"ange un&er t"e Aoreign E8c"ange Regulation
Act al$o4E

rgani$ation o' Loan )ela,? Cel& t"e $c"eme neit"er -iolate$ t"e gui&eline$ o'
t"e Re$er-e Bank o' In&ia nor t"e commercial Banking La#$,1E

InPunction re$training %ayment in term$ o' t"e letter o' cre&it ? Grant o',? It i$ #ell
$ettle& t"at letter$ o' cre&it coul& .e .ot" re-oca.le an& irre-oca.le, H"ile t"e
irre-oca.le an& con9rme& letter$ o' cre&it $tan& on a &i(erent 'ooting
irre-oca.le letter$ o' cre&it #it"in t"e time can .e re-oke& .e'ore negotiation$, It
i$ $tate& t"at t"e contract .et#een t"e i$$uing .ank an& t"e interme&iary
&e%en&e& u%on t"e term$ in #"ic" t"e 'ormerU$ %romi$e to %ay #a$ couc"e&, It
#oul& .ecome .in&ing in t"e ca$e o' a con9rme& cre&it+ t"at i$ an irre-oca.le
cre&it #"ic" "a$ .een con9rme& .y t"e interme&iary or %aying .anker a$ $oon
a$ it i$ in&icate& to t"e .ene9ciary, I' t"e cre&it #a$ re-oca.le+ t"ere #a$ no
%oint in "a-ing it con9rme&+ $uc" a cre&it #a$ &eeme& to .e re-oca.le at any
time #it"out notice t"oug" it #a$ t"oug"t t"at a .anker %aying un&er a
re-oca.le cre&it coul& &eman& to .e reim.ur$e& in re$%ect o' any %ayment "e
"a& ma&e u%to t"e time o' re-ocation, But in or&er to en'orce %ayment t"e
&ocument$ ten&ere& mu$t con'orm to t"e e8act term$ an& con&ition$ $ti%ulate&
in t"e letter o' cre&it, It #oul& not &o to .e more or le$$ $imilar, T"e !ourt$
u$ually re'rain 'rom granting inPunction to re$train t"e %er'ormance o' t"e
contractual o.ligation$ ari$ing out o' t"e letter o' cre&it or a .ank guarantee
.et#een one .anker an& ot"er, I' $uc" tem%orary inPunction$ #ere to .e grante&
in tran$action .et#een a .anker an& a .anker re$training a .ank 'rom recalling
t"e amount &ue #"en %ayment #a$ ma&e un&er re$er-e to anot"er .ank or in
term$ o' t"e letter o' guarantee or cre&it+ e8ecute& .y it+ t"e #"ole .anking
$y$tem in t"e country #oul& 'ail, It i$ only in e8ce%tional ca$e$ t"at t"e !ourt$
#oul& inter'ere #it" t"e mac"inery o' irre-oca.le o.ligation$ a$$ume& .y
.anker$, nce a letter o' cre&it i$ e$ta.li$"e& t"ere i$ a contract .et#een t"e
i$$uing .ank an& t"e $eller, T"e .uyer "a$ no rig"t to inter-ene, I' t"e .ank %ay$
in -iolation o' t"e letter o' cre&it t"en t"e .uyer can al#ay$ $ue t"e .ank 'or any
&amage$ or .reac" o' "i$ contract, I'+ on t"e ot"er "an&+ t"ere are certain ot"er
claim$ o' t"e .uyer again$t t"e $eller t"en t"e .uyer can 9le a $uit 'or reco-ery
o' $uc" &amage$ an& money 'rom t"e $eller, In -ie# o' #ell?$ettle& %rinci%le o'
.alance o' con-enience in $uc" a ca$e in t"e a.$ence o' clear ca$e o' 'rau& to
t"e kno#le&ge o' t"e .ank t"e !ourt $"oul& not grant inPunction re$training
%ayment in term$ o' t"e letter o' cre&it a$ t"oug" in t"i$ ca$e t"e letter o' cre&it
#a$ irre-oca.le one+ it "a$ not yet .een re-oke&, T"u$ t"e or&er o' inPunction
#a$ -acate&,*E

Re$traint again$t enca$"ment o' .ank guarantee,? H"ere t"e amount #a$ in 'act
&ue #"ic" im%elle& t"e %etitioner to in-oke t"e .ank guarantee+ t"e re$traint
or&er %a$$e& .y t"e !ourt again$t enca$"ment o' .ank guarantee #a$ not
Pu$ti9e& .eing .a$e& on no e-i&ence,6E

!on$titutional -ali&ity o' Art, 5* 0&2,? T"e !oun$el rai$e$ an ingeniou$ argument
t"at t"e la# re'erre& to in Art, 5*0&2 can .e c"allenge& only on t"e groun& t"at it
o(en&$ %u.lic or&er+ morality an& "ealt", T"e !oun$el &eri-e$ in$%iration 'rom
t"i$ $u.mi$$ion 'rom t"e o%ening #or&$ o' t"e article, T"e !on$titution+ in Art,
5*+ guarantee$ to e-ery religiou$ &enomination or any $ection t"ereo' certain
rig"t$ relating to matter$ o' religion an& t"o$e a(ecting %ro%ertie$ an& t"eir
a&mini$tration, T"e$e rig"t$ are+ "o#e-er+ $u.Pect to %u.lic or&er+ morality an&
"ealt", T"e$e rig"t$ cannot t"ere'ore .e a$$erte& or recogni$e& #"en t"ey are
%lainly o%%o$e& to %u.lic or&er+ morality an& "ealt", It i$ t"i$ re$tricte& rig"t t"at
i$ guarantee&, Article 5*0&2 regulate$ t"at rig"t in accor&ance #it" la#, T"e la#
naturally may co-er #i&er 9el&$ an& cannot .e limite& to t"e t"ree $%eci9e&
$u.Pect$+ %u.lic or&er+ morality an& "ealt", Similarly+ #"ile t"i$ la# may .e
c"allenge& a$ .eyon& t"e legi$lati-e com%etence o' t"e State or a$ o(en&ing
Art$, 14 an& 19 o' t"e !on$titution+ i' cannot .e conten&e& t"at t"e c"allenge
$"oul& al$o .e re$tricte& to t"e$e groun&$ .a$e& on %u.lic or&er+ morality an&
"ealt", A legi$lation .eyon& t"e legi$lati-e com%etence cannot &eri-e $u%%ort
un&er t"i$ Article on t"e groun& t"at it i$ a legi$lation relating to %u.lic or&er+
morality an& "ealt" an& a(ecting t"e rig"t to a&mini$ter %ro%ertie$ o' a religiou$
in$titution, T"i$ %oint i$ a.$olutely .a$ele$$ an& "a$ to .e rePecte&,7E

3e'ault in re%ayment o' .ank &ue$ Q Bank not Pu$ti9e& in &enying it$ $er-ice$ to
t"e &e.tor,? Lea-ing all t"e contention$ o' t"e %artie$ o%en+ t"e re$%on&ent Bank
may not &eny .anking 'acilitie$ to t"e a%%ellant$ 'or o%eration o' a current
account to ena.le t"em to kee% t"eir .u$ine$$ going, It #oul& .e to no.o&yU$
.ene9t t"at a$ a re$ult o' a total &enial o' .anking 'acilitie$ V $er-ice$+ t"e
.u$ine$$ o' a%%ellant$ $"oul& come to a grin&ing "alt, Su%reme !ourt+ t"ere'ore+
&irecte& t"at #it"out %rePu&ice to t"e re$%ecti-e contention$ o' t"e %artie$+ t"e
re$%on&ent $"all allo# t"e o%eration o' one current account+ #"ic" #ill .e 'ree
'rom t"e inci&ent$ o' t"e .ankerU$ lien claime& .y t"e re$%on&ent $o a$ to ena.le
t"e a%%ellant to carry on it$ normal &ay?to?&ay .u$ine$$ tran$action$+ to o.tain
letter$ o' cre&it a 'ull margin an& to ena.le %ayment o' $tatutory outgoing$+
ta8e$+ #age$+ $alarie$+ ra#?material$+ etc, #"ic" are t"e u$ual .u$ine$$
re/uirement$ o' a manu'acturing unit, T"ere $"all .e not o.ligation on t"e %art o'
t"e Bank to %ro-i&e any cre&it 'acility in t"i$ account, Co#e-er in%ut$ o' money
into t"i$ account $"all not .e $u.Pecte& to or a%%ro%riate& un&er t"e lien claime&
.y t"e Bank,9E

Bank &ue$ Q Banking 'acilitie$ cannot .e $to%%e&,? It a%%ear$ t"at lea-ing all t"e
contention$ o' t"e %artie$ o%en+ t"e re$%on&ent?.ank may not &eny .anking
'acilitie$ to t"e a%%ellant$ 'or o%eration o' a current account to ena.le t"em to
kee% t"eir .u$ine$$ going, It #oul& .e to no.o&yU$ .ene9t t"at a$ a re$ult o' a
total &enial o' a .anking 'acilitie$V$er-ice$+ t"e .u$ine$$ o' a%%ellant $"oul&
come to a grin&ing "alt,1:E

In'erence o' 'rau&,? In'erence o' 'rau& i$ to .e &ra#n not 'rom in&i-i&ual e-ent$,
Eac" e-ent .y it$el' may not .e $uLcient 'or &ra#ing in'erence o' 'rau&, Totality
o' t"e e-ent$ cumulati-ely "a-e t"e e(ect o' 'rau&, In t"i$ ca$e+ i' t"e 'act$ an&
corre$%on&ence$ 'rom t"e $tage o' glo.al ten&er till t"e $uit i$ 9le& are
con$i&ere& toget"er+ a clear im%re$$ion o' 'rau& in t"e tran$action o' ca%ti-e
%o#er %lant .y &e'en&ant No$,1 to = i$ create& an& &e'en&ant No,4 cannot .e
'ully &i$$ociate& 'rom it,11E

In t"e in$tant ca$e it i$ an a&mitte& 'act t"at in t"e %laint it$el'+ t"ere #a$ no
allegation o' 'rau&, It #a$ initially only in t"e 9r$t a%%lication 'or t"e grant o'
inPunction t"at in a %aragra%" it "a$ .een mentione& t"at t"e a%%ellant "a&
in-oke& t"e .ank guarantee ar.itrarily, T"i$ a%%lication contain$ no 'act or
%articular$ in $u%%ort o' t"e allegation o' 'rau&, A $imilar .al& a-erment alleging
'rau& i$ al$o containe& in t"e $econ& a%%lication 'or inPunction relating to .ank
guarantee No, 4:V46, T"i$ i$ not a ca$e #"ere &e'en&ant No,1 "a& at any time
allege& 'rau& %rior to t"e 9ling o' inPunction a%%lication, T"e main contract+
%ur$uant to #"ic" t"e .ank guarantee #ere i$$ue& #a$ not $oug"t to .e a-oi&e&
.y alleging 'rau&+ nor #a$ it at any %oint o' time allege& t"at t"e .ank guarantee
#a$ i$$ue& .ecau$e any 'rau& "a& .een %laye& .y t"e a%%ellant, T"ere i$ no
&ou.t t"at t"e .al& a$$ertion o' 'rau& "a& .een ma&e $olely #it" a -ie# to
o.tain an or&er o' inPunction, In t"e a.$ence o' e$ta.li$"e& 'rau& an& not a mere
allegation o' 'rau& an& t"at al$o "a-ing .een ma&e only in t"e inPunction
a%%lication+ t"e !ourt coul& not+ in t"e %re$ent ca$e+ "a-e grante& an inPunction
relating to t"e enactment o' t"e .ank guarantee$,15E

1=E F6, U$e o' #or&$ N.ankO+ N.ankerO+ N.ankingO+ or N.anking com%anyO,? 012 No
com%any ot"er t"an a .anking com%any $"all u$e a$ %art o' it$ name 14E For in
connection #it" it$ .u$ine$$G any o' t"e #or&$ N.ankO+ N.ankerO or N.ankingO
an& no com%any $"all carry on t"e .u$ine$$ o' .anking in In&ia unle$$ it u$e$ a$
%art o' it$ name at lea$t one o' $uc" #or&$,

052 No 9rm+ in&i-i&ual or grou% o' in&i-i&ual$ $"all+ 'or t"e %ur%o$e o' carrying on
any .u$ine$$ u$e a$ %art o' it$ or "i$ name any o' t"e #or&$ N.ankO+ N.ankingO+
or N.anking com%anyO,

0=2 Not"ing in t"i$ $ection $"all a%%ly to Q
0a2 $u.$i&iary to a .anking com%any 'orme& 'or one or more o' t"e %ur%o$e$
mentione& in $u.?$ection 012 o' Sec,19+ #"o$e name in&icate$ t"at it i$
$u.$i&iary o' t"at .anking com%anyI
0.2 any a$$ociation o' .ank$ 'orme& 'or %rotection o' !om%anie$ Act+ 191* 01 o'
191*2,

!))ENTS

Sa'eguar&$ 'or genuine an& "one$t .ank cu$tomer$,? In or&er to en$ure t"at
genuine an& "one$ .ank cu$tomer$ are not "ara$$e& or %ut to incon-enience
$uLcient $a'eguar&$ "a-e al$o .een %ro-i&e& in !"a%ter IR+ Negotia.le
In$trument$ Act, Suc" $a'eguar&$ are J

0a2 t"at no !ourt $"all take cogniMance o' $uc" o(ence e8ce%t on a com%laint+ in
#riting+ ma&e .y t"e %ayee or "ol&er in &ue cour$e o' t"e c"e/ueI
0.2 t"at $uc" com%laint i$ ma&e #it"in one mont" o' t"e &ate on #"ic" t"e cau$e
o' action ari$e$I an&
0c2 t"at no !ourt in'erior to t"at o' a )etro%olitan )agi$trate or a Su&icial
)agi$trate o' t"e 9r$t cla$$ $"all try any $uc" o(ence,11E

Banker? )eaning o',? T"ere can .e no &ou.t t"at or&inarily t"e %o$ition o' t"e
.ank -i$?a?-i$ a %er$on &ealing #it" t"e .ank i$ t"at o' &e.tor an& cre&itor, It i$+
o' cour$e+ %er'ectly o%en to $uc" %er$on to $"o# t"at in a %articular tran$action
t"e .ank "a$ recei-e& money in tru$t, A common in$tance i$ #"ere a .ank i$
%ai& money 'or t"e e8%re$$ %ur%o$e o' it .eing remitte& to a %er$on at $ome
ot"er %lace, In any %articular ca$e it i$ 'or t"e %er$on alleging tru$t to e$ta.li$"
it, In t"e %re$ent ca$e t"ere i$ no e-i&ence #"ate-er to $"o# t"at t"e tran$action
#a$ anyt"ing more t"an t"e or&inary %urc"a$e &eman& &ra't on anot"er .ranc"
o' t"e .ank, T"e %lainti( "a$ a&mitte& in "i$ e-i&ence t"at "e "a$ %re-iou$ly
%urc"a$e& &ra't 'rom t"e &e'en&ant .ank on $e-eral occa$ion in connection #it"
"i$ .u$ine$$, Ce $tate& t"at "e 9lle& in a 'orm .e'ore %urc"a$e o' t"e &ra't .ut
t"i$ 'orm containe& no mention o' t"e %ur%o$e 'or #"ic" t"e &ra't #a$ .eing
%urc"a$e& on t"e 'act$+ t"ere'ore+ t"ere i$ not ca$e t"at t"e relation$"i% .et#een
t"e %lainti( an& t"e &e'en&ant .ank #a$ anyt"ing ot"er t"an o' cre&itor an&
&e.tor,1*E

T"e relation$"i% .et#een a &e%o$itor an& a .ank i$ t"e $im%le relation$"i% o' a
cre&itor an& a &e.tor, A &e%o$itor #"o &e%o$it$ money in .ank in "i$ current
account i$ not"ing more t"an a cre&itor an& it cannot .e $ai& t"at t"ere "a$ .een
any entru$tment to t"e .ank 'or any %articular %ur%o$e, T"e .ank i$+ o' cour$e+
lia.le to re'un& t"e money to t"e &e%o$itor #"en t"e &e%o$itor call$ 'or it+ .ut
t"e money &e%o$ite& .elong$ to t"e .ank an& t"e .ank i$ entitle& to &eal #it" it
a$ it like$,16E

7, 4ro"i.ition o' tra&ing,? Not#it"$tan&ing anyt"ing containe& in Sec,* or in any
contract+ no .anking com%any $"all &irectly or in&irectly &eal in t"e .uying or
$elling or .artering o' goo&$+ e8ce%t in conne8ion #it" t"e realiMation o' $ecurity
gi-en to or "el& .y it+ or engage in any tra&e+ or .uy+ $ell o' .arter goo&$ 'or
ot"er$ ot"er#i$e t"an in conne8ion #it" .ill$ o' e8c"ange recei-e& 'or collection
or negotiation or #it" $uc" o' it$ .u$ine$$ a$ i$ re'erre& to in !l,0i2 o' $u.?$ection
012 o' Sec,*J

17E F4ro-i&e& t"at t"i$ $ection $"all not a%%ly to any $uc" .u$ine$$ a$ i$
$%eci9e& in %ur$uance o' !l, 02 o' $u.?$ection 012 o' Sec,*,G

E8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $ection+ Ngoo&$O mean$ e-ery kin& o'
mo-a.le %ro%erty+ ot"er t"at actiona.le claim$+ $tock$+ $"are$+ money+ .ullion
an& $%ecie+ an& all in$trument$ re'erre& to in !l,0a2 o' $u.?$ection 012 o' Sec,*,

!))ENT
Section 7 o' t"e Act i$ a %ointer to t"e re$triction im%o$e& .y Sec,15 o' t"e !"it
Aun& Act 04: o' 19752, 19E

9, 3i$%o$al o' non?.anking a$$et$,? Not#it"$tan&ing anyt"ing containe& in Sec,*+
no .anking com%any $"all "ol& any immo-a.le %ro%erty+ "o#$oe-er ac/uire&+
e8ce%t $uc" a$ i$ re/uire& 'or it$ o#n u$e+ 'or any %erio& e8cee&ing $e-en year$
'rom t"e ac/ui$ition t"ereo' or 'rom t"e commencement o' t"i$ Act+ #"ic"e-er i$
later or any e8ten$ion o' $uc" %erio& a$ in t"i$ $ection %ro-i&e&+ an& $uc"
%ro%erty $"all .e &i$%o$e& o' #it"in $uc" %erio& or e8ten&e& %erio&+ a$ t"e ca$e
may .eJ

4ro-i&e& t"at t"e .anking com%any may+ #it"in t"e %erio& o' $e-en year$ a$
a'ore$ai&+ &eal or tra&e in any $uc" %ro%erty 'rom t"e %ur%o$e o' 'acilitating t"e
&i$%o$al t"ereo'J

4ro-i&e& 'urt"er t"at t"e Re$er-e Bank may in any %articular ca$e e8ten& t"e
a'ore$ai& %erio& o' $e-en year$ .y $uc" %erio& not e8cee&ing 9-e year$ #"ere it
i$ $ati$9e& t"at $uc" e8ten$ion #oul& .e in t"e intere$t$ o' t"e &e%o$itor$ o' t"e
.anking com%anyJ

!))ENT

T"e #or& N$"allO ? )eaning o',? It "a$ .een lai& &o#n con$i$tently .y t"e
Su%reme !ourt t"at t"e mere u$e o' t"e #or& N$"allO .y it$el' in t"e $tatute &oe$
not make t"e %ro-i$ion man&atory+ .ut it i$ t"e &uty o' t"e !ourt$ o' Pu$tice to try
to get at t"e real intention o' t"e Legi$lature .y care'ully atten&ing to t"e #"ole
$co%e o' t"e $tatute to .e con$true&, In eac" ca$e+ one "a$ to look to t"e
$u.Pect?matter+ con$i&er t"e im%ortance o' t"e %ro-i$ion$ an& t"e relation o' t"at
%ro-i$ion #it" t"e general o.Pect inten&e& to .e $ecure& .y t"e Act an& u%on t"e
re-ie# o' t"e ca$e in t"at a$%ect &eci&e #"et"er t"e enactment i$ man&atory or
only &irectory,5:E

51E F1:, 4ro"i.ition o' em%loyment o' managing agent$ an& re$triction$ on
certain 'orm$ o' em%loyment,? 012 No .anking com%any Q

0a2 $"all em%loy or .e manage& .y a managing agentI or
0.2 $"all em%loy or continue t"e em%loyment o' any %er$on?
0i2 #"o i$+ or at any time "a$ .een+ a&Pu&icate& in$ol-ent+ or "a$ $u$%en&e&
%ayment or "a$ com%oun&e& #it" "i$ cre&itor$+ or #"o i$+ or "a$ .een+ con-icte&
.y !riminal !ourt o' an o(ence in-ol-ing moral tur%itu&eI or
0ii2 #"o$e remuneration or %art o' #"o$e remuneration take$ t"e 'orm o'
commi$$ion or o' a $"are in t"e %ro9t$ o' t"e com%anyJ
55E F4ro-i&e& t"at not"ing containe& in t"i$ $u.?clau$e $"all a%%ly to t"e
%ayment .y .anking com%any o' Q
0a2 any .onu$ in %ur$uance o' a $ettlement or a#ar& arri-e& at or ma&e un&er
any la# relating to in&u$trial &i$%ute$ or in accor&ance #it" any $c"eme 'rame&
.y $uc" .anking com%any or in accor&ance #it" t"e u$ual %ractice %re-ailing in
.anking .u$ine$$ I
0.2 any commi$$ion to any .roker 0inclu&ing guarantee .roker2+ ca$"ier?
contractor+ clearing an& 'or#ar&ing agent+ auctioneer or any ot"er %er$on+
em%loye& .y t"e .anking com%any un&er a contract ot"er#i$e t"an a$ regular
mem.er o' t"e $ta( o' t"e com%any I orG
0iii2 #"o$e remuneration i$+ in t"e o%inion o' t"e Re$er-e Bank+ e8ce$$i-eI or
0c2 $"all .e manage& .y any %er$on ?
5=E F0i2 #"o i$ a &irector o' any ot"er com%any not .eing Q
0a2 a $u.$i&iary o' t"e .anking com%any+ or
0.2 a com%any regi$tere& un&er Sec,51 o' t"e !om%anie$ Act+ 191* 01 o' 191*2J
4ro-i&e& t"at t"e %ro"i.ition in t"i$ $u.?clau$e $"all not a%%ly in re$%ect o' any
$uc" &irector 'or a tem%orary %erio& not e8cee&ing t"ree mont"$ or $uc" 'urt"er
%erio& not e8cee&ing nine mont"$ a$ t"e Re$er-e Bank may allo#I orG
0ii2 #"o i$ engage& in any ot"er .u$ine$$ or -acation or
0iii2 54EF#"o$e term$ o' oLce a$ a %er$on managing t"e com%any i$G 'or a %erio&
e8cee&ing 9-e year$ at any one timeJ
51E F4ro-i&e& t"at t"e term o' oLce o' any $uc" %er$on may .e rene#e& or
e8ten&e& .y 'urt"er %erio&$ not e8cee&ing 9-e year$ on eac" occa$ion $u.Pect to
t"e con&ition t"at $uc" rene#al or e8ten$ion $"all not .e $anctione& earlier t"an
t#o year$ 'rom t"e &ate on #"ic" it i$ to come into 'orce J
4ro-i&e& al$o t"at #"ere t"e term o' oLce o' $uc" %er$on i$ 'or an in&e9nite
%erio&+ $uc" term+ unle$$ it ot"er#i$e come$ to an en& earlier+ $"all come to an
en& imme&iately on t"e e8%iry o' 9-e year$ 'rom t"e &ate o' "i$ a%%ointment or
on t"e e8%iry o' t"ree mont"$ 'rom t"e &ate o' commencement o' Sec, 7 o' t"e
Banking La#$ 0)i$cellaneou$ 4ro-i$ion$2 Act+ 19*= 011 o' 19*=2+ #"ic"e-er i$
laterGJ
4ro-i&e& 'urt"er t"at not"ing in t"i$ clau$e $"all a%%ly to a &irector+ ot"er t"an
t"e managing &irector+ o' a .anking com%any .y rea$on only o' "i$ .eing $uc"
&irector,
E8%lanation,? Aor t"e %ur%o$e o' $u.?clau$e 0iii2 o' !l,0.2+ t"e e8%re$$ion
NremunerationO+ in relation to a %er$on em%loye& or continue& in em%loyment+
$"all inclu&e $alary+ 'ee$ an& %re/ui$ite$ .ut $"all not inclu&e any allo#ance$ or
ot"er amount$ %ai& to "im 'or t"e %ur%o$e o' reim.ur$ing "im in re$%ect o' t"e
e8%en$e$ actually incurre& .y "im in t"e %er'ormance$ o' "i$ &utie$,

052 In 'orming it$ o%ining un&er $u.?clau$e 0iii2 o' !l,0.2 o' $u.?$ection 012+ t"e
Re$er-e Bank may "a-e regar& among ot"er matter$ to t"e 'ollo#ingJ
0i2 t"e 9nancial con&ition an& "i$tory o' t"e .anking com%any+ it$ $iMe an& area
o' o%eration+ it$ re$ource$+ t"e -olume o' it$ .u$ine$$+ an& t"e tren& o' it$
earning ca%acityI
0ii2 t"e num.er o' it$ .ranc"e$ or oLce$ I
0iii2 t"e /uali9cation$+ age an& e8%erience o' t"e %er$on concerne&I
0i-2 t"e remuneration %ai& to ot"er %er$on$ em%loye& .y t"e .anking com%any
or to any %er$on occu%ying a $imilar %o$ition in any ot"er .anking com%any
$imilarly $ituate&I an&
0-2 t"e intere$t$ o' it$ &e%o$itor$,
5*E F56 E E E E G
0*2 Any &eci$ion or or&er o' t"e Re$er-e Bank ma&e un&er t"i$ $ection $"all .e
9nal 'or all %ur%o$e$,G

!))ENTS

Suri$&iction o' !i-il !ourt$, Q !i-il $uit c"allenging &i$mi$$al o' an em%loyee o'
State Bank Q Not $eeking relie' un&er t"e In&u$trial 3i$%ute$ Act Q Suri$&iction o'
!i-il !ourt not .arre&,57E

BankU$ circular No, 4, A1V77V*)V151V77+ &ate& 51$t No-em.er+ 1977 Q
A%%lica.ility an& $co%e o', Q nly %aragra%" 1 o' t"e circular i$ material, T"e $ai&
%aragra%"+ inter alia+ %ro-i&e$ t"at 'or 9lling u% t"e -acancy o' %art timeV'ull time
$#ee%er 'or t"e ne#ly o%ene& .ranc"e$VoLce$+ re/ui$ition i$ to .e $ent to t"e
local em%loyment e8c"ange &etailing t"erein t"e nature o' -acancy+
remuneration to .e %ai& to t"e $electe& can&i&ate$ a$ #ell a$ t"e eligi.ility
criteria o' t"e can&i&ate$ 'or t"e $ai& %o$t, T"e $ai& %olicy 'urt"er %ro-i&e$ t"at
ot"er $ource$ may .e ta%%e& #"en em%loyment e8c"ange 'aile& to $u%%ly
$uita.le can&i&ate$ 'or recruitment in t"e %o$t o' $#ee%er, It may .e mentione&
t"at t"i$ circular i$ a%%lica.le in t"e ca$e$ o' 9lling u% t"e %o$t o' $uc" $#ee%er$
'or t"e ne#ly o%ene& .ranc"e$ an& oLce$ o' t"e .ank, In t"e gi-en ca$e it #a$
o%en to t"e .ank aut"oritie$ to "a-e 'ollo#e& t"e %ro-i$ion$ o' t"e circular .e'ore
gi-ing t"e a%%ointment on a tem%orary .a$i$ to t"e %etitioner .ut #"en once t"e
re$%on&ent .ank "a$ alrea&y a%%ointe& a %er$on "ol&ing out 'uture "o%e$ an&
&ream$ #"et"er t"e .ank $"oul& .e or&ere& to $"atter $uc" &ream$ taking
$"elter un&er $uc" recruitment %olicy,59E

(ence in-ol-ing moral tur%itu&e, ? (ence in-ol-ing moral tur%itu&e i$ one
#"ic" in-ite$ $"ame on t"e %er$on #"o .ecame guilty t"ereo', In 'act+ in t"e
mo&ern #orl&+ t"ere are $o many o(ence$ 'or in$tance+ o(ence$ relating to
traLc rule$+ #it" #"ic" any %er$on em%loye& may .ecome guilty o' at any time,
T"ere'ore+ a $im%le con-iction .y a !riminal !ourt #oul& not nece$$arily entail
&i$/uali9cation to em%loyment in %u.lic $er-ice or in a .ank, T"at i$ #"y+ t"e la#
maker "a$ care'ully circum$cri.e& t"e nature o' t"e o(ence+ t"e con-iction+
t"ere'ore+ #oul& "a-e im%lication in t"e matter o' em%loyment an& t"e only
category o' o(ence$ are t"o$e #"ic" in-ite $"ame on t"e %er$on #"o .ecame
guilty+ #"ic" $"ame #ill irra&iate on t"e in$titution #"ic" em%loy$, In t"i$ ca$e+
t"e %etitioner #a$ not in a %o$ition to $"o# t"e !u$tom$ !learance !erti9cate in
re$%ect o' t#o item$ o' article$, T"e 'act o' %o$$e$$ing R!R an& -i&eo camera
#it"out t"e corre$%on&ing cu$tom$ &ocument$ i$ .y no $tretc" o' imagination an
o(ence in-ol-ing moral tur%itu&e an&+ t"ere'ore+ no automatic termination o'
$er-ice can take %lace on t"e .a$i$ o' t"e con-iction recor&e& again$t t"e
accu$e&=:E

)oral tur%itu&e Q Te$t,? T"e te$t #"ic" can .e a%%lie& 'or Pu&ging #"et"er an
o(ence &oe$ or &oe$ not in-ol-e Tmoral tur%itu&eU can .e $ummari$e& a$ 'ollo#$J
012 #"et"er t"e act lea&ing to a con-iction #a$ $uc" a$ coul& $"ock t"e moral
con$cience o' $ociety in generalI
052 #"et"er t"e moti-e #"ic" le& to t"e act #a$ a .a$e one+ an&
0=2 #"et"er on account o' t"e act "a-ing .een committe& t"e %er%etrator coul&
.e con$i&ere& to .e o' a &e%ra-e& c"aracter or a %er$on #"o #a$ to .e looke&
&o#n u%on .y t"e $ociety,
It i$ not %o$$i.le to lay &o#n any a.$tract $tan&ar& #"ic" con$titute$ moral
tur%itu&e, T"ere are certain criminal o(ence$ like t"e't+ ro..ery+ criminal .reac"
o' tru$t+ mi$a%%ro%riation o' %ro%erty+ #"ic" &irectly in-ol-e moral tur%itu&e, In
$uc" ca$e$ no ela.orate in-e$tigation i$ re/uire& to 9n& out t"e &e%ra-e&
con&uct o' t"e &elin/uent em%loyee, I' t"e o(ence &oe$ not $"o# any element o'
-ilene$$+ &e%ra-ity an& #eakne$$ o' c"aracter o' t"e o(en&er t"e &i$ci%linary
aut"ority i$ re/uire& to con$i&er t"e 'act an& circum$tance$ o' t"e ca$e to 9n&
out #"et"er t"e moti-e #"ic" le& to t"e con-iction #a$ &e%ra-e, It i$ a $ettle&
la# t"at Tmoral tur%itu&eU cannot .e a%%lie& in it$ #i&e$t term, Co#e-er+ t"e
ratio &eci&en&i o' t"e -ariou$ ca$e$ in&icate t"at t"e /ue$tion #"et"er a certain
o(ence in-ol-e$ Nmoral tur%itu&eO or not #ill nece$$arily &e%en& on t"e
circum$tance$ in #"ic" t"e o(ence i$ committe&, It i$ not e-ery %uni$"a.le act
t"at can .e con$i&ere& to .e an o(ence in-ol-ing moral tur%itu&e, Any criminal
con-iction %er $e &oe$ not amount to Tmoral tur%itu&eU, So it 'ollo#$ t"at #"en
t"e em%loyee i$ con-icte& on criminal c"arge "i$ &i$mi$$al cannot .e automatic
unle$$+ t"ere i$ a $%eci9c rule in t"at regar&,=1E

r&er o' &i$mi$$al,? r&er o' &i$mi$$al cannot .e c"allenge& on groun& t"at i$
#a$ .a$e& on mere con-iction an& not on con&uct #"ic" le& to con-iction or t"at
it #a$ not a $%eaking or&er or t"at t"e em%loyee #a$ $u.$e/uently relea$e& on
%ro.ation,=5E

Bi%artite agreement,?In t"e in$tant ca$e in &e%artmental en/uiry an em%loyee
#a$ %uni$"e& to increment $to%%age an& later on con-icte& o' criminal c"arge$
on c"arge?$"eet $u.mitte& .y !,B,I, It #a$ "el& t"at t"e con-iction #a$ not
-iolati-e o' Art, 5:052 o' t"e !on$titution,==E

Em%loyment o' %er$on$ on commi$$ion .a$i$,? Section 1: o' t"e Banking
Regulation Act &oe$ not %re-ent em%loyment o' %er$on$ on commi$$ion .a$i$,
T"e %ro-i$o to Sec,1: make$ it clear t"at commi$$ion can .e %ai& to %er$on$ #"o
are not in regular em%loyment, Un&ou.te&ly t"e 3e%o$it !ollector$ are not
regular em%loyee$ o' t"e Bank, But t"ey ne-ert"ele$$ are #orker$ #it"in t"e
meaning o' t"e term$ a$ &e9ne& in t"e In&u$trial 3i$%ute$ Act, T"ere i$ clearly
relation$"i% o' ma$ter an& $er-ant .et#een t"e 3e%o$it !ollector$ an& t"e
concerne& Bank,=4E

Sta( #orking on commi$$ion cannot .e &eeme& a$ regular em%loyee,? A rea&ing
o' t"e $u.$tanti-e %ro-i$ion$ a$ #ell a$ t"e e8ce%tion unmi$taka.ly $"o#$ t"e
intention o' t"e 4arliament t"at t"e %er$on to #"om a commi$$ion i$ %aya.le a$
remuneration cannot .e a regular $ta( o' t"e .ank .ut t"at "e may .e em%loye&
on contract, Em%loyment on t"e .a$i$ o' contract i$+ un&er t"e $c"eme o' t"e
$ection+ treate& on a &i(erent 'ooting t"an a %er$on #"o i$ a regular $ta( o' t"e
.ank, A &e%o$it collector+ like t"e re$%on&ent+ #oul& .e one #"o i$ $/uarely
co-ere& .y t"e e8ce%tion+ i,e, t"e %ro-i$o+ $ince "i$ remuneration totally con$i$t$
o' commi$$ion 'or #"ic" rea$on "e coul& not .e a regular $ta(, I' "e #oul& "a-e
.een a regular $ta( 'rom t"e &ate o' "i$ engagement a$ a &e%o$it collector+ "e
coul& not "a-e .een %ai& remuneration .y #ay o' commi$$ion, Suc"
engagement o' "im+ an& o' t"e &e%o$it collector$ #"o #ere a&mitte&ly engage&
a'ter t"e 1949 Act+ #oul& "a-e .een again$t t"e %ro-i$ion o' la# an& #oul& "a-e
.een null an& -oi&,=1E


Su$%en$ion o' %ayment, T"e 9ling o' an in$ol-ency %etition in t"e %re$ent ca$e
"a-ing t"e $ame %rinci%le an& cau$ing t"e i$$ue o' notice an& %u.lication ma&e
in t"e GaMette a$ #ell a$ $er-ice o' notice on $ome o' t"e re$%on&ent$ to t"e
%etition #oul&+ con$titute $uLcient .a$i$ to $u.$tantiate t"e claim o' t"e
re$%on&ent t"at t"e %etitioner T$u$%en&e& %aymentU #it"in t"e meaning o'
Sec,1:012 0.2 0i2 o' t"e Act, !on$e/uently+ &e "or$ any ot"er material$ on t"e
-ery a&mitte& con&uct an& cour$e o' action a&o%te& .y t"e %etitioner an& "a-ing
regar& to t"e $ti%ulation containe& in t"e Banking Regulation Act+ 1949 t"e
termination on account o' lo$$ o' con9&ence cannot .e $ai& to .e one in-ol-ing
any mi$con&uct an& con$e/uently+ t"e non?com%liance #it" %aragra%" 151 o'
t"e Bi?%artite $ettlement &oe$ not -itiate t"e or&er o' termination, T"e %lea o'
-iolation o' Art, 14 o' t"e !on$titution o' In&ia an& c"allenge to %aragra%" 155 o'
t"e Bi?%artite $ettlement al$o &o not merit acce%tance, !on$e/uently+ t"e
%ro-i$ion$ containe& in %ara 151 an& 155 "a& &i(erent an& &i$tinct role$ to %lay
an& "a& .een "el& to .e .in&ing all along u%on t"e %artie$ an& t"e %lea .a$e& on
Art,14 o' t"e !on$titution o' In&ia+ i$ #"olly mi$concei-e&,=*E

4ro.ation &oe$ not o.literate t"e $tigma o' con-iction,? In t"e in$tant ca$e it #a$
$u.mitte& .y t"e learne& coun$el a%%earing 'or re$%on&ent No,1 t"at once a
%er$on "a$ .een relea$e on %ro.ation+ $uc" %er$on &oe$ not $u(er 'rom any
&i$/uali9cation attac"ing to "i$ con-iction o' an o(ence un&er any la# an& t"at
t"e Banking Aut"ority #ere not Pu$ti9e& in %rocee&ing again$t re$%on&ent N,1
un&er t"e &i$ci%linary rule$, A &ee% t"oug"t #a$ gi-en to t"i$ matter an& it #a$
"el& t"at relea$e o' t"e o(en&er on %ro.ation &oe$ not o.literate t"e $tigma o'
con-iction on $uc" %er$on an& an em%loyee i$ not entitle to rein$tatement in
$er-ice automatically .y getting t"e .ene9t o' %ro.ation o' goo& con&uct,=6E

Bank #orker collecting &e%o$it 'rom &oor to &oor #orkmen,? T"e $econ&
re$%on&ent i$ a #orkman a$ &e9ne& .y t"e Act on t"e 'act$ an& circum$tance$ o'
t"i$ ca$e+ "a-ing regar& to t"e term$ an& con&ition$ $et out in t"e agreement
.et#een t"e Bank an& t"e $econ& re$%on&ent, T"e e-i&ence in t"i$ ca$e clearly
e$ta.li$"e$ t"at t"e $econ& re$%on&ent i$ a $er-ant o' t"e Bank an& not an
in&e%en&ent contractor,=7E

Cu$.an& com%elling "i$ #i'e to accom%any "im to "i$ o#n "ou$e Q Action &oe$
not in-ol-e moral tur%itu&e,? In t"e %re$ent ca$e+ t"e con-iction #a$ ultimately
ma&e .y t"e a%%ellate !ourt only un&er Sec,=*1+ I,4,!, a$ one o' an a.&uction,
T"e learne& Su&ge note& t"at t"e com%lainant #a$ t"e %etitionerU$ #i'e an& t"ere
coul& not .e a con-iction un&er Sec,=*4+ I,4,!, 'or #"ic" "e #a$ c"arge&, Ce
u%"el& t"e con-iction un&er Sec,=*1+ I,4,!, only on t"e groun& t"at $"e #a$
'orce& to come 'rom one %lace to anot"er again$t "er #i$", But+ t"e 'act t"at $"e
#a$ "i$ #i'e+ cannot .e ignore&, I' a "u$.an& e-en mi$takenly com%el$ "i$ #i'e
to accom%any "im to "i$ o#n "ou$e+ no rea$ona.le %er$on can $ay t"at t"i$
action in-ol-e& moral tur%itu&e,=9E

3i$/uali9cation 'or continuing in $er-ice,? It i$ rele-ant to notice t"at un&er
Se,1:012 0.2 o' t"e Banking Regulation Act+ any an& e-ery con-iction .y a
!riminal !ourt &oe$ not o%erate a$ a &i$/uali9cation 'or continuing in $er-ice+
only t"e con-iction .y a !riminal !ourt o' an o(ence in-ol-ing moral tur%itu&e
o%erate$ a$ $uc" &i$/uali9cation, nce it i$ 'oun& t"at an em%loyee "a$ .een
con-icte& o' an o(ence in-ol-ing moral tur%itu&e+ t"e em%loyer "a$ no o%tion
.ut to terminate "i$ $er-ice, T"at i$ t"e comman& o' Sec,1: 012 0.2, No#+ t"e
re$%on&entU$ contention+ #"ic" "a$ .een acce%te& .y t"e learne& $ingle Su&ge+ i$
t"at .y -irtue o' Sec, 15 o' t"e 4ro.ation o' (en&er$ Act+ 1917+ t"e
&i$/uali9cation containe& in Sec,1:012 0.2 &oe$ not attac" to "im,

Accor&ing to Sec,15 o' t"e 4ro.ation o' o(en&er$ Act+ 1917+ t"ere'ore+ a %er$on
con-icte& o' an o(ence .ut &ealt #it" un&er Sec,4 N$"all not $u(er
&i$/uali9cation+ i' any+ attac"ing to a con-iction o' an o(ence un&er $uc" la#O,
Section 1:012 0.2 o' t"e Banking Regulation Act &oe$+ in&ee& %ro-i&e 'or a
&i$/uali9cation, T"oug" t"e #or& T&i$/uali9cationU not u$e& t"erein+ it $ay$
e8%re$$ly t"at a %er$on con-icte& .y a criminal !ourt o' an o(ence in-ol-ing
moral tur%itu&e $"all not .e continue& in t"e em%loyment o' a .anking
!om%any,4:E

41E F1:?A, Boar& o' 3irector$ to inclu&e %er$on$ #it" %ro'e$$ional or ot"er
e8%erience, Q 012 Not#it"$tan&ing anyt"ing containe& in any ot"er la# 'or t"e
time .eing in 'orce+ e-ery .anking com%any+?

0a2 in e8i$tence on t"e commencement o' Sec,= o' t"e Banking La#$
0Amen&ment2 Act+ 19*7 019 o' 19*72+ or
0.2 #"ic" come$ into e8i$tence t"erea'ter+
$"all com%ly #it" t"e re/uirement$ o' t"i$ $ection J

4ro-i&e& t"at not"ing containe& in t"i$ $u.?$ection $"all a%%ly to a .anking
com%any re'erre& to in !l,0a2 'or a %erio& o' t"ree mont"$ 'rom $uc"
commencement,

052 Not le$$ t"at 9'ty?one %er cent o' t"e total num.er o' mem.er$ o' t"e Boar&
o' 3irector$ o' a .anking com%any $"all con$i$t o' %er$on$+ #"o?

0a2 $"all "a-e $%ecial kno#le&ge or %ractical e8%erience in re$%ect o' one or
more o' t"e 'ollo#ing matter$+ namely J
0i2 accountancy+
0ii2 agriculture an& rural economy+
0iii2 .anking+
0i-2 co?o%eration+
0-2 economic$+
0-i2 9nance+
0-ii2 la#+
0-iii2 $mall?$cale in&u$try+
0i82 any ot"er matter+ t"e $%ecial kno#le&ge o'+ an& %ractical e8%erience in+
#"ic" #oul&+ in t"e o%inion o' t"e Re$er-e Bank+ .e u$e'ul to t"e .anking
com%anyJ
4ro-i&e& t"at out o' t"e a'ore$ai& num.er o' &irector$+ not le$$ t"an t#o $"all .e
%er$on$ "a-ing $%ecial kno#le&ge or %ractical e8%erience in re$%ect o'
agriculture an& rural economy+ co?o%erati-e or $mall?$cale in&u$tryI an&
0.2 $"all not Q
012 "a-e $u.$tantial intere$t in+ or .e connecte& #it"+ #"et"er a$ em%loyee+
manager or managing agent+?
0i2 any com%any+ not .eing a com%any regi$tere& un&er Sec,51 o' t"e !om%anie$
Act+ 191* 01 o' 191*2+ or
0ii2 any 9rm+
#"ic" carrie$ on any tra&e+ commerce or in&u$try an& #"ic"+ in eit"er ca$e+ i$
not a $mall?$cale in&u$trial concern+ or
052 .e %ro%rietor$ o' any tra&ing commercial or in&u$trial concern+ not .eing a
$mall?$cale in&u$trial concern,

45E F05?A2 Not#it"$tan&ing anyt"ing to t"e contrary containe& in t"e !om%anie$
Act+ 191* 01 o' 191*2+ or in any ot"er la# 'or t"e time .eing in 'orce+?
0i2 no &irector o' a .anking com%any+ ot"er t"an it$ !"airman or #"ole?time
&irector+ .y #"ate-er name calle&+ $"all "ol& oLce continuou$ly 'or a %erio&
e8cee&ing eig"t year$I
0ii2 a !"airman or ot"er #"ole?time &irector o' a .anking com%any #"o "a$ .een
remo-e& 'rom oLce a$ $uc" !"airman or #"ole time &irector+ a$ t"e ca$e may
.e+ un&er t"e %ro-i$ion$ o' t"i$ Act+ $"all al$o cea$e to .e a &irector o' t"e
.anking com%any an& $"all al$o not .e eligi.le to .e a%%ointe& a$ a &irector o'
$uc" .anking com%any+ #"et"er .y election or co?o%tion or ot"er#i$e+ 'or a
%erio& o' 'our year$ 'rom t"e &ate o' "i$ cea$ing to .e t"e !"airman or #"ole?
time &irector+ a$ t"e ca$e may .e,G

0=2 I'+ in re$%ect o' any .anking com%any+ t"e re/uirement$+ a$ lai& &o#n in $u.?
$ection 052 are not 'ul9lle& at any time+ t"e Boar& o' 3irector$ o' $uc" .anking
com%any $"all re?con$titute $uc" Boar& $o a$ to en$ure t"at t"e $ai&
re/uirement$ are 'ul9lle&,

042 I'+ 'or t"e %ur%o$e o' re?con$tituting t"e Boar& un&er $u.?$ection 0=2 it i$
nece$$ary to retire any &irector or &irector$+ t"e Boar& may+ .y lot$ &ra#n in
$uc" manner a$ may .e %re$cri.e&+ &eci&e #"ic" &irector or &irector$ $"all cea$e
to "ol& oLce an& $uc" &eci$ion $"all .e .in&ing on e-ery &irector o' t"e Boar&,

012 H"ere t"e Re$er-e Bank i$ o' o%inion t"at t"e com%o$ition o' t"e Boar& o'
3irector$ o' a .anking com%any i$ $uc" t"at it &oe$ not 'ul9l t"e re/uirement$ o'
$u.?$ection 052+ it may+ a'ter gi-ing to $uc" .anking com%any rea$ona.le
o%%ortunity o' .eing "ear&+ .y an or&er in #riting+ &irect t"e .anking com%any to
$o recon$titute it$ Boar& o' 3irector$ a$ to en$ure t"at t"e $ai& re/uirement$ are
'ul9lle& an&+ i' #it"in t#o mont"$ 'rom t"e &ate o' recei%t o' t"at or&er+ t"e
.anking com%any &oe$ not com%ly #it" t"e &irector$ ma&e .y Re$er-e Bank+
t"at .ank may+ a'ter &etermining .y lot$ &ra#n in $uc" manner a$ may .e
%re$cri.e&+ t"e %er$on #"o oug"t to .e remo-e& 'rom t"e mem.er$"i% o' t"e
Boar& o' 3irector$+ remo-e $uc" %er$on 'rom t"e oLce o' t"e &irector o' $uc"
.anking com%any an& #it" a -ie# to com%lying #it" t"e %ro-i$ion$ o' $u.?
$ection 052+ a%%oint a $uita.le %er$on a$ a mem.er o' t"e Boar& o' 3irector$ in
t"e %lace o' t"e %er$on $o remo-e& #"ereu%on t"e %er$on $o a%%ointe& $"all .e
&eeme& to "a-e .een &uly electe& .y .anking com%any a$ it$ &irector,

0*2 E-ery a%%ointment+ remo-al or recon$titution &uly ma&e an& e-ery election
&uly "el&+ un&er t"i$ $ection $"all .e 9nal an& $"all not .e calle& into /ue$tion in
any !ourt,

062 E-ery &irector electe& or+ a$ t"e ca$e may .e+ a%%ointe& un&er t"i$ $ection
$"all "ol& oLce until t"e &ate u%to #"ic" "i$ %re&ece$$or #oul& "a-e "el& oLce+
i' t"e election "a& not .een "el&+ or+ a$ t"e ca$e may .e+ t"e a%%ointment "a&
not .een ma&e,

072 No act or %rocee&ing o' t"e Boar& o' 3irector$ o' a .anking com%any $"all .e
in-ali& .y rea$on only o' any &e'ect in t"e com%o$ition t"ereo' or on t"e groun&
t"at it i$ $u.$e/uently &i$co-ere& t"at any o' it$ mem.er$ &i& not 'ul9l t"e
re/uirement$ o' t"i$ $ection,


!))ENTS

I$$ue o' &irection to 9ll u% -acancy o' #orkman .a&,? In $o 'ar a$ t"e Sc"e&ule&
Bank$ are concerne&+ t"ere i$ no $uc" %ro-i$ion ena.ling t"e em%loyee$ to
re%re$ent in t"e Boar& o' 3irector$ o' t"e Banking !om%any, In a.$ence o' any
%ro-i$ion ena.ling t"e Re$er-e Bank o' In&ia to i$$ue &irection$ t"e 9r$t
re$%on&ent Bank+ to 9ll u% t"e -acancy cau$e& a$ a re$ult o' t"e retirement o'
t"e #rit %etitioner 'rom t"e Boar& o' 3irector$+ t"ere cannot .e any &irection to
t"e Re$er-e Bank o' In&ia to i$$ue &irection a$ %raye& 'or,4=E

!om%any la# i$ a $el'?containe& !o&e,? T"e !om%any La# i$ a $el'?containe&
!o&e an& t"e %ro-i$ion$ o' t"e !om%any La# $"all .e a%%lica.le to t"e 9r$t
re$%on&ent Bank an& in $o 'ar a$ t"e a%%ointment o' t"e 3irector i$ concerne&+
t"e %ro-i$ion$ o' t"e Act $"all %re-ail, Sec,51* 0=2 o' t"e !om%anie$ Act %ro-i&e$
t"at at t"e annual general meeting at #"ic" a 3irector retire$ t"e !om%any may
9ll u% t"e -acancy .y a%%ointing t"e retiring &irector or $ome ot"er %er$on
t"ereto, Co#e-er+ in -ie# o' t"e 'act t"at t"e %ro-i$ion$ o' t"e Banking
Regulation Act are al$o a%%lica.le+ $uc" a%%ointment o' &irector$ $"all .e
con$i$tent #it" t"e %ro-i$ion containe& un&er Sec,1:?A o' t"e Act, Section 1:?A
o' t"e Act 'urt"er %ro-i&e$ t"at #"ere t"e Re$er-e Bank o' In&ia i$ o' o%inion t"at
t"e com%o$ition o' t"e Boar& o' 3irector$ o' a .anking com%any i$ $uc" t"at it
&oe$ not 'ul9l t"e re/uirement$ o' $u.?$ection 052 it may+ a'ter gi-ing to $uc"
.anking com%any a rea$ona.le o%%ortunity o' .eing "ear&+ .y an or&er in #riting
&irect t"e .anking com%any to $o recon$titute t"e Boar& o' 3irector$ a$ to
en$ure t"at t"e $ai& re/uirement$ are 'ul9lle& an& i' t"e Banking !om%any &oe$
not com%ly #it" t"e &irection$ ma&e .y t"e Re$er-e Bank+ t"e Re$er-e Bank may
remo-e $uc" %er$on 'rom t"e oLce o' 3irector an& #it" a -ie# to com%lying #it"
t"e %ro-i$ion$ o' $u.?$ection 0=2 a%%oint a $uita.le %er$on a$ a mem.er o' t"e
Boar& o' 3irector$+ in t"e %lace o' t"e %er$on $o remo-e& #"ereu%on t"e %er$on
$o a%%ointe& $"all .e &eeme& to "a-e .een &uly electe& .y t"e .anking
com%any a$ it$ &irector, Arom t"e a.o-e+ it i$ mani'e$t t"at i' t"e com%o$ition o'
&irector$ .y t"e com%any &oe$ not 'ul9l t"e re/uirement$ o' $u.?$ection 052 o'
Sec,1:?A o' t"e Act+ t"e Re$er-e Bank "a$ aut"ority to &irect t"em to
recon$titute t"e Boar& o' 3irector$ $o a$ to en$ure t"at t"e re/uirement$ o' $u.?
$ection are 'ul9lle&, In ca$e t"e Bank &oe$ not com%ly #it" t"e &irection$+ t"e
Re$er-e Bank "a$ aut"ority to remo-e t"e t#o 3irector$ an& to a%%oint $uita.le
%er$on $o a$ to en$ure t"at t"e re/uirement$ o' $u.?$ection 052 o' Sec,1:?A o'
t"e Act are 'ul9lle&, Un&er Sec,=1?A o' t"e Banking Regulation Act+ t"e Re$er-e
Bank "a$ %o#er to i$$ue &irection$ #"en it i$ $ati$9e& t"at in t"e %u.lic intere$t
or in t"e inter$ o' .anking %olicy or to %re-ent t"e a(aire$ o' any .anking
com%any .eing con&ucte& in a manner &etrimental to t"e intere$t o' t"e
&e%o$itor$ or in a manner %rePu&icial to t"e intere$t o' t"e .anking com%any or
to $ecure t"e %ro%er management o' any .anking com%any generally an& t"e
.anking com%any $"all com%ly #it" $uc" &irection$, T"e$e are t"e contingencie$
at #"ic" Re$er-e Bank "a$ aut"ority to a%%oint &irector$,44E

1:?B, Banking com%any to .e manage& .y #"ole?time !"airman,?
41E F012 Not#it"$tan&ing anyt"ing containe& in any la# 'or t"e time .eing in
'orce or in any contract to t"e contrary+ e-ery .anking com%any in e8i$tence on
t"e commencement o' t"e Banking Regulation 0Amen&ment2 Act+ 1994+ or #"ic"
come$ into e8i$tence t"erea'ter $"all "a-e one o' it$ &irector$+ #"o may .e
a%%ointe& on a #"ole?time or a %art?time .a$i$ a$ !"airman o' it$ Boar& o'
3irector$+ an& #"ere "e i$ a%%ointe& on a #"ole?time .a$i$+ a$ !"airman o' it$
Boar& o' 3irector$+ "e $"all .e entru$te& #it" t"e management o' t"e #"ole o'
t"e a(air$ o' t"e .anking com%anyJ

4ro-i&e& t"at t"e !"airman $"all e8erci$e "i$ %o#er$ $u.Pect to t"e
$u%erinten&ence+ control an& &irection o' t"e Boar& o' &irector$,

4ro-i&e& 'urt"er t"at not"ing in t"i$ $u.?$ection $"all a%%ly to a .anking
com%any in e8i$tence on t"e commencement o' t"e $ai& $ection 'or a %erio& o'
t"ree mont"$ 'rom $uc" commencement,

01?A2 H"ere a !"airman i$ a%%ointe& on a %art?time .a$i$+?
0i2 $uc" a%%ointment $"all .e #it" t"e %re-iou$ a%%ro-al o' t"e Re$er-e Bank an&
.e $u.Pect to $uc" con&ition$ a$ t"e Re$er-e Bank may $%eci'y #"ile gi-ing $uc"
a%%ro-alI

0ii2 t"e management o' t"e #"ole o' t"e a(air$ o' $uc" .anking com%any $"all .e
entru$te& to a managing &irector #"o $"all e8erci$e "i$ %o#er$ $u.Pect to t"e
$u%erinten&ence+ control an& &irection o' t"e Boar& o' &irector$,G

052 4*EFE-ery !"airman o' t"e Boar& o' 3irector$ #"o i$ a%%ointe& on a #"ole?
time .a$i$ an& e-ery managing &irectorG o' a .anking com%any $"all .e in t"e
#"ole?time em%loyment o' $uc" com%any an& $"all "ol& oLce 'or $uc" %erio&+
not e8cee&ing 9-e year$+ a$ t"e Boar& o' 3irector$ may 98+ .ut $"all+ $u.Pect to
t"e %ro-i$ion$ o' t"e $ection+ .e eligi.le 'or re?election or re?a%%ointmentJ

4ro-i&e& t"at not"ing i$ t"i$ $u.?$ection $"all .e con$true& a$ %ro"i.iting a
!"airman 'rom .eing a &irector o' a $u.$i&iary o' t"e .anking com%any or a
&irector o' a com%any regi$tere& un&er Sec,51 o' t"e !om%anie$ Act+ 191* 01 o'
191*2,

0=2 E-ery %er$on "ol&ing oLce on t"e commencement o' Sec,= o' t"e Banking
La#$ 0Amen&ment2 Act+ 19*7 017 o' 19*72+ a$ managing &irector o' t"e .anking
com%any $"all ?

0a2 i' t"ere i$ a !"airman o' it$ Boar& o' 3irector$+ -acate oLce on $uc"
commencement+ or
0.2 i' t"ere i$ no !"airman o' it$ Boar& o' 3irector$+ -acate oLce on t"e &ate on
#"ic" t"e !"airman o' it$ Boar& o' 3irector$ i$ electe& or a%%ointe& in
accor&ance #it" t"e %ro-i$ion$ o' t"i$ $ection,

042 4*FE-ery !"airman #"o i$ a%%ointe& on a #"ole?time .a$i$ an& e-ery
)anaging 3irector o' a .anking com%any a%%ointe& un&er $u.?$ection 01?A2 $"all
.e a %er$on #"o "a$ $%ecial kno#le&ge an& %ractical e8%erience o' ?

0a2 t"e #orking o' a .anking com%any+ or o' t"e State Bank o' In&ia or any
$u.$i&iary .ank or 9nancial in$titution$I or
0.2 9nancial+ economic or .u$ine$$ a&mini$trationJ

4ro-i&e& t"at a %er$on $"all .e &i$/uali9e& 'or .eing 4*F!"airman #"o i$
a%%ointe& on a #"ole?time .a$i$ a$ a )anaging 3irectorG+ i' "e Q

0a2 i$ a &irector o' any com%any ot"er t"an a com%any re'erre& to in t"e %ro-i$o
to $u.?$ection 052I or
0.2 i$ a %artner o' any 9rm #"ic" carrie$ on any tra&e+ .u$ine$$ or in&u$tryI or
0c2 "a$ $u.$tantial intere$t in any ot"er com%any or 9rmI or
0&2 i$ a &irector+ manager+ managing agent+ %artner or %ro%rietor o' any tra&ing+
commercial or in&u$trial concernI or
0e2 i$ engage& in any ot"er .u$ine$$ or -ocation,

012 46E FA !"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or
a )anaging 3irectorG o' a .anking com%any may+ .y #riting un&er "i$ "an&
a&&re$$e& to t"e com%any+ re$ign "i$ oLce 47FEEEG,

49E F01?A2 4*E FA !"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time
.a$i$ or )anaging 3irectorG #"o$e term$ o' oLce "a$ come to an en&+ eit"er .y
rea$on o' "i$ re$ignation or .y rea$on o' e8%iry o' t"e %erio& o' "i$ oLce+ $"all+
$u.Pect to t"e a%%ro-al o' t"e Re$er-e Bank continue in oLce until "i$ $ucce$$or
a$$ume$ oLce,G

0*2 Hit"out %rePu&ice to t"e %ro-i$ion$ o' Sec,=*?AA+ #"ere t"e Re$er-e Bank i$
o' o%inion t"at any %er$on #"o i$+ or "a$ .een electe& to .e+ t"e 1:E F !"airman
o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or a )anaging
3irectorG o' a .anking com%any i$ not a 9t an& %ro%er %er$on to "ol& $uc" oLce+
it may+ a'ter gi-ing to $uc" %er$on an& to t"e .anking com%any a rea$ona.le
o%%ortunity o' .eing "ear&+ .y or&er in #riting re/uire t"e .anking com%any to
elect or a%%oint any ot"er %er$on a$ t"e 1:E F!"airman o' t"e Boar& o' 3irector$
#"o i$ a%%ointe& on a #"ole time .a$i$ or a )anaging 3irectorG an& i'+ #it"in a
%erio& o' t#o mont"$ 'rom t"e &ate o' recei%t o' $uc" or&er+ t"e .anking
com%any 'ail$ to elect or a%%oint a $uita.le %er$on a$ t"e 1:E F!"airman o' t"e
Boar& o' 3irector$+ #"o i$ a%%ointe& on a #"ole?time .a$i$ or a )anaging
3irectorG t"e Re$er-e Bank may+ .y or&er+ remo-e t"e 9r$t Qmentione& %er$on
'rom t"e oLce o' t"e 1:E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a
#"ole Q time .a$i$ or a )anaging 3irectorG o' t"e .anking com%any an& a%%oint
a $uita.le %er$on in "i$ %lace #"ereu%on t"e %er$on $o a%%ointe& $"all .e
&eeme& to "a-e .een &uly electe& or a%%ointe&+ a$ t"e ca$e may .e+ a$ t"e 1:E
F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or
)anaging 3irectorG o' $uc" .anking com%any an& any %er$on electe& or
1:E Fa%%ointe& a$ c"airman on a #"ole?time .a$i$ or managing &irectorG un&er
t"i$ $u.?$ection $"all "ol& oLce 'or t"e re$i&ue o' t"e %erio& o' oLce o' t"e
%er$on in #"o$e %lace "e "a$ .een $o electe& or a%%ointe&,

062 T"e .anking com%any an& any %er$on again$t #"om an or&er o' remo-al i$
ma&e un&er $u.?$ection 0*2 may+ #it"in t"irty &ay$ 'rom t"e &ate o'
communication to it or to "im o' t"e or&er+ %re'er an a%%eal to t"e !entral
Go-ernment an& t"e &eci$ion o' t"e !entral Go-ernment t"ereon+ an& $u.Pect
t"ereto+ t"e or&er ma&e .y t"e Re$er-e Bank un&er $u.?$ection 0*2+ $"all .e 9nal
an& $"all not .e calle& into /ue$tion in any !ourt,

072 Not#it"$tan&ing anyt"ing containe& in t"i$ $ection+ t"e Re$er-e Bank may+ i'
in it$ o%inion it i$ nece$$ary in t"e %u.lic intere$t $o to &o+ %ermit 1:F!"airman o'
t"e Boar& o' 3irector$ #"o i$ a%%ointe& on a #"ole?time .a$i$ or t"e )anaging
3irectorG to un&ertake $uc" %art?time "onorary #ork a$ i$ not likely to inter'ere
#it" "i$ &utie$ a$ 1:F$uc" !"airman or managing &irectorG,

092 Not#it"$tan&ing anyt"ing containe& in t"i$ $ection+ #"ere a %er$on 1:E
Fa%%ointe& on a #"ole?time .a$i$+ a$ !"airman o' t"e Boar& o' 3irector$ or
)anaging 3irectorG &ie$ or re$ign$ or i$ .y in9rmity or ot"er#i$e ren&ere&
inca%a.le o' carrying out "i$ &utie$ or i$ a.$ent on lea-e or ot"er#i$e in
circum$tance$ not in-ol-ing t"e -acation o' "i$ oLce+ t"e .anking com%any
may+ #it" t"e a%%ro-al o' t"e Re$er-e Bank+ make $uita.le arrangement$ 'or
carrying out t"e 1:E F&utie$ o' !"airman or )anaging 3irectorG 'or a total %erio&
not e8cee&ing 'our mont"$,

11E F1:?BB, 4o#er o' Re$er-e Bank to a%%oint !"airman o' a .anking com%any,?
012 H"ere t"e oLce o' t"e 15E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on
a #"ole?time .a$i$ or a )anaging 3irectorG o' a .anking com%any i$ -acant+ t"e
Re$er-e Bank may+ i' it i$ o' o%inion t"at t"e continuation o' $uc" -acancy i$
likely to a&-er$ely a(ect t"e intere$t o' t"e .anking com%any+ a%%oint a %er$on+
eligi.le un&er $u.?$ection 042 o' Sec, 1:?B to .e $o a%%ointe&+ to .e t"e !"airman
o' t"e .anking com%any an& #"ere t"e %er$on $o a%%ointe& i$ not a &irector o'
$uc" .anking com%any+ "e $"all+ $o long a$ "e "ol&$ t"e oLce o' t"e 1=E
F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or a
)anaging 3irectorG+ .e &eeme& to .e a &irector o' t"e .anking com%any,

052 T"e 1=E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$
or a )anaging 3irectorG $o a%%ointe& .y t"e Re$er-e Bank $"all .e in t"e #"ole?
time em%loyment o' t"e .anking com%any an& $"all "ol& oLce 'or $uc" %erio&
not e8cee&ing t"ree year$+ a$ t"e Re$er-e Bank may $%eci'y+ .ut $"all+ $u.Pect to
ot"er %ro-i$ion$ o' t"i$ Act+ .e eligi.le to re?a%%ointment,

0=2 T"e 1=E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$
or a )anaging 3irectorG $o a%%ointe& .y t"e Re$er-e Bank $"all &ra# 'rom t"e
.anking com%any $uc" %ay an& allo#ance$ a$ t"e Re$er-e Bank may &etermine
an& may .e remo-e& 'rom oLce only .y t"e Re$er-e Bank,

042 Sa-e a$ ot"er#i$e %ro-i&e& in t"i$ $ection+ t"e %ro-i$ion$ o' Sec,1:?B $"all+ a$
'ar a$ may .e+ a%%ly to t"e 1=E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on
a #"ole?time .a$i$ or a )anaging 3irectorG a%%ointe& .y t"e Re$er-e Bank un&er
$u.?$ection 012 a$ t"ey a%%ly to t"e 1=F!"airman o' t"e Boar& o' 3irector$
a%%ointe& on a #"ole?time .a$i$ or a )anaging 3irectorG a%%ointe& .y t"e
.anking com%any,G

14E F1:?!, !"airman an& certain &irector$ not to .e re/uire& to "ol& /uali9cation
$"are$,? 11E FA !"airman o' t"e Boar& o' 3irector$ #"o i$ a%%ointe& on a #"ole?
time .a$i$ or a )anaging 3irectorG o' a .anking com%any 0.y #"om$oe-er
a%%ointe&2 an& a &irector o' a .anking com%any 0a%%ointe& .y t"e Re$er-e Bank
un&er Sec,1:?A2 $"all not .e re/uire& to "ol& /uali9cation $"are$ in t"e .anking
com%any,G

1:?3, 4ro-i$ion$ o' Sec$,1:?A an& 1:?B to o-erri&e all ot"er la#$+ contract$+ etc,?
Any a%%ointment or remo-al o' a 1*E F&irector+ !"airman o' t"e Boar& o'
3irector$ #"o i$ a%%ointe& on a #"ole?time .a$i$ or )anaging 3irectorG in
%ur$uance o' Sec, 1:?A or Sec,1:?B 16E For Sec,1:?BBG $"all "a-e e(ect an& any
$uc" %er$on $"all not .e entitle& to claim any com%en$ation 'or t"e lo$$ or
termination o' oLce+ not#it"$tan&ing anyt"ing containe& in any la# or in any
contract+ memoran&um o' article$ o' a$$ociation,G

11, Re/uirement a$ to minimum %ai&?u% ca%ital an& re$er-e$,? 012
Not#it"$tan&ing anyt"ing containe& in 17E FSec,149 o' t"e !om%anie$ Act+ 191*
01 o' 191*2G+ no .anking com%any in e8i$tence on t"e commencement o' t"i$
Act+ $"all a'ter t"e e8%iry o' t"ree year$ 'rom $uc" commencement or o' $uc"
'urt"er %erio& not e8cee&ing one year a$ t"e Re$er-e Bank+ "a-ing regar& to t"e
intere$t$ o' t"e &e%o$itor$ o' t"e com%any may t"ing 9t in any %articular ca$e to
allo#+ to carry on .u$ine$$ 19E Fin In&iaG+ an& no ot"er .anking com%any $"all
a'ter t"e commencement o' t"i$ Act+ commence or carry on .u$ine$$ 19E Fin
In&iaG *:E Funle$$ it com%lie$ #it" $uc" o' t"e re/uirement$ o' t"i$ $ection a$ are
a%%lica.le to it,G

*1E F052 In t"e ca$e o' a .anking com%any incor%orate& out$i&e In&ia Q
0a2 t"e aggregate -alue o' it$ %ai&?u% ca%ital an& re$er-e$ $"all not .e le$$ t"an
9'teen lak"$ o' ru%ee$ an& i' it "a$ a %lace or %lace$ o' .u$ine$$ in city o'
Bom.ay or !alcutta or .ot"+ t#enty lak"$ o' ru%ee$I an&
*5E F0.2 t"e .anking com%any $"all &e%o$it an& kee% &e%o$ite& #it" t"e Re$er-e
Bank eit"er in ca$" or in t"e 'orm o' unencum.ere& a%%ro-e& $ecuritie$ or %artly
in ca$" an& %artly in t"e 'orm o' $uc" $ecuritie$ Q
0i2 an amount #"ic" $"all not .e le$$ t"an t"e minimum re/uirement .y !l,0a2I
an&
0ii2 a$ $oon a$ may .e a'ter e8%iration o' eac" *=FEEEG year+ an amount calculate&
at t#enty %er cent, o' it$ %ro9t 'or t"at year in re$%ect o' all .u$ine$$ tran$acte&
t"roug" it$ .ranc"e$ in In&ia+ a$ &i$clo$e& in t"e %ro9t an& lo$$ account %re%are&
#it" re'erence to t"at year un&er Sec, 59JG
4ro-i&e& t"at any $uc" .anking com%any may at time re%lace Q
0i2 any $ecuritie$ $o &e%o$ite& .y ca$" or .y any ot"er unencum.ere& a%%ro-e&
$ecuritie$ or %artly .y ca$" an& %artly .y ot"er $uc" $ecuritie$+ $o "o#e-er+ t"at
t"e total amount &e%o$ite& i$ not a(ecte&I
0ii2 any ca$" $o &e%o$ite& .y unencum.ere& a%%ro-e& $ecuritie$ o' an e/ual
-alue,G

*4E F05?A2 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 052+ t"e !entral
Go-ernment may+ on t"e recommen&ation o' t"e Re$er-e Bank+ an& "a-ing
regar& to t"e a&e/uacy o' t"e amount$ alrea&y &e%o$ite& an& ke%t &e%o$ite& .y
a .anking com%any un&er $u.?$ection 052+ in relation to it$ &e%o$it lia.ilitie$ in
In&ia+ &eclare .y or&er in #riting t"at t"e %ro-i$ion$ o' $u.?clau$e 0ii2 o' !l,0.2 o'
$u.?$ection 052 $"all not a%%ly to $uc" .anking com%any 'or $uc" %erio& a$ may
.e $%eci9e& in t"e or&er,G

0=2 In t"e ca$e o' any .anking com%any to #"ic" t"e %ro-i$ion$ o' $u.?$ection 052
&o not a%%ly+ t"e aggregate -alue o' it$ %ai&?u% ca%ital an& re$er-e$ $"all not .e
le$$ t"an ?

0i2 i' it "a$ %lace$ o' .u$ine$$ in more t"an one State+ 9-e lak"$ o' ru%ee$+ an& i'
any $uc" %lace or %lace$ o' .u$ine$$ i$ or are $ituate& in t"e city o' Bom.ay or
!alcutta or .ot"+ ten lak"$ o' ru%ee$I
0ii2 i' it "a$ all it$ %lace$ o' .u$ine$$ in one State none o' #"ic" i$ $ituate& in t"e
city o' Bom.ay or !alcutta+ one lak" o' ru%ee$ in re$%ect o' it$ %rinci%al %lace o'
.u$ine$$+ %lu$ ten t"ou$an& ru%ee$ in re$%ect o' eac" o' it$ ot"er %lace$ o'
.u$ine$$ $ituate& in t"e $ame &i$trict in #"ic" it "a$ it$ %rinci%al %lace o'
.u$ine$$+ %lu$ t#enty?9-e t"ou$an& ru%ee$ in re$%ect o' eac" %lace o' .u$ine$$
$ituate& el$e#"ere in t"e State ot"er#i$e t"an in t"e $ame &i$trict J

4ro-i&e& t"at no .anking com%any to #"ic" t"i$ clau$e a%%lie$ $"all .e re/uire&
to "a-e %ai&?u% ca%ital an& re$er-e$ e8cee&ing an aggregate -alue o' 9-e lak"$
o' ru%ee$ J

4ro-i&e& 'urt"er t"at no .anking com%any to #"ic" t"i$ clau$e a%%lie$ an& #"ic"
"a$ only one %lace o' .u$ine$$+ $"all .e re/uire& to "a-e %ai&?u% ca%ital an&
re$er-e$ e8cee&ing an aggregate -alue o' 9'ty t"ou$an& ru%ee$ J

*1E F4ro-i&e& 'urt"er t"at in t"e ca$e o' e-ery .anking com%any to #"ic" t"i$
clau$e a%%lie$ an& #"ic" commence$ .anking .u$ine$$ 'or t"e 9r$t time a'ter
commencement o' t"e Banking !om%anie$ 0Amen&ment2 Act+ 19*5 0=* o' 19*52+
t"e -alue o' it$ %ai&?u% ca%ital $"all not .e le$$ t"an 9-e lak"$ o' ru%ee$IG

0iii2 i' it "a$ all it$ %lace$ o' .u$ine$$ in one State+ one or more o' #"ic" i$ or are
$ituate& in t"e city o' Bom.ay or !alcutta+ 9-e lak"$ o' ru%ee$+ %lu$ t#enty?9-e
t"ou$an& ru%ee$ in re$%ect o' eac" %lace o' .u$ine$$ $ituate& out$i&e t"e city o'
Bom.ay or !alcutta + a$ t"e ca$e may .e J

4ro-i&e& t"at no .anking com%any to #"ic" t"i$ clau$e a%%lie$ $"all .e re/uire&
to "a-e %ai&?u% ca%ital an& re$er-e$ e8cee&ing in aggregate -alue o' ten lak"$ o'
ru%ee$,

E8%lanation,? Aor t"e %ur%o$e o' t"i$ $u.?$ection+ a %lace o' .u$ine$$ $ituate& **E
Fin a StateG ot"er t"an t"at in #"ic" t"e %rinci%al %lace o' .u$ine$$ o' t"e
.anking com%any i$ $ituate& $"all+ i' it i$ not more t"an t#enty?9-e mile$ &i$tant
'rom $uc" %rinci%al %lace o' .u$ine$$+ .e &eeme& to .e $ituate& #it"in t"e $ame
State a$ $uc" %rinci%al %lace o' .u$ine$$,

042 Any amount &e%o$ite& an& ke%t &e%o$ite& #it" t"e Re$er-e Bank un&er
*6FEEEG $u.?$ection 052 .y any .anking com%any incor%orate& *7E Fout$i&e In&iaG
$"all+ in t"e e-ent o' t"e com%any cea$ing 'or any rea$on to carry on .anking
.u$ine$$ *9E Fin In&iaG+ .e an a$$et o' t"e com%any on #"ic" t"e claim$ o' all t"e
cre&itor$ o' t"e com%any *6Fin In&iaG+ $"all .e a 9r$t c"arge,

6:E F012 Aor t"e %ur%o$e$ o' t"i$ $ection+?

0a2 N%lace o' .u$ine$$O mean$ any oLce+ $u.?oLce+ $u.?%ay oLce an& any %lace
o' .u$ine$$ at #"ic" &e%o$it$ are recei-e&+ c"e/ue$ ca$"e& or money$ lentI
0.2 N-alueO mean$ t"e real or e8c"angea.le -alue+ an& not t"e nominal -alue
#"ic" may .e $"o#n in t"e .ook$ o' t"e .anking com%any concerne&,G

0*2 I' any &i$%ute ari$e$ in com%uting t"e aggregate -alue o' t"e %ai&?u% ca%ital
an& re$er-e$ o' any .anking com%any+ a &etermination t"ereo' .y t"e Re$er-e
Bank $"all .e 9nal 'or t"e %ur%o$e$ o' t"i$ $ection,

61E F15, Regulation o' %ai&?u% ca%ital+ $u.$cri.e& ca%ital an& aut"oriMe& ca%ital
an& -oting rig"t$ o' $"are"ol&er$,? 012 No .anking com%any $"all carry on
.u$ine$$ in In&ia+ unle$$ it $ati$9e$ t"e 'ollo#ing con&ition$+ namelyJ

0i2 t"at t"e $u.$cri.e& ca%ital i' t"e com%any i$ not le$$ t"an one?"al' o' t"e
aut"oriMe& ca%ital+ an& %ai&?u% ca%ital i$ not le$$ t"an one?"al' o' t"e $u.$cri.e&
ca%ital an& t"at+ i' t"e ca%ital increa$e&+ it com%lie$ #it" t"e con&ition$
%re$cri.e& in t"i$ clau$e #it"in $uc" %erio& not e8cee&ing t#o year$ a$ t"e
Re$er-e Bank may allo#I
0ii2 t"at t"e ca%ital o' t"e com%any con$i$t$ o' or&inary $"are$ only or o' or&inary
$"are$ or e/uity $"are$ an& $uc" %re'erential $"are$ a$ may "a-e .een i$$ue&
%rior to t"e 1$t &ay o' Suly+1944J
4ro-i&e& t"at not"ing containe& in t"i$ $u.?$ection $"all a%%ly to any .anking
com%any incor%orate& .e'ore t"e 11t" &ay o' Sanuary+ 19=6,

052 No %er$on "ol&ing $"are$ in a .anking com%any $"all+ in re$%ect o' any
$"are$ "el& .y "im+ e8erci$e -oting rig"t 65E Fon 4ollG 6=E Fin e8ce$$ o' 64E Ften
%er cent,GG o' t"e total -oting rig"t$ o' all t"e $"are"ol&er$ o' t"e .anking
com%any,

0=2 Not#it"$tan&ing anyt"ing containe& in any la# 'or t"e time .eing in 'orce or
in contract or in$trument no $uit or ot"er %rocee&ing $"all .e maintaine& again$t
any %er$on regi$tere& a$ t"e "ol&er o' a $"are in a .anking com%any on t"e
groun& t"at title to t"e $ai& $"are -e$t$ in a %er$on ot"er t"at t"e regi$tere&
"ol&er J

4ro-i&e& t"at not"ing containe& in t"i$ $u.?$ection $"all .ar a $uit o' ot"er
%rocee&ing Q

0a2 .y a tran$'eree o' t"e $"are on t"e groun& t"at "e "a$ o.taine& 'rom t"e
regi$tere& "ol&er a tran$'er o' t"e $"are in accor&ance #it" any la# relating to
$uc" tran$'erI or
0.2 on .e"al' o' a minor or a lunatic on t"e groun& t"at t"e regi$tere& "ol&er
"ol&$ t"e $"are on .e"al' o' t"e minor or lunatic,

042 E-ery !"airman+ )anaging 3irector or !"ie' E8ecuti-e Lcer .y #"ate-er
name calle& o' a .anking com%any $"all 'urni$" to t"e Re$er-e Bank t"roug"
t"at .anking com%any return$ containing 'ull %articular$ o' t"e e8tent an& -alue
o' "i$ "ol&ing o' $"are$+ #"et"er &irectly or in&irectly+ in t"e .anking com%any
an& o' any c"ange in t"e e8tent o' $uc" "ol&ing or any -ariation in t"e rig"t$
attac"ing t"ereto an& $uc" ot"er in'ormation relating to t"o$e $"are$ a$ t"e
Re$er-e Bank may+ .y or&er+ re/uire an& in $uc" 'orm an& at $uc" time a$ may
.e $%eci9e& in t"e or&er,G

!))ENTS

Ralua.le rig"t a-aila.le to t"e %etitioner,? T"e %etitioner a$ %er t"e rele-ant
in$truction$ an& regulation$ "a& namely a$%iration$, T"ey mu$t "a-e Poine& t"e
$er-ice o' t"e Bank "o%ing t"at t"ey #oul& .e %romote& in accor&ance #it" t"e
rele-ant in$truction$ an& t"e 4: %oint ro$ter, T"eir rig"t$ a$ $uc" coul& not .e
&e'eate& .y gi-ing %romotion$ to general category can&i&ate$ ignoring t"e
criteria o' normal c"annel 98e& a$ %er %aragra%" 1,5, T"e -alua.le rig"t #a$
a-aila.le to t"e %etitioner$ an& merely .ecau$e $ome ot"er general category
can&i&ate$ $u(ere&+ i$ no groun& to &e'eat t"e rule$ an& in$truction$ an& criteria
'or %romotion 98e& .y t"e Bank, To t"at e8tent+ t"e %etition a$ $uc" mu$t
$uccee&, Aor t"e$e rea$on$+ t"e %etition i$ allo#e& an& it i$ &irecte& t"at
%etitioner$ are entitle& to .e con$i&ere& 'or %romotion again$t t"e .ack?log o'
re$er-e& -acancie$ create& again$t 47 -acancie$ a$ %er t"e normal c"annel o'
%romotion un&er %aragra%" 1,5 o' %romotion %olicy 'rame& un&er Regulation 16
o' t"e 4unPa. ; Sin& Bank 0Lcer$2 Ser-ice Regulation$+ 1975, 61E

Tran$'er$ o' $"are$ an& regi$tration t"ereo',? It i$ clear t"at t"i$ Sec, FSec, 15 052G
&oe$ not in any #ay a(ect t"e tran$'er$ o' $"are$ an& regi$tration o' $uc"
tran$'er$, It only mean$ t"at a %er$on "ol&ing $"are$ #ill not get -oting rig"t in
e8ce$$ o' one %er cent, o' t"e total -oting rig"t$ o' t"e $"are"ol&er$ o' t"e
com%any, T"i$ "a$ no relation to any grou% an& e-en a$$uming t"at a grou% o'
$"are"ol&er$ may get more t"an one %er cent, o' t"e -oting rig"t$+ t"at i$ not
%ro"i.ite& .y Sec, 15052 o' t"e Banking Regulation Act, An a%%re"en$ion t"at t"e
tran$'er i$ an attem%t at cornering o' $"are$ #"en on 'act$ t"ere i$ no $co%e 'or
it+ i$ no rea$on to re'u$e regi$tration, In t"i$ ca$e+ on t"e 'act$ t"ere i$ no
%er$onal &i$/uali9cation to t"e tran$'er$, T"ey are not allege& to .e %er$on$ #"o
#ill not act in t"e intere$t$ o' t"e com%any, T"e num.er o' $"are$ in all t"e
%etition$ %ut toget"er #ill .e only roun& a.out 4 %er cent, o' t"e -oting rig"t o'
t"e total num.er o' $"are"ol&er$ o' t"e com%any, To un&er$tan& t"e$e
tran$action$ a$ an attem%t to corner t"e $"are$ i$+ to $ay t"e lea$t+ an a.u$e o'
t"e %o#er o' re'u$al to regi$ter, Section 15052 o' t"e Banking Regulation Act &oe$
not in any #ay re$trict t"e tran$'er o' $"are$ or t"eir regi$tration, T"e %olicy o'
t"e Re$er-e Bank i$ al$o not again$t t"e tran$'er o' t"e $"are$, T"e circular only
re/uire& in'ormation to .e 'urni$"e& to t"e Re$er-e Bank o' t"e tran$'er o'
$"are$+ #"ic" may amount to an attem%t to "a-e a controlling intere$t in t"e
.ank, To $ay t"at %olicy o' t"e Re$er-e Bank i$ to &i$courage tran$'er$ #"ic" may
amount to "a-e controlling intere$t in t"e .ank i$ one t"ing, But to make u$e o'
t"at %olicy a$ a cloak to re'u$e regi$tration in any ca$e #"ere on t"e 'act$ t"ere
i$ no $co%e 'or "a-ing any controlling intere$t i$ an a.u$e o' t"e %o#er, T"e
&irector$ "a-e acte& on a #rong %rinci%le or t"eir moti-e$ $eem to .e o.li/ue,
T"ere "a$ not .een a Pu$t an& legal con$i&eration o' t"e a%%lication 'or
regi$tration o' t"e $"are$, No %aramount intere$t o' t"e com%any or t"e general
intere$t$ o' t"e $"are"ol&er$ i$ $een a(ecte& .y t"e$e %ro%o$e& tran$'er$, T"at
.eing $o+ t"e re'u$al to regi$ter in all t"e$e ca$e$ $eem$ to .e an im%ro%er
e8erci$e o' t"e &i$cretion containe& in Art, 45 o' t"e Article$ o' A$$ociation o' t"e
!om%any,6*E
I' loan taken .y com%any remain$ un&i$c"arge& it &oe$ not &i$/uali'y an e8?
&irector 'orm .eing electe& a$ &irector o' t"e .ank,? )uc" argument$ #ere
a&-ance& t"at in t"e counter?aL&a-it 9le& .y t"e Bank+ t"ere #a$ not $tatement
t"at t"e loan gi-en to t"e $ai& lea$ing com%any "a& alrea&y &i$c"arge&, E-en
a$$uming t"at t"e loan remain$ un&i$c"arge&+ t"at &oe$ not a(ect t"e eligi.ility
o' T"iagaraPan to .e a &irector o' t"e Bank in -ie# o' t"e %o$ition in la# #"ic"
"a-e .een $tate& a.o-e,66E

67E F15?A, Election o' ne# &irector$,? 012 T"e Re$er-e Bank may+ .y or&er re/uire
any .anking com%any to call a general meeting o' t"e $"are"ol&er$ o' t"e
com%any #it"in $uc" time+ not le$$ t"an t#o mont"$ 'rom t"e &ate o' t"e or&er+
a$ may .e $%eci9e& in t"e or&er o' #it"in $uc" 'urt"er time a$ t"e Re$er-e Bank
may allo# in t"i$ .e"al'+ to elect in accor&ance #it" t"e -oting rig"t$ %ermi$$i.le
un&er t"i$ Act 're$" &irector$+ an& t"e .anking com%any $"all .e .oun& to
com%ly #it" t"e or&er,

052 E-ery &irector electe& un&er $u.?$ection 012 $"all "ol& oLce until t"e &ate
u%to #"ic" "i$ %re&ece$$or #oul& "a-e "el& oLce+ i' t"e election "a& not .een
"el&,

0=2 Any election &uly "el& un&er t"i$ $ection $"all not .e calle& in /ue$tion in any
!ourt,G

1=, Re$triction on commi$$ion+ .rokerage+ &i$count+ etc, on $ale o' $"are$,?
Not#it"$tan&ing anyt"ing to t"e contrary containe& in 69E FSec$, 6* an& 69 o'
t"e !om%anie$ Act+ 191* 01 o' 191*2G+ no .anking com%any $"all %ay out &irectly
or in&irectly .y #ay o' commi$$ion+ .rokerage+ &i$count o' remuneration in any
'orm in re$%ect o' any $"are$+ i$$ue& .y it+ any amount e8cee&ing in t"e
aggregate t#o an& one?"al' %er cent, o' t"e %ai&?u% -alue o' t"e $ai& $"are$,

14, 4ro"i.ition o' c"arge on un%ai& ca%ital,? No .anking com%any $"all create
any c"arge u%on any un%ai& ca%ital o' t"e com%any+ an& any $uc" c"arge $"all
.e in-ali&,

7:E F14?A, 4ro"i.ition o' >oating c"arge on a$$et$,? Not#it"$tan&ing anyt"ing
containe& in Sec,* no .anking com%any $"all create a >oating c"arge on t"e
un&ertaking or any %ro%erty o' t"e com%any or any %art t"ereo' unle$$ t"e
creation o' $uc" >oating c"arge i$ certi9e& in #riting .y t"e Re$er-e Bank a$ not
.eing &etrimental to t"e intere$t$ o' t"e &e%o$itor$ o' $uc" com%any,

052 Any $uc" c"arge create& #it"out o.taining t"e certi9cate o' t"e Re$er-e
Bank $"all .e in-ali&,

0=2 Any .anking com%any aggrie-e& .y t"e re'u$al o' a certi9cate un&er $u.?
$ection 012 may+ #it"in ninety &ay$ 'rom t"e &ate on #"ic" $uc" re'u$al i$
communicate& to it+ a%%eal to t"e !entral Go-ernment,
042 T"e &eci$ion o' t"e !entral Go-ernment #"ere an a%%eal "a$ .een %re'erre&
to it un&er $u.?$ection 0=2 or o' t"e Re$er-e Bank #"ere not $uc" a%%eal "a$
.een %re'erre& $"all .e 9nal,G

11, Re$triction$ a$ to %ayment o' &i-i&en&,? 71E F012 No .anking com%any $"all
%ay any &i-i&en& on it$ $"are$ until all it$ ca%itali$e& e8%en$e$ 0inclu&ing
%reliminary e8%en$e$+ organiMation e8%en$e$+ $"are?$elling commi$$ion+
.rokerage+ amount$ o' lo$$e$ incurre& an& any ot"er item o' e8%en&iture not
re%re$ente& .y tangi.le a$$et$2 "a-e .een com%letely #ritten o(,

75E F052 Not#it"$tan&ing anyt"ing to t"e contrary containe& in $u.?$ection 012 or
in t"e !om%anie$ Act+ 191* 01 o' 191*2+ a .anking com%any may %ay &i-i&en&$
on it$ $"are$ #it"out #riting o(?

0i2 t"e &e%reciation+ i' any+ in t"e -alue o' it$ in-e$tment$ in a%%ro-e& $ecuritie$
in any ca$e #"ere $uc" &e%reciation "a$ not actually .een ca%italiMe& or
ot"er#i$e accounte& 'or a$ a lo$$I
0ii2 t"e &e%reciation+ i' any+ in t"e -alue o' it$ in-e$tment$ in $"are$+ &e.enture
or .on&$ 0ot"er t"an a%%ro-e& $ecuritie$2 in any ca$e #"ere a&e/uate %ro-i$ion
'or $uc" &e%reciation "a$ .een ma&e to t"e $ati$'action o' t"e au&itor o' t"e
.anking com%anyI
0iii2 t"e .a& &e.t$+ i' any+ in any ca$e #"ere a&e/uate %ro-i$ion 'or $uc" &e.t$
"a$ .een ma&e to t"e $ati$'action o' t"e au&itor o' t"e .anking com%any,G

7=E F1*, 4ro"i.ition o' common &irector$,? 74E F012 No .anking com%any
incor%orate& in In&ia $"all "a-e a$ a &irector in it$ Boar& o' 3irector$ any %er$on
#"o i$ a &irector o' any ot"er .anking com%any,

01?A2 No .anking com%any re'erre& to in $u.?$ection 012 $"all "a-e in it$ Boar& o'
3irector$+ more t"an t"ree &irector$ #"o are &irector$ o' com%anie$ #"ic"
among t"em$el-e$ are entitle& to e8erci$e -oting rig"t$ in e8ce$$ o' t#enty %er
cent, o' t"e total -oting rig"t$ o' all t"e $"are"ol&er$ o' t"at .anking com%any,G

052 I' imme&iately .e'ore t"e commencement o' t"e Banking !om%anie$
0Amen&ment2 Act+ 191* 011 o' 191*2+ any %er$on "ol&ing oLce a$ a &irector o' a
.anking com%any i$ al$o a &irector o' com%anie$ #"ic" among t"em$el-e$ are
entitle& to e8erci$e -oting rig"t$ in e8ce$$ o' t#enty %er cent, o' t"e total -oting
rig"t$ o' all t"e $"are"ol&er$ o' t"e .anking com%any+ "e $"all+ #it"in $uc"
%erio& 'rom $uc" commencement$ a$ t"e Re$er-e Bank may $%eci'y in t"i$
.e"al' ?

0a2 eit"er re$ign "i$ oLce a$ a &irector o' t"e .anking com%anyI or
0.2 c"oo$e $uc" num.er o' com%anie$ a$ among t"em$el-e$ are not entitle& to
e8erci$e -oting rig"t$ in e8ce$$ o' t#enty %er cent, o' t"e total -oting rig"t$ o' all
t"e $"are "ol&er$ o' t"e .anking com%any a$ com%anie$ in #"ic" "e #i$"e$ to
continue to "ol& t"e oLce o' a &irector an& re$ign "i$ oLce a$ &irector in t"e
ot"er com%anie$,G

71E F0=2 Not"ing in $u.?$ection 012 $"all a%%ly to+ or in relation to+ any &irector
a%%ointe& .y t"e Re$er-e Bank,G

7*E F16, Re$er-e Aun&,? 012 E-ery .anking com%any incor%orate& in In&ia $"all
create a re$er-e 'un& an& 76FEEEG $"all+ out o' t"e .alance o' %ro9t o' eac" year
a$ &i$clo$e& in t"e %ro9t an& lo$$ account %re%are& un&er Sec, 59 an& .e'ore
any &i-i&en& i$ &eclare&+ tran$'er to t"e re$er-e 'un& a $um e/ui-alent to not
le$$ t"an t#enty %er cent, o' $uc" %ro9t,

77E F01?A2 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 012+ t"e !entral
Go-ernment may+ on t"e recommen&ation o' t"e Re$er-e Bank an& "a-ing
regar& to t"e a&e/uacy o' t"e %ai&?u% ca%ital an& re$er-e$ o' a .anking
com%any in relation to it$ &e%o$it lia.ilitie$+ &eclare& .y or&er in #riting t"at t"e
%ro-i$ion$ o' $u.?$ection 012 $"all not a%%ly to t"e .anking com%any 'or $uc"
%erio& a$ may .e $%eci9e& in t"e or&erJ

4ro-i&e& t"at no $uc" or&er $"all .e ma&e unle$$+ at t"e time it i$ ma&e+ t"e
amount in t"e re$er-e 'un& un&er $u.?$ection 012+ toget"er #it" t"e amount in
t"e $"are %remium account i$ not le$$ t"an t"e %ai&?u% ca%ital o' t"e .anking
com%any,G

052 H"ere a .anking com%any a%%ro%riate$ any $um or $um$ 'rom t"e re$er-e
'un& o' t"e $"are %remium account+ it $"all+ #it"in t#enty?one &ay$ 'rom t"e
&ate o' $uc" a%%ro%riation+ re%ort t"e 'act to t"e Re$er-e Bank e8%laining t"e
circum$tance$ relating to $uc" a%%ro%riationJ

4ro-i&e& t"at t"e Re$er-e Bank may+ in any %articular ca$e+ e8ten& t"e $ai&
%erio& o' t#enty? one &ay$ .y $uc" %erio& a$ it t"ink$ 9t or con&one any &elay in
t"e making o' $uc" re%ort,

!))ENT

)an&ate o' Sec,16,? T"e man&ate o' Sec,16 i$ t"at e-ery .anking com%any #ill
"a-e to tran$'er to a re$er-e 'un& e-ery year+ a $um e/ui-alent to N not le$$ t"an
t#enty %er cent, o' $uc" %ro9t,O In ot"er #or&$+ at lea$t 5: %er cent, o' t"e %ro9t
a$ $"o#n in t"e %ro9t an& lo$$ account .e'ore &eclaration o' any &i-i&en& "a$ to
.e tran$'erre& to t"e re$er-e 'un&, T"i$ i$ t"e $tatutory re/uirement, I' a .anking
com%any tran$'er$ any amount in e8ce$$ o' 5: %er cent, o' it$ %ro9t o' any year
to t"i$ re$er-e 'un&+ t"e e8clu$ion in !l,08i2 0a2 #ill .e limite& to 5: %er cent, o'
t"e %ro9t #"ic" i$ t"e re/uirement o' Sec,16 012 o' t"e Banking Regulation$ Act,
79E

9:E F17, !a$" re$er-e,? 012 E-ery .anking com%any+ not .eing a $c"e&ule& .ank+
$"all maintain in In&ia .y #ay o' ca$" re$er-e #it" it$el' or .y #ay o' .alance in
a current account #it" t"e Re$er-e Bank or .y #ay o' net .alance in current
account$ or in one or more o' t"e a'ore$ai& #ay$+ a $um e/ui-alent+ to at lea$t
t"ree %er cent, o' t"e total o' it$ &eman& an& time lia.ilitie$ in In&ia a$ on t"e
la$t Ari&ay o' t"e $econ& %rece&ing 'ortnig"t an& $"all $u.mit to t"e Re$er-e
Bank .e'ore t"e t#entiet" &ay o' e-ery mont" a return $"o#ing t"e amount $o
"el& on alternate Ari&ay$ &uring a mont" #it" %articular$ o' it$ &eman& an& time
lia.ilitie$ in In&ia on $uc" Ari&ay$ or i' any $uc" Ari&ay i$ a %u.lic "oli&ay un&er
t"e Negotia.le In$trument$ Act+ 1771 05* o' 17712+ at t"e clo$e o' .u$ine$$ on
t"e %rece&ing #orking &ay,

E8%lanation,? In t"i$ $ection+ an& Sec,54+?

0a2 Nlia.ilitie$ in In&iaO $"all not inclu&e?
0i2 t"e %ai&?u% ca%ital or t"e re$er-e$ or any cre&it .alance in t"e %ro9t an& lo$$
account o' t"e .anking com%anyI
0ii2 any a&-ance taken 'rom t"e Re$er-e Bank or 'rom t"e 3e-elo%ment Bank or
'rom t"e E8im Bank 91E For 'rom t"e Recon$truction BankG 95E For 'rom t"e
National Cou$ing BankG or 'rom t"e National Bank 9=E F or 'rom t"e Small
In&u$trie$ BankG .y t"e .anking com%anyI
0iii2 in t"e ca$e o' a Regional Rural Bank+ al$o any loan taken .y $uc" .ank 'rom
it$ $%on$or BankI
0.2 N'ortnig"tO $"all mean t"e %erio& 'rom Satur&ay to t"e $econ& 'ollo#ing
Ari&ay+ .ot" &ay$ inclu$i-eI
0c2 Nnet .alance in current account$O $"all+ in relation to a .anking com%any+
mean t"e e8ce$$+ i' any+ o' t"e aggregate o' t"e cre&it .alance in current
account maintaine& .y t"at .anking com%any #it" t"e State Bank o' In&ia or a
$u.$i&iary .ank or a corre$%on&ing ne# .ank o-er t"e aggregate o' t"e cre&it
.alance in current account "el& .y t"e $ai& .ank$ #it" $uc" .anking com%anyI
0&2 'or t"e %ur%o$e$ o' com%utation o' lia.ilitie$+ t"e aggregate o' t"e lia.ilitie$ o'
a .anking com%any o' t"e State Bank o' In&ia+ a $u.$i&iary .ank+ a
corre$%on&ing ne# .ank+ a Regional Rural Bank+ anot"er .anking com%any+ a !o?
o%erati-e Bank or any ot"er 9nancial in$titution noti9e& .y t"e !entral
Go-ernment in t"i$ .e"al'+ $"all .e re&uce& .y t"e aggregate o' t"e lia.ilitie$ o'
all $uc" .ank$ an& in$titution$ to t"e .anking com%anyI
0e2 t"e e8%re$$ion N!o?o%erati-e BankO $"all "a-e t"e meaning a$$igne& to it in
!l, 0cci2 o' Sec,1*,

052 T"e Re$er-e Bank may+ 'or t"e %ur%o$e$ o' t"i$ $ection an& Sec,54+ $%eci'y
'rom time to time+ #it" re'erence to any tran$action or cla$$ o' tran$action$+ t"at
$uc" tran$action or tran$action$ $"all .e regar&e& a$ lia.ility in In&ia o' a
.anking com%any an&+ i' any /ue$tion ari$e$ a$ to #"et"er any tran$action or
cla$$ o' tran$action$ $"all .e regar&e& 'or t"e %ur%o$e$ o' t"i$ $ection an&
Sec,54 a$ lia.ility in In&ia o' a .anking com%any+ t"e &eci$ion o' t"e Re$er-e
Bank t"ereon $"all .e 9nal,G

19, Re$triction on nature o' $u.$i&iary com%anie$,? 94E F012 A .anking com%any
$"all not 'orm any $u.$i&iary com%any e8ce%t a $u.$i&iary com%any 'orme& 'or
one or more o' t"e 'ollo#ing %ur%o$e$+ namelyJ

0a2 t"e un&ertaking o' any .u$ine$$ #"ic"+ un&er !l$,0a2 to 0o2 o' $u.?$ection 012
o' Sec,*+ i$ %ermi$$i.le 'or a .anking com%any to un&ertake+ or
0.2 #it" t"e %re-iou$ %ermi$$ion in #riting o' t"e Re$er-e Bank+ t"e carrying on
o' t"e .u$ine$$ o' .anking e8clu$i-ely out$i&e In&ia+ or
0c2 t"e un&ertaking o' $uc" ot"er .u$ine$$+ #"ic" t"e Re$er-e Bank may+ #it"
t"e %rior a%%ro-al o' t"e !entral Go-ernment+ con$i&er to .e con&uci-e to t"e
$%rea& o' .anking in In&ia or to .e ot"er#i$e u$e'ul or nece$$ary in t"e %u.lic
intere$t,

E8%lanation,? Aor t"e %ur%o$e$ o' Sec,7+ a .anking com%any $"all not .e
&eeme&+ .y rea$on o' it$ 'orming or "a-ing a $u.$i&iary com%any+ to .e engage&
in&irectly in t"e .u$ine$$ carrie& on .y $uc" $u.$i&iary com%any,G

052 Sa-e a$ %ro-i&e& in $u.?$ection 012+ no .anking com%any $"all "ol& $"are$ in
any com%any+ #"et"er a$ %le&gee+ mortgagee or a.$olute o#ner+ o' an amount
e8cee&ing t"irty %er cent, o' t"e %ai&?u% $"are ca%ital o' t"at com%any or t"irty
%er cent, o' it$ o#n %ai&?u% $"are ca%ital an& re$er-e$+ #"ic"e-er i$ le$$J

4ro-i&e& t"at any .anking com%any #"ic" i$ on t"e &ate o' t"e commencement
o' t"i$ Act "ol&ing any $"are$ in contra-ention o' t"e %ro-i$ion$ o' t"i$ $u.?
$ection $"all not .e lia.le to any %enalty t"ere'ore i' it re%ort$ t"e matter #it"out
&elay to t"e Re$er-e Bank an& i' it .ring$ it$ "ol&ing o' $"are$ into con'ormity
#it" t"e $ai& %ro-i$ion$ #it"in $uc" %erio&+ not e8cee&ing t#o year$+ a$ t"e
Re$er-e Bank may t"ink 9t to allo#,

0=2 Sa-e a$ %ro-i&e& in $u.?$ection 012+ an& not#it"$tan&ing anyt"ing containe&
in $u.?$ection 052+ a .anking com%any $"all not+ a'ter t"e e8%iry o' one year 'rom
t"e &ate o' t"e commencement o' t"i$ Act+ "ol& $"are$+ #"et"er a$ %le&gee+
mortgagee or a.$olute o#ner+ in any com%any in t"e management o' #"ic" any
)anaging 3irector or manager o' t"e .anking com%any i$ in any manner
concerne& or intere$te&,

91E F5:, Re$triction$ on loan$ an& a&-ance$,? 012 Not#it"$tan&ing anyt"ing to
t"e contrary containe& in Sec,66 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ no
.anking com%any $"all+?

0a2 grant any loan$ or a&-ance$ on t"e $ecurity o' it$ o#n $"are$+ or
0.2 enter into any commitment 'or granting any loan or a&-ance or a&-ance to or
on .e"al' o' Q
0i2 any o' it$ &irector$+
0ii2 any 9rm in #"ic" any o' it$ &irector$ i$ intere$te& a$ %artner+ manager
em%loyee or guarantor+ or
0iii2 any com%any 0not .eing a $u.$i&iary o' t"e .anking com%any or a com%any
regi$tere& un&er Sec,51 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ or a
Go-ernment com%any2G o' #"ic" 9*E For t"e $u.$i&iary or t"e "ol&ing com%any
o' #"ic"G any o' t"e &irector$ o' t"e .anking com%any i$ a &irector+ managing
agent+ manager+ em%loyee or guarantor or in #"ic" "e "ol&$ $u.$tantial intere$t+
or
0i-2 any in&i-i&ual in re$%ect o' #"om any o' it$ &irector$ i$ a %artner or
guarantor,

052 H"ere any loan or a&-ance grante& .y a .anking com%any i$ $uc" t"at a
commitment 'or granting it coul& not "a-e .een ma&e i' !l,0.2 o' $u.?$ection 012
"a& .een in 'orce on t"e &ate on #"ic" t"e loan or a&-ance #a$ ma&e+ or i$
grante& .y a .anking com%any a'ter t"e commencement o' Sec,1 o' t"e Banking
La#$ 0Amen&ment2 Act+ 19*7 017 o' 19*72+ .ut in %ur$uance o' a
commencement o' Sec,1 o' t"e Banking La#$ 0Amen&ment2 Act+ 19*7 017 o'
19*72+ .ut in %ur$uance o' a commitment entere& into .e'ore $uc"
commencement+ $te%$ $"all .e taken to reco-er t"e amount$ &ue to t"e .anking
com%any on account o' t"e loan or a&-ance toget"er #it" intere$t+ i' any+ &ue
t"ereon #it"in t"e %erio& $ti%ulate& at t"e time o' t"e grant o' t"e loan or
a&-ance+ or #"ere no $uc" %erio& "a$ .een $ti%ulate&+ .e'ore t"e e8%iry o' one
year 'rom t"e commencement o' t"e $ai& Sec,1J

4ro-i&e& t"at t"e Re$er-e Bank may+ in any ca$e on an a%%lication in #riting
ma&e to it .y t"e .anking com%any in t"i$ .e"al'+ e8ten& t"e %erio& 'or t"e
reco-ery o' t"e loan or a&-ance until $uc" &ate+ not .eing a &ate .eyon& t"e
%erio& o' t"ree year$ 'rom t"e commencement o' t"e $ai& Sec, 1+ an& $u.Pect to
$uc" term$ an& con&ition$+ a$ t"e Re$er-e Bank may &eem 9tJ

4ro-i&e& 'urt"er t"at t"i$ $u.?$ection $"all not a%%ly i' an& #"en t"e &irector
concerne& -acate$ t"e oLce o' t"e &irector o' t"e .anking com%any+ #"et"er .y
&eat"+ retirement+ re$ignation or ot"er#i$e,

0=2 No loan or a&-ance+ re'erre& to in $u.?$ection 052+ or any %art t"ereo' $"all .e
remitte& #it"out t"e %re-iou$ a%%ro-al o' t"e Re$er-e Bank+ an& any remi$$ion
#it"out $uc" a%%ro-al $"all .e -oi& an& o' no e(ect,
042 H"ere any loan or a&-ance re'erre& to in $u.?$ection 052+ %aya.le .y any
%er$on+ "a$ not .een re%ai& to t"e .anking com%any #it"in t"e %erio& $%eci9e&
in t"at $u.?$ection+ t"en $uc" %er$on $"all+ i' "e i$ a &irect o' $uc" .anking
com%any on t"e &ate o' t"e e8%iry o' t"e $ai& %erio&+ .e &eeme& to "a-e
-acate& "i$ oLce a$ $uc" on t"e $ai& &ate,

E8%lanation,? In t"i$ $ection+?

0a2 Nloan$ or a&-anceO $"all not inclu&e any tran$action #"ic" t"e Re$er-e Bank
may+ "a-ing regar& to t"e nature o' t"e tran$action+ t"e %erio& #it"in #"ic"+ an&
t"e manner an& circum$tance$ in #"ic"+ any amount &ue on account o' t"e
tran$action i$ likely to .e realiMe&+ t"e intere$t o' t"e &e%o$itor$ an& ot"er
rele-ant con$i&eration$+ $%eci'y .y general or $%ecial or&er a$ not .eing a loan or
a&-ance 'or t"e %ur%o$e o' t"i$ $ectionI

0.2 N&irectorO inclu&e$ a mem.er o' any .oar& or committee in In&ia con$titute&
.y a .anking com%any 'or t"e %ur%o$e o' managing+ or 'or t"e %ur%o$e o'
a&-i$ing it in regar& to t"e management o'+ all or any o' it$ a(air$,

012 I' any /ue$tion ari$e$ #"et"er any tran$action i$ a loan or a&-ance 'or t"e
%ur%o$e$ o' t"i$ $ection+ it $"all .e re'erre& to t"e Re$er-e Bank+ #"o$e &eci$ion
t"ereon $"all .e 9nal,G

!))ENT

Re$triction "a$ .een im%o$e& on loan$ an& a&-ance$, S"are$+ &irector$ an& any
9rm in #"ic" &irector$ are intere$te& a$ a %artner $"all not get grant an& loan$
are a&-ance& .y .anking com%any,

!om%laint to .anking m.u&$man "a$ to .e in #riting,? T"e o.Pection taken .y
t"e .ank t"at .e'ore a com%laint can .e entertaine& t"e %etitioner i$ to %re'er a
re%re$entation mu$t .e $u$taine&, T"i$ i$ man&atory, In t"i$ ca$e+ no $uc"
re%re$entation "a$ 9le&, T"e re%re$entation 9le& in t"e year 199= cannot .e
looke& into .ecau$e t"i$ #a$ 9le& more t"an a year .e'ore t"e a%%lication #a$
%re'erre& .e'ore t"e .anking m.u&$man, Bar o' limitation in&icate& in !l, 1* 0=2
0.2 #oul& .e attracte&,96E

97E F5:?A, Re$triction on %o#er to remit &e.t$,? 012 Not#it"$tan&ing anyt"ing to
t"e contrary containe& in Sec,59= o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ a
.anking !om%any $"all not+ e8ce%t #it" t"e %rior a%%ro-al o' t"e Re$er-e Bank+
remit in #"ole or in %art any &e.t &ue to it .y Q

0a2 any o' it$ &irector$+ or
0.2 any 9rm or com%any in #"ic" any o' it$ &irector$ i$ intere$te& a$ &irector+
%artner+ managing agent or guarantor+ or
0c2 any in&i-i&ual i' any o' it$ &irector i$ "i$ %artner or guarantor,
052 Any remi$$ion ma&e in contra-ention o' t"e %ro-i$ion$ o' $u.? $ection 012
$"all .e -oi& an& o' no e(ect,G

51, 4o#er o' Re$er-e Bank to control a&-ance$ .y .anking com%anie$,?012 H"ere
t"e Re$er-e Bank i$ $ati$9e& t"at it i$ nece$$ary or e8%e&ient in t"e %u.lic
intere$t 99E For in t"e intere$t$ o' &e%o$itor$G 1::E For .anking %olicyG $o to &o+ it
may &etermine t"e %olicy in relation to a&-ance$ to .e 'ollo#e& .y .anking
com%anie$ generally or .y any .anking com%anie$ or t"e .anking com%any
concerne&+ a$ t"e ca$e may .e+ $"all .e .oun& to 'ollo# t"e %olicy a$ $o
&etermine&,

052 Hit"out %rePu&ice to t"e generality o' t"e %o#er -e$te& in t"e Re$er-e Bank
un&er $u.?$ection 012+ t"e Re$er-e Bank may gi-e &irection$ to .anking
com%anie$+ eit"er generally or to any .anking com%any or grou% o' .anking
com%anie$ in %articular+ 1:1E Fa$ to ?

0a2 t"e %ur%o$e$ 'or #"ic" a&-ance may or may not .e ma&e+
0.2 t"e margin$ to .e maintaine& in re$%ect o' $ecure& a&-ance$+
0c2 t"e ma8imum amount o' a&-ance$ or ot"er 9nancial accommo&ation #"ic"+
"a-ing regar& to t"e %ai&?u% ca%ital+ re$er-e any &e%o$it$ o' a .anking com%any
an& rele-ant con$i&eration$+ may .e ma&e .y t"at .anking com%any+ to any one
com%any+ 9rm+ a$$ociation o' %er$on$ or in&i-i&ual+
0&2 t"e ma8imum amount u% to #"ic"+ "a-ing regar& to t"e con$i&eration$
re'erre& to in !l0c2+ guarantee$ may .e gi-en .y a .anking com%any on .e"al' o'
any one com%any+ 9rm+ a$$ociation o' %er$on$ or in&i-i&ual+ an&
0e2 t"e rate o' intere$t an& ot"er term$ an& con&ition$ on #"ic" a&-ance$ or
ot"er 9nancial accommo&ation may .e ma&e or guarantee$ may .e gi-en,G

1:5E F0=2 E-ery .anking com%any $"all .e .oun& to com%ly #it" any &irection$
gi-en to it un&er t"i$ $ection,G


!))ENTS

Banking com%any .oun& to com%ly #it" any &irection i$$ue& .y R,B,I,? Un&er
Sec,51 o' t"e Banking Regulation Act+ 1949+ t"e Re$er-e Bank "a$ got t"e %o#er
to control a&-ance$ to .e ma&e .y t"e Banking !om%anie$, H"en t"e Re$er-e
Bank i$ $ati$9e& t"at it i$ nece$$ary an& e8%e&ient in %u.lic intere$t or Banking
%olicy $o to &o+ it can &etermine t"e %olicy in relation to a&-ance$ to .e 'ollo#e&
.y t"e .anking com%anie$ generally or any .anking com%any in %articular, T"e
.anking com%anie$ are .oun& to 'ollo# t"e %olicy $o &etermine&, Re$er-e Bank
"a$ al$o t"e %o#er to gi-e &irection a$ to t"e rate o' intere$t an& ot"er term$
an& con&ition$ on #"ic" a&-ance$ or ot"er 9nancial accommo&ation$ may .e
ma&e or guarantee gi-en, T"e circular i$$ue& .y t"e Re$er-e Bank o' In&ia
regulating rate o' intere$t c"argea.le on loan$ an& t"e manner o' c"arging
intere$t are $tatutory circular$ i$$ue& #it" lau&a.le %ur%o$e$ an& are .in&ing on
t"e .ank$,1:=E

!ourtU$ &i$cretion in granting rate o' intere$t,? T"e !ourt "a$ no &i$cretion to
grant a &i(erent rate o' intere$t t"an t"e contractual rate o' intere$t+ 'rom t"e
&ate it i$ &ue an& %aya.le to t"e &ate it i$ actually %ai&, In t"e ca$e o'
commercial loan$ o' t"e .ank$+ Sec,=4 o' t"e !o&e o' !i-il 4roce&ure+ 19:7 i$ to
.e a%%lie& in t"e conte8t o' circular$V&irection$ i$$ue& .y t"e Re$er-e Bank o'
In&ia un&er Sec,51 an& =1?A o' t"e Banking Regulation Act+ 1949, 1:4E

Banking %olicy an& t"e rate o' intere$t &etermine& .y t"e Re$er-e Bank o' In&ia
are .in&ing on t"e Banking com%anie$,? H"en t"e Re$er-e Bank i$ $ati$9e& t"at
it i$ nece$$ary or e8%e&ient in %u.lic intere$t+ o' .anking %olicy $o to &o+ it can
&etermine t"e %olicy in relation to a&-ance$ to .e 'ollo#e& .y t"e .anking
com%anie$ generally or any .anking com%anie$ in %articular, T"e .anking
com%anie$ are .oun& to 'ollo# t"e %olicy $o &etermine&, Re$er-e Bank "a$ al$o
t"e %o#er to gi-e &irection$ a$ to t"e rate o' intere$t an& ot"er term$ an&
con&ition$ on #"ic" a&-ance$ or ot"er 9nancial accommo&ation$ may .e ma&e
or guarantee gi-en, E-ery .anking com%any $"all .e .oun& to com%ly #it" any
&irection gi-en to it .y t"e Re$er-e Bank un&er Sec,51, T"e circular$ i$$ue& .y
t"e Re$er-e Bank o' In&ia regulating rate o' intere$t c"argea.le on loan$ an& t"e
manner o' c"arging intere$t are $tatutory circular$ i$$ue& #it" lau&a.le %ur%o$e$
an& are .in&ing on t"e .ank$, 1:1E

Total amount a&Pu&ge& to .e t"e %rinci%al amount,? At t"e time o' t"e %a$$ing o'
t"e &ecree+ t"e total amount #a$ a&Pu&ge& to .e t"e %rinci%al amount an&+
t"ere'ore t"e %lainti( Bank #a$ rig"tly gi-en intere$t t"ereon at t"e rate o' 1=1V5
%er cent, %er annum, )oreo-er+ t"e amount$ $oug"t to .e reali$e& .y t"e Bank
'rom t"e &e'en&ant$ are gi-en 'rom time to time in t"e notice$ i$$ue& .y it an&+
t"ere'ore+ t"e %rinci%al amount 'oun& &ue not only mean$ t"e %rinci%al amount
a$ $uc"+ .ut al$o t"e amount &ue on intere$t #"ic" "a$ .ecome %art o' t"e
%rinci%al amount a$ %er t"e calculation$ o' t"e Bank,1:*E

Wue$tion o' la# Q )aintaina.ility o' a%%eal, ? T"e /ue$tion #"et"er nationali$e&
.ank$+ o.lige& to c"arge intere$t at $%eci9e& rate in accor&ance #it" t"e
circular$ an& &irecti-e$ %erio&ically i$$ue& .y t"e Re$er-e Bank o' In&ia un&er
t"e %ro-i$ion$ o' t"e Banking Regulation$ Act+ can .e taken out o' t"e category
o' ca$e$ #"ere t"e %re$um%tion regar&ing e8ce$$i-e nature o' intere$t un&er t"e
%ro-i$ion o' t"e U$uriou$ Loan$ Act can .e rai$e&+ i$ a /ue$tion o' la# an& t"at
only t"at /ue$tion #a$ rai$e& an& &e.ate& .e'ore t"e Lo#er A%%ellate !ourt an&+
t"ere'ore+ t"e a%%eal &i& in-ol-e a /ue$tion o' la#, In t"e in$tant ca$e+ it i$ clear
'rom a %eru$al o' t"e memoran&um o' a%%eal 9le& .e'ore t"e !ourt .elo# an&
t"e Pu&gment t"erein &i$clo$e$ t"at t"e a%%eal #a$ 9le& an& argue& on a
/ue$tion o' la#+ -iM,+ t"e a%%lica.ility o' t"e %ro-i$ion$ o' t"e U$uriou$ Loan$ Act+
to nationali$e& .ank$ 'unctioning un&er t"e %ro-i$ion$ o' t"e Banking Regulation
Act an& t"e $co%e an& e(ect o' Sec,= an& t"e %ro-i$ion$ t"ereun&er, Be$i&e$+
t"i$ -ery /ue$tion #a$ argue& at great lengt" .e'ore t"e Cig" !ourt, No o.Pection
regar&ing t"e incom%etency o' t"e a%%eal on t"e $core t"at it in-ol-e& a
/ue$tion o' 'act+ #a$ e-er attem%te& to .e rai$e& .y t"e re$%on&ent$ in t"e
!ourt .elo#, T"u$ it i$ too late to urge t"at no /ue$tion o' la# aro$e in t"e a%%eal
.e'ore t"e !ourt .elo#, It coul& not .e $ai& t"at no /ue$tion o' la# aro$e an&+
t"ere'ore+ t"e a%%eal #a$ not com%etent,1:6E

!"arging o' intere$t on agricultural loan,? In t"e ca$e o' agricultural loan$
com%oun&ing o' intere$t #it" /uarterly or "al'?yearly re$t$ i$ not %ermi$$i.le+ t"e
intere$t can .e 98e& #it" annual re$t$, But #"en t"e loan amount "a$ .ecome
o-er&ue or t"e in$talment "a$ .een o-er&ue+ it i$ o%en to t"e Bank$ to a&& t"e
amount o' intere$t #it" t"e %rinci%al $um t"at "a$ .ecome &ue calculate& at
yearly re$t$ t"at intere$t coul& .e a&&e& to#ar&$ t"e %rinci%al amount,
T"ere'ore+ t"e &ecree #"ic" "a$ .een %a$$e& in t"e in$tant ca$e 'or a $um o'
R$,5+95+74*+:6 calculating t"e intere$t at t"e rate o' 1*,1< %,a, #it" yearly re$t$
cannot .e $ai& to $u(er 'rom error o' la#,1:7E

Re$er-e Bank &irecti-e$ an& t"eir im%ortance,? T"e &i$cretion #a$ gi-en to .ank$
to c"arge intere$t a.o-e t"e minimum+ .ut t"at &oe$ not mean t"at .ank$ coul&
c"arge unrea$ona.le+ or e8ce$$i-e intere$t, Bank$ are %u.lic in$titution$ an& not
Pu$t money?len&er$, In t"e a.$ence o' Re$er-e Bank &irecti-e$+ t"ey are+
t"ere'ore+ re/uire& to 'ollo# t"e .anking %ractice generally acce%te& .y all
.ank$, It i$ clear t"at t"e or&inary %ractice or cu$tom o' .ank$ #a$ only to
c"arge intere$t #it" yearly or "al'?yearly re$t$ an& t"at too only on o-er&ra't
amount$ an& un$ecure& loan$, T"e mont"ly+ or /uarterly re$t$+ t"ere'ore+ &oe$
not a%%ear to .e t"e recogniMe& .anking %ractice, It may .e t"at $ome .ank$ a$
in t"e %re$ent ca$e+ mig"t "a-e c"arge& intere$t #it" /uarterly re$t$ or mont"ly
re$t$ on $ome tran$action$+ .ut to $tate t"at it #a$ a .anking %ractice generally
acce%te& or uni-er$ally 'ollo#e& .y all .ank$+ i$ 'ar 'rom true,1:9E

11:E F51?A, Rate$ o' intere$t c"arge& .y .anking com%anie$ not to .e $u.Pect to
$crutiny .y !ourt$,? Not#it"$tan&ing anyt"ing containe& in t"e U$uriou$ Loan$
Act+ 1917 01: o' 19172+ or any ot"er la# relating to in&e.te&ne$$ in 'orce in any
State+ a tran$action .et#een a .anking com%any an& it$ &e.tor $"all not .e
reo%ene& .y any !ourt on t"e groun& t"at t"e rate o' intere$t c"arge& .y t"e
.anking com%any in re$%ect o' $uc" tran$action i$ e8ce$$i-e,G

!))ENTS

Sco%e o' Sec,51?A,? In a ca$e t"e An&"ra 4ra&e$" Cig" !ourt "el& t"at Sec, 51?A
i$ inten&e& to %re-ent reo%ening t"e tran$action on t"e groun& t"at t"e rate o'
intere$t c"arge& .y t"e .anking com%any in re$%ect o' $uc" tran$action i$
e8ce$$i-e, T"e relie' un&er t"e State Act i$ not on t"e groun& t"at it i$ e8ce$$i-e
.ut it i$ on t"e groun& t"at t"e general in&e.te&ne$$ o' agriculturi$t$ $"all .e
relie-e& an& t"ey $"oul& not .e re/uire& to %ay more t"an t"e $tatutory an& al$o
to li/ui&ate certain &e.t$ in it$ $c"eme,111E

Section may .e rele-ant to t"e agree& rate o' intere$t .ut not to t"e rate o'
intere$t unilaterally 98e& .y t"e .anking com%any,115E

T"e %ro-i$ion$ o' Sec,51?A cannot .e "el& to "a-e inten&e& to o-erri&e a !entral
Legi$lation like t"e !o&e o' !i-il 4roce&ure or r&er DDDIR+ rule 11+ !,4,!,11=E

A%%lica.ility o' Sec, 51?A,? 012 Section 51?A o' t"e Banking Regulation Act+ 1949
a%%lie$ to all tran$action$ entere& into .et#een t"e .anking com%any an& it$
&e.tor #"et"er t"e tran$action #a$ entere& into %rior to it$ commencement or
a'ter,

052 Section 51?A o' t"e Banking Regulation Act+ 1949+ a%%lie$ to t"e $uit$ %en&ing
on t"e &ate o' coming into 'orce o' t"e $ai& $ection,

0=2 Section 51?A a%%lie$ to %en&ing a%%eal$ irre$%ecti-e o' t"e 'act #"et"er a
&ecree #a$ %a$$e& gi-ing relie' to t"e &e.tor or not,

042 Section 51?A make no &i$tinction .et#een an a&-ance ma&e 'or agricultural
%ur%o$e or 'or commercial %ur%o$e an& it e/ually a%%lie$ to .ot",114E

!on$titutional -ali&ity o' Sec, 51?A,? Section 51?A o' t"e Banking Regulation Act
e8%re$$ly o-erri&e$ t"e %ro-i$ion$ o' t"e U$uriou$ Loan$ Act inclu&ing any ot"er
la# relating to in&e.te&ne$$ in any State, Section 51?A o' t"e Banking Regulation
Act i$ only %ro$%ecti-e an& it i$ not retro$%ecti-e in o%eration, A 3i-i$ional .enc"
o' An&"ra 4ra&e$" Cig" !ourt con$i$ting o' Ramarao+ S, an& Ko&an&aramaia"+ S,
in A, S, No,=15 V 67 an& .atc" u%"el& t"e con$titutional -ali&ity o' Sec, 51?A o'
t"e Banking Regulation Act,111E

Co# 'ar re$traint on t"e %art o' !ourt,? T"oug" Sec, 51?A o' t"e Act i$ a re$traint
on t"e %o#er o' t"e !ourt+ $uc" re$traint #ill not %reclu&e t"e !ourt$ 'rom
reo%ening t"e tran$action .et#een t"e .ank an& it$ &e.tor i' it i$ e$ta.li$"e&
t"at t"e .ank "a$+ in -iolation o' t"e &irecti-e$ containe& in t"e rele-ant circular$
or any ot"er %ro-i$ion$ o' la#+ c"arge& intere$t at a rate &i(erent 'rom t"at
$%eci9e& in t"e circular$ an& "a-e #"ile $ettling t"e account$ com%oun&e&
intere$t ot"er#i$e t"an yearly in t"e ca$e o' loan$ to #"ic" t"e circular$ a%%ly,
T"at .eing t"e %o$ition+ Sec,51?A cannot .e legally un&er$too& a$ a %ro-i$ion
re$training t"e !ourt$ 'rom e8erci$ing it$ %o#er$ to gi-e relie' to a %arty
#"ene-er any .anking claim$ i$ in -iolation o' t"e circular$ i$$ue& un&er Sec,51
o' t"e Act,11*E

Non?action on t"e %art o' .ank,? In t"e in$tant ca$e t"e &e'en&ant "a& &e9nitely
in'orme& t"e %lainti( t"at $"e #a$ al$o making arrangement 'or $ale o' t"e
$"are$ an& $"e "a& alrea&y entere& into an agreement #it" a t"ir& %arty
t"ere'ore, S"e #ante& t"e .ank not to take any &ra$tic action an& gi-e "er $ome
time, T"u$+ t"e &e'en&ant #a$ $to%%ing %lainti(?.ank 'rom taking any action, In
t"e$e circum$tance$+ $"e cannot %lea& t"at t"e .ank 'aile& to take action in time
an& t"ere.y cau$e& lo$$ to "er,116E

Section o-erri&e$ U$uriou$ Loan$ Act,? Section 51?A o' t"e Banking Regulation
Act e8%re$$ly o-erri&e$ t"e %ro-i$ion$ o' t"e U$uriou$ Loan$ Act inclu&ing any
ot"er la# relating to in&e.te&ne$$ in any State,117E

Co#e-er+ t"e intere$t in re$%ect o' agricultural tran$action "a$ to .e
com%oun&e& only on t"e .a$i$ o' yearly re$t$ an& not #it" /uarterly or "al'?
yearly re$t$I #"erea$ in re$%ect o' commercial tran$action$ c"arging o' intere$t
#it" /uarterly or any $uc" longer re$t$ i$ a&mi$$i.le,119E

Section 51?A cannot take a#ay t"e .ene9t alrea&y grante& .y !ourt$ .e'ore t"e
U$uriou$ Loan$ Act came into 'orce,15:E

Un&er Sec,51?A o' t"e Banking Regulation Act+ 1949+ a$ amen&e&+ t"e
a%%lication o' t"e U$uriou$ Loan$ Act i$ ma&e in e(ect im%ermi$$i.le 'rom 11t"
Ae.ruary+ 1974, It i$ only a 'e# &ay$ .e'ore t"at &ate t"at t"i$ $uit #a$ in$titute&,
It #oul& .e im%ermi$$i.le 'or a !ourt &ecreeing a $uit to $eek to reo%en a
tran$action on t"e .a$i$ o' Sec,= o' t"e U$uriou$ Loan$ Act unle$$ at t"e &ate o'
%a$$ing o' t"e &ecree+ t"e !ourt #ere 'ree to a%%ly t"e $ai& Act to t"e
tran$action co-ere& .y t"e $uit,151E

4ayment o' intere$t a$ %er agreement,? H"ere it #a$ $%eci9cally %lea&e& .y t"e
a%%ellant? .ank in t"e %laint t"at t"ere #a$ a contract 'or %ayment o' /uarterly
re$t$ intere$t an& in t"e relie' clau$e+ a %rayer #a$ ma&e 'or a &ecree o' intere$t
#it" /uarterly re$t$, An i$$ue #a$ al$o 'rame& an& e-i&ence on .e"al' o' t"e
.ank #a$ al$o recor&e& .y t"e trial !ourt+ .ut t"e re$%on&ent "a& not %ro&uce&
any e-i&ence in re.uttal, T"ere #a$+ t"ere'ore+ no Pu$ti9cation 'or t"e trial !ourt
'or not granting intere$t #it" /uarterly re$t$, No ca$e #a$ ma&e out .y t"e
re$%on&ent$ 'or e8erci$ing a &i$cretion 'or a#ar& o' le$$er rate o' intere$t or to
#ai-e t"e com%oun& intere$t,155E

Amen&e& $ection coming into 'orce &uring %en&ency o' a%%eal+ can .e taken
notice o' .y A%%ellate !ourt an& &ecree to .e mo&i9e&,? It i$ #ell e$ta.li$"e&
t"at an a%%eal i$ t"e continuation o' t"e $uit an&+ t"ere'ore+ Sec,51?A o' t"e
Banking Regulation Act+ 1949 #oul& a%%ly to 'act$ o' t"e ca$e #"en t"e learne&
$ingle Su&ge e8erci$e& "i$ a%%ellate %o#er un&er Sec,9* o' t"e !o&e o' !i-il
4roce&ure, Section 1:6 052 o' t"e !o&e o' !i-il 4roce&ure gi-e$ %o#er to an
A%%ellate !ourt almo$t t"e $ame %o#er$ a$ t"at o' Trial !ourt, It "a$ al$o %o#er
to notice t"e $u.$e/uent e-ent$, T"ere'ore t"e learne& $ingle Su&ge $"oul& "a-e
a%%lie& Sec,51?A o' t"e Banking Regulation Act+ 1949 an& "el& t"at t"e Act o'
1917 #a$ not a%%lica.le to a tran$action .et#een t"e a%%ellant an&
re$%on&ent$, t"er#i$e+ t"e re$ult #oul& .e $tarting in ca$e t"e learne& $ingle
Su&ge reman&e& t"e ca$e+ t"e Trial !ourt #oul& .e com%elle& to take notice o'
Sec,51?A o' t"e Banking Regulation Act+ 1949+ an& %a$$ &ecree accor&ingly, T"e
re$ult #oul& .e incongruou$ an& -agariou$ i' it i$ not "el& t"at t"e !ourt #a$
.oun& to take notice o' amen&ment in la# at t"e time o' %a$$ing &ecree at
a%%ellate $tage an& -ary t"e &ecree o' t"e Trial !ourt accor&ing to t"e la#
o.taining a'ter t"e amen&ment, T"ere'ore+ it #a$ "el& t"at amen&e& Sec, 51?A o'
t"e Banking Regulation Act+ 1949 #oul& .e a%%lica.le at t"e a%%ellate $tage too
an& t"e !ourt mu$t %a$$ a &ecree in accor&ance #it" t"e c"ange& la#,15=E

4en&ente lite an& 'uture intere$t,? A'ter t"e coming into 'orce o' Sec,51?A o' t"e
Banking Regulation Act+ 1949 #"ic" came into 'orce on 11t" Ae.ruary+ 1974+ t"e
!ourt "a$ no %o#er to re&uce t"e rate o' %en&ente lite an& 'uture intere$t
%aya.le .y Pu&gment &e.tor$ in $uit$ 9le& .y nationali$e& .ank$ 'or reco-ery o'
loan$, In t"e %re$ent ca$e t"e 3i$trict !ourt committe& an error in not allo#ing
intere$t at t"e co-enante& rate %en&ente lite, T"e !ourt i$ .oun& to a#ar&
intere$t at t"e co-enante& rate,154E

Section 51?A relate$ to %roce&ural la# an& i$ a%%lica.le to tran$action$ %rior to
t"e &ate o' in$ertion o' Sec,51?A? It o-erri&e$ Sec,41 o' t"e )a&ra$ La# Act, Q
Section 51?A o' t"e Banking Regulation Act+ relate$ to %roce&ural la# an& i$
a%%lica.le to t"e tran$action$ %rior to t"e &ate o' in$ertion o' Sec, 51?A o' t"e
Banking Regulation Act, T"e a%%ellant #a$+ t"ere'ore+ entitle& to intere$t at t"e
rate o' 1= %er cent, %er annum #it" $i8 mont"ly re$t$+ a$ agree& to .et#een t"e
%artie$ an& a$ mentione& in t"e initial loan &ocument,151E

Re$tro$%ecti-e o%eration o' t"e Act,? Section 51?A o' t"e Banking Regulation Act+
#"ic" came into 'orce 'rom 11t" Ae.ruary+ 1974+ i$ %ro$%ecti-e an& not
retro$%ecti-e,15*E

!ourt not em%o#ere& to reo%en t"e tran$action,? In t"e %re$ent ca$e+ t"ere i$ a
#ritten contract .et#een t"e %artie$ containe& in t"e "y%ot"ecation agreement
&ate& =1$t cto.er+ 196*+ t"at t"e .orro#er $"all %ay intere$t on t"e %rinci%al
amount or t"e .alance out$tan&ing o' t"e loan at any time at t"e rate o' 6,1 %er
cent, %er annum o-er an& a.o-e t"e Re$er-e Bank o' In&ia rate o' intere$t
$u.Pect+ "o#e-er+ to a minimum o' 1*,1 %er cent, %er annum an& $uc" intere$t i$
to .e %ai& e-ery mont" en&ing #it" t"e la$t #orking &ay o' calen&ar mont",
!lau$e 052 0c2 'urt"er %ro-i&e$ t"at+ in &e'ault o' %ayment o' any one in$talment
o' t"e %rinci%al amount on t"e &ue &ate+ t"e .orro#er $"all %ay on all $uc"
o-er&ue in$talment$ or $uc" %ortion t"ereo' a$ $"all t"en remain out$tan&ing+
intere$t at = %er cent, %er annum o-er an& a.o-e t"e agree& rate mentione& in
!l, 0.2 a.o-e, A$ lai& &o#n .y Sec,51?A+ t"e !ourt i$ not em%o#ere& no# to
reo%en t"i$ tran$action .et#een t"e %artie$ on t"e groun& t"at t"e rate o'
intere$t c"arge& .y t"e %lainti( .ank in re$%ect o' t"e tran$action i$ e8ce$$i-e, It
i$ t"e ca$e o' t"e %lainti(?.ank in %ara, 16 o' t"e %laint t"at t"e &e'en&ant$
'aile& to re%ay t"e $ecure& loan in 4: mont"ly in$talment$ o' R$,5+::: eac", T"e
&e'en&ant$ are al$o allege& to "a-e 'aile& to %ay t"e ca$" cre&it o-er&ra't loan o'
R$, 61+::: .e'ore cto.er =1+ 1966, In t"e$e circum$tance$+ t"e %lainti( .ank i$
'ully entitle& to claim %enal intere$t on o-er&ue in$talment$,156E

Rea$ona.le cla$$i9cation,? T"e $c"e&ule& .ank$ are c"arging intere$t in
accor&ance #it" t"e gui&eline$ o' t"e Re$er-e Bank o' In&ia an& uni'ormly 'rom
all agriculturi$t$ in t"e State #it"out any &i$crimination $o 'ar a$ agricultural
&e.t i$ concerne&, T"e rate o' intere$t i$ uni'orm an& i$ neit"er unrea$ona.le nor
ar.itrary or e8or.itant $o a$ to 'all #it"in t"e -ice o' &i$crimination, T"e
cla$$i9cation mu$t .e 'oun&e& on an intelligi.le &i(erentiation #"ic"
&i$tingui$"e$ %er$on$ or t"ing$ t"at are to .e %ut toget"er 'rom ot"er$ le't out o'
t"e grou% an& t"at t"e &i(erential mu$t "a-e rational relation$"i% to t"e o.Pect
$oug"t to .e ac"ie-e& .y t"e $tatute in /ue$tion+ "a-e .een 'oun& in t"i$ conte8t
o' t"e %ro-i$ion$ o' Sec,4 0c2 o' t"e Act a$ %ermi$$i.le cla$$i9cation,157E

Letter #ritten to a cre&itor #"et"er re/uire$ regi$tration,? T"e %o$ition o' la#
a%%ear$ to .e t"at t"e te$t to .e a%%lie& to conclu&e #"et"er a letter #ritten to
a cre&itor at t"e time o' t"e &e%o$it o' title &ee&$ o' $u.$e/uent to t"e title
&ee&$ re/uire$ regi$tration or not &e%en&$ on t"e matter$ containe& in t"at
letter an& i' it recite$ t"at t"roug" t"i$ letter t"e mortgage #a$ create& t"en only
it #oul& re/uire regi$tration ot"er#i$e not,159E

!ontrol o' a&-ance$, ? Un&er Sec,51 o' t"e Banking Regulation Act+ 1949+ t"e
Re$er-e Bank "a$ got t"e %o#er to control a&-ance$ to .e ma&e .y .anking
com%anie$, H"en t"e Re$er-e Bank i$ $ati$9e& t"at it i$ nece$$ary or e8%e&ient
in %u.lic intere$t or .anking %olicy $o to &o+ it can &etermine t"e %olicy in
relation to a&-ance$ to .e 'ollo#e& .y .anking com%anie$ generally or .y any
.anking com%any in %articular, Banking com%anie$ are .oun& to 'ollo# t"e %olicy
$o &etermine&, T"e Re$er-e Bank "a$ al$o t"e %o#er to gi-e &irection$ a$ to t"e
rate o' intere$t an& ot"er term$ an& con&ition on #"ic" a&-ance$ or ot"er
9nancial accommo&ation$ may .e ma&e or guarantee$ gi-en, E-ery .anking
com%any $"all .e .oun& to com%ly #it" any &irection gi-en to it .y t"e Re$er-e
Bank un&er Sec,51, T"e circular$ i$$ue& .y t"e Re$er-e Bank o' In&ia regulating
t"e rate o' intere$t c"argea.le on loan$ an& t"e manner o' c"arging intere$t are
$tatutory circular$ i$$ue& #it" a lau&a.le %ur%o$e an& are .in&ing on t"e .ank$
Renkite$#ara Rice )ill -, Union Bank o' In&ia+ 1=:E an& T"am%an -,
3"analak$"mi Bank Lt&,+1=1E Section 51?A o' t"e Banking Regulation Act
%ro-i&e$ t"at t"e intere$t c"arge& .y .anking com%anie$+ accor&ingly+ $"all not
.e $u.Pecte& to $crutiny .y !ourt$,1=5E

55, Licen$ing o' .anking com%anie$,? 1==E 012 Sa-e a$ "ereina'ter %ro-i&e& no
com%any $"all carry on .anking .u$ine$$ in In&ia unle$$ it "ol&$ a licence i$$ue&
in t"at .e"al' .y t"e Re$er-e Bank an& any $uc" licence may .e i$$ue& $u.Pect
to $uc" con&ition$ a t"e Re$er-e Bank may t"ink 9t to im%o$e,G

052 E-ery .anking com%any in e8i$tence on t"e commencement o' t"i$ Act+
.e'ore t"e e8%iry o' $i8 mont"$ 'rom $uc" commencement+ an& e-ery ot"er
com%any .e'ore commencing .anking .u$ine$$ 1=4E Fin In&iaG+ $"all a%%ly in
#ritten to t"e Re$er-e Bank 'or a licence un&er t"i$ $ection J

4ro-i&e& t"at in t"e ca$e o' .anking com%any in e8i$tence on t"e
commencement o' t"i$ Act+ not"ing in $u.?$ection 012 $"all .e &eeme& to
%ro"i.it t"e com%any 'rom carrying on .anking .u$ine$$ until it i$ grante&
licence in %ur$uance o' 1=1E Ft"i$ $ectionG or i$ .y notice in #riting in'orme& .y
t"e Re$er-e Bank t"at a licence cannot .e grante& to it J

4ro-i&e& 'urt"er t"at t"e Re$er-e Bank $"all not gi-e a notice a$ a'ore$ai& to a
.anking com%any in e8i$tence on t"e commencement o' t"i$ Act .e'ore t"e
e8%iry o' t"e t"ree year$ re'erre& to in $u.?$ection 012 o' Sec, 11 or o' $uc"
'urt"er %erio& a$ t"e Re$er-e Bank may un&er t"at $u.?$ection t"ink 9t to allo#,

0=2 Be'ore granting any licence un&er t"i$ $ection t"e Re$er-e Bank may re/uire
to t"e $ati$9e& .y an in$%ection o' t"e .ook$ o' t"e com%any or ot"er#i$e t"at
1=*FEEEG t"e 'ollo#ing con&ition$ are 'ul9lle&+ namelyJ

1=6E F0a2 t"at t"e com%any i$ or #ill .e in %o$ition to %ay it$ %re$ent or 'uture
&e%o$itor$ in 'ull a$ t"eir claim$ accrueI
0.2 t"at t"e a(air$ o' t"e com%any are not .eing+ or are not likely to .e
con&ucte& in a manner &etrimental to t"e intere$t$ o' it$ %re$ent or 'uture
&e%o$itor$IG
1=7E F0c2 t"at t"e general c"aracter o' t"e %ro%o$e& management o' t"e
com%any #ill not .e %rePu&icial to t"e %u.lic intere$t o' it$ %re$ent or 'uture
&e%o$itor$I
0&2 t"e com%any "a$ a&e/uate ca%ital $tructure an& earning %ro$%ect$I
0e2 t"at t"e %u.lic intere$t #ill .e $er-e& .y t"e grant o' a licence to t"e
com%any to carry on .anking .u$ine$$ in In&iaI
0'2 t"at "a-ing regar& to t"e .anking 'acilitie$ a-aila.le in t"e %ro%o$e& %rinci%al
area o' o%eration$ o' t"e com%any+ t"e %otential $co%e 'or e8%an$ion o' .ank$
alrea&y in e8i$tence in t"e area an& ot"er rele-ant 'actor$ t"e grant o' t"e
licence #oul& not .e %rePu&icial to t"e o%eration an& con$oli&ation o' t"e .anking
$y$tem con$i$tent #it" monetary $ta.ility an& economic gro#t"I
0g2 any ot"er con&ition+ t"e 'ul9lment o' #"ic" #oul&+ in t"e o%inion o' t"e
Re$er-e Bank+ .e nece$$ary to en$ure t"at t"e carrying on t"e .anking .u$ine$$
in In&ia .y t"e com%any #ill not .e %rePu&icial to t"e %u.lic intere$t or t"e
intere$t$ o' t"e &e%o$itor$,G

1=9E F0=?A2 Be'ore granting any licence un&er t"i$ $ection to a com%any
incor%orate& out$i&e In&ia+ t"e Re$er-e Bank may re/uire to .e $ati$9e& .y an
in$%ection o' t"e .ook$ o' t"e com%any or ot"er#i$e t"at t"e con&ition$ $%eci9e&
in $u.?$ection 0=2 are 'ul9lle& an& t"at t"e carrying on o' .anking .u$ine$$ .y
$uc" com%any in In&ia #ill .e in t"e %u.lic intere$t an& t"at t"e Go-ernment or
la# o' t"e country in #"ic" it i$ incor%orate& &oe$ not &i$criminate in any #ay
again$t com%anie$ regi$tere& in In&ia an& t"at t"e com%any com%lie$ #it" all t"e
%ro-i$ion$ o' t"i$ Act a%%lica.le to .anking com%anie$ incor%orate& out$i&e
In&ia,G

14:E F042 T"e Re$er-e Bank may cancel a licence grante& to a .anking com%any
un&er t"i$ $ection Q

0i2 i' t"e com%any cea$e$ to carry on .anking .u$ine$$ in In&iaI or
0ii2 i' t"e com%any at any time 'ail$ to com%ly #it" any o' t"e con&ition$ im%o$e&
u%on it un&er $u.?$ection 012I or
0iii2 i' at any time+ any o' t"e con&ition$ re'erre& to in $u.?$ection 0=2 141E Fan&
$u.?$ection 0=?A2 i$ not 'ul9lle& J

4ro-i&e& t"at .e'ore cancelling a licence un&er !l, 0ii2 or !l,0iii2 o' t"i$ $u.?$ection
on t"e groun& t"at t"e .anking com%any "a$ 'aile& to com%ly #it" or "a$ 'aile&
to 'ul9l any o' t"e con&ition$ re'erre& to t"erein+ t"e Re$er-e Bank unle$$ it i$ o'
o%inion t"at t"e &elay #ill .e %rePu&icial to t"e intere$t$ o' t"e com%anyU$
&e%o$itor$ or t"e %u.lic+ $"all grant to t"e com%any on $uc" term$ a$ it may
$%eci'y+ an o%%ortunity o' taking t"e nece$$ary $te%$ 'or com%lying #it" or
'ul9lling $uc" con&ition$,

012 Any .anking com%any aggrie-e& .y t"e &eci$ion o' t"e Re$er-e Bank
cancelling a licence un&er t"i$ $ection may+ #it"in t"irty &ay$ 'rom t"e &ate on
#"ic" $uc" &eci$ion i$ communicate& to it+ a%%eal to t"e !entral Go-ernment,

0*2 T"e &eci$ion o' t"e !entral Go-ernment #"ere an a%%eal "a$ .een %re'erre&
to it un&er $u.?$ection 012 or o' t"e Re$er-e Bank #"ere no $uc" a%%eal "a$ .een
%re'erre& $"all .e 9nal,G

!))ENTS


Bank guarantee$ "a-e to .e "onoure&,? E-en a$$uming 'or t"e $ake o' argument
t"at Sec,55 o' t"e Sick In&u$trial !om%anie$ Act 1971 a$ amen&e& in 199=+ take$
#it"in it$ am.it e-en enca$"ment o' .ank guarantee$+ ina$muc" a$ t"e a%%ellant
in t"e in$tant ca$e #a$ a&mitte&ly &eclare& .y t"e B,I,A,R, to "a-e cea$e& to .e a
$ick in&u$trial com%any+ -i&e or&er &ate& 15t" Sanuary+ 1991+ t"e $ai& $ection i$
o' no a-ail to t"e a%%ellant, In t"i$ -ie# o' t"e matter+ it may not .e nece$$ary to
go into t"e /ue$tion rai$e& regar&ing t"e $co%e o' Sec,55, E-en ot"er#i$e+ t"e
%rinci%le$ regar&ing t"e grant o' an inPunction re$training t"e en'orcement o'
.ank guarantee$ are no longer in &ou.t a$ t"e $ame "a-e .een reiterate& time
an& again .y t"e A%e8 !ourt in a catena o' &eci$ion,145E

T"e rele-ant term$ o' t"e .ank guarantee 9r$tly make$ it clear t"at t"e .ank "a$
uncon&itionally an& irre-oca.ly un&ertaken to %ay to t"e a%%ellant+ on #ritten
&eman& an& #it"out &eman&+ t"e amount &eman&e& .y it + Secon&ly+ !l,II o' t"e
$ai& guarantee clari9e$ t"at t"e %ayment $"all .e ma&e #it"in &eman& an& on
t"e un&ertaking t"at t"e a%%ellant i$ to .e $ole Pu&ge #"et"er t"e $eller "a$
committe& any .reac", !on$e/uently t"e rig"t o' t"e a%%ellant to reco-er t"e
guarantee& amount i$ not to .e e(ecte& or $u$%en&e& .y rea$on o' any &i$%ute
#"ic" can .e rai$e& or %en&ing .e'ore t"e !ourt$ Tri.unal$ or ar.itrator, T"ir&ly
t"e guarantor "a& no rig"t to kno# t"e rea$on$ o' or to in-e$tigate t"e merit$ o'
t"e &eman& or to /ue$tion or to c"allenge t"e &eman& or to kno# any 'act$
a(ecting t"e &eman& an& la$tly it #a$ not o%en to t"e .ank to re/uire t"e %roo'
o' t"e lia.ility o' re$%on&ent No,1 to %ay t"e amount .e'ore %aying t"e a'ore$ai&
guarantee& amount to t"e a%%ellant, T"e letter o' in-ocation i$$ue& .y t"e
a%%ellant &eman&ing t"e %ayment o' R$,5*+11+:::V? #a$ in accor&ance #it" t"e
term$ o' .ank guarantee No,4:V11 an& t"e .ank #a$+ t"ere'ore+ un&er an
o.ligation to "onour it$ un&ertaking an& to make %ayment, It+ "o#e-er+ c"o$e
not to 'ul9l it$ o.ligation, I' t"e .ank coul& not in la# a-oi& t"e %ayment+ a$ t"e
&eman& "a& .een ma&e in term$ o' t"e .ank guarantee+ a$ "a$ .een &one in t"e
%re$ent ca$e+ t"en t"e !ourt oug"t not to "a-e i$$ue& an inPunction #"ic" "a&
t"e e(ect o' re$training t"e .ank 'rom 'ul9lling it$ contractual o.ligation in term$
o' t"e .ank guarantee, An inPunction o' t"e !ourt oug"t not to .e an in$trument
#"ic" i$ u$e& in nulli'ying t"e term$ o' a contract+ agreement or un&ertaking
#"ic" i$ la#'ully en'orcea.le,14=E

144F5=, Re$triction$ on o%ening o' ne#+ an& tran$'er o' e8i$ting %lace$ o'
.u$ine$$,? 012 Hit"out o.taining t"e %rior %ermi$$ion o' t"e Re$er-e Bank Q

0a2 no .anking com%any $"all o%en a ne# %lace o' .u$ine$$ in In&ia or c"ange
ot"er#i$e t"an #it"in t"e $ame city+ to#n or -illage+ t"e location o' an e8i$ting
%lace o' .u$ine$$ $ituate& in In&iaI an&
0.2 no .anking com%any incor%orate& in In&ia $"all o%en a ne# %lace o' .u$ine$$
out$i&e In&ia or c"ange+ ot"er#i$e t"an #it"in t"e $ame city+ to#n or -illage in
any country or area out$i&e In&ia+ t"e location o' an e8i$ting %lace o' .u$ine$$
$ituate& in t"at country or areaJ
4ro-i&e& t"at not"ing in t"i$ $u.?$ection $"all a%%ly to t"e o%ening 'or a %erio&
not e8cee&ing one mont" o' a tem%orary %lace o' .u$ine$$ #it"in a city+ to#n or
-illage or t"e en-iron$ t"ereo' #it"in #"ic" t"e .anking com%any alrea&y "a$ a
%lace o' .u$ine$$+ 'or t"e %ur%o$e o' a(or&ing .anking 'acilitie$ to t"e %u.lic on
t"e occa$ion o' an e8"i.ition+ a con'erence or mela or any ot"er like occa$$ion,

052 Be'ore granting any %ermi$$ion un&er t"i$ $ection+ t"e Re$er-e Bank may
re/uire to .e $ati$9e& .y an in$%ection un&er Sec,=1 or ot"er#i$e a$ to t"e
9nancial con&ition an& "i$tory o' t"e com%any+ t"e general c"aracter o' it$
management+ t"e a&e/uacy o' it$ ca%ital $tructure an& earning %ro$%ect$ an&
t"at %u.lic intere$t #ill .e $er-e& .y t"e o%ening or+ a$ t"e ca$e may .e+ c"ange
o' location+ o' t"e %lace o' .u$ine$$,

0=2 T"e Re$er-e Bank may grant %ermi$$ion un&er $u.?$ection 012 $u.Pect to $uc"
con&ition$ a$ it may t"ink 9t to im%o$e eit"er generally or #it" re'erence to any
%articular ca$e,

042 H"ere in t"e o%inion o' t"e Re$er-e Bank+ a .anking com%any "a$+ at any
time+ 'aile& to com%ly #it" any o' t"e con&ition$ im%o$e& on it un&er t"i$ $ection+
t"e Re$er-e Bank may+ .y or&er in #riting an& a'ter a(or&ing rea$ona.le
o%%ortunity to t"e .anking com%any 'or $"o#ing cau$e again$t t"e action
%ro%o$e& to .e taken again$t it+ re-oke any %ermi$$ion grante& un&er t"i$
$ection,

141E F04?A2 Any regional rural .anking re/uiring t"e %ermi$$ion o' t"e Re$er-e
Bank un&er t"i$ $ection $"all 'or#ar& it$ a%%lication to t"e Re$er-e Bank t"roug"
t"e National Bank #"ic" $"all gi-e it$ comment$ on t"e merit$ o' t"e a%%lication
an& $en& it to t"e Re$er-e BankJ

4ro-i&e& t"at t"e regional rural .ank $"all al$o $en& an a&-ance co%y o'
a%%lication &irectly to t"e Re$er-e Bank+

012 Aor t"e %ur%o$e$ o' t"i$ $ection N%lace o' .u$ine$$O inclu&e$ any $u.?oLce+
%ay oLce+ $u.?%ay oLce+ an& any %lace o' .u$ine$$ at #"ic" &e%o$it$ are
recei-e&+ c"e/ue$ ca$"e& or money$ lent,G

54, )aintenance o' a %ercentage o' a$$et$,? 012 A'ter t"e e8%iry o' t#o year$ 'rom
t"e commencement o' t"i$ Act+ e-ery .anking com%any $"all maintain 14*E Fin
In&iaG in ca$"+ gol& or unencum.ere& a%%ro-e& $ecuritie$+ -alue at a %rice not
e8cee&ing t"e current market %rice+ an amount #"ic" $"all not at t"e clo$e o'
.u$ine$$ on any &ay .e le$$ t"an 5: %er cent, o' t"e total o' it$ 146E F&eman&
an& time lia.ilitie$G 147E Fin In&iaG,

149E FE8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $ection+ Nunencum.ere& a%%ro-e&
$ecuritie$O o' .anking com%any $"all inclu&e it$ a%%ro-e& $ecuritie$ lo&ge& #it"
anot"er in$titution 'or an a&-ance or any ot"er cre&it arrangement to t"e e8tent
to #"ic" $uc" $ecuritie$ "a-e not .een &ra#n again$t or a-aile& o',G

11:E F052 In com%uting t"e amount 'or t"e %ur%o$e$ o' $u.?$ection 012 t"e
&e%o$it re/uire& un&er $u.?$ection 052 o' Sec,11 to .e ma&e #it" t"e Re$er-e
Bank .y a .anking com%any incor%orate& out$i&e In&ia an& any .alance
maintaine& in In&ia .y a .anking com%any in current account #it" t"e Re$er-e
Bank or t"e State Bank o' In&ia or #it" any ot"er .ank #"ic" may .e noti9e& in
t"i$ .e"al' .y t"e !entral Go-ernment+ inclu&ing in t"e ca$e o' a $c"e&ule& .ank
t"e .alance re/uire& un&er Sec, 45 o' t"e Re$er-e Bank o' In&ia Act+ 19=4 05 o'
19=42+ to .e $o maintaine&+ $"all .e &eeme& to .e ca$" maintaine& in In&ia,G

111E F05?A2 0a2 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 012 or in $u.?
$ection 052+ a'ter e8%iry o' t#o year$ 'rom t"e commencement o' t"e Banking
!om%anie$ 0Amen&ment2 Act+ 19*5 0=* o' 19*52+?

0i2 a $c"e&ule& .ank+ in a&&ition to t"e a-erage &aily .alance #"ic" it i$+ or may
.e+ re/uire& to maintain un&er Sec, 45 o' t"e Re$er-e Bank o' In&ia Act+ 19=4 05
o' 19=42+ an&

0ii2 e-ery ot"er .anking com%any+ in a&&ition to t"e ca$" re$er-e #"ic" it i$
re/uire& to maintain un&er Sec,17,

0A2 in ca$"+ or
0B2 in gol&+ -alue& at a %rice not e8cee&ing t"e current market %rice or in
unencum.ere& a%%ro-e& $ecuritie$ -alue& at a %rice &etermine& in accor&ance
#it" $uc" one or more o'+ or com.ination o'+ t"e 'ollo#ing met"o&$ o'
-aluation +namely+ -aluation #it" re'erence to co$t %rice+ market %rice+ .ook
-alue or 'ace -alue+ a$ may .e $%eci9e& .y t"e Re$er-e Bank 'rom time to time+
an amount #"ic" $"all not+ at t"e clo$e o' .u$ine$$ on any &ay+ .e le$$ t"an
t#enty?9-e %er cent, or $uc" ot"er %ercentage not e8cee&ing 'orty %er cent, a$
t"e Re$er-e Bank may+ 'rom time to time+ .y noti9cation in t"e Lcial GaMette+
$%eci'y+ o' t"e total o' it$ &eman& an& time lia.ilitie$ in In&ia+ a$ on t"e la$t
Ari&ay o' t"e $econ& %rece&ing 'ortnig"t,G

115EF0.2 in com%uting t"e amount 'or t"e %ur%o$e o' !l, 0a2 Q

0i2 t"e &e%o$it re/uire& un&er $u.?$ection 052 o' Sec, 11 to .e ma&e #it" t"e
Re$er-e Bank .y a .anking com%any incor%orate& out$i&e In&iaI
0ii2 any ca$" or .alance maintaine& in In&ia .y a .anking com%any ot"er t"an a
$c"e&ule& .ank #it" it$el' or #it" t"e Re$er-e Bank or .y #ay o' net .alance in
current account in e8ce$$ o' t"e aggregate o' t"e ca$" or .alance or net .alance
re/uire& to maintaine& un&er Sec,17I
0iii2 any .alance$ maintaine& .y a $c"e&ule& .ank #it" t"e Re$er-e Bank in
e8ce$$ o' t"e .alance re/uire& to .e maintaine& .y it un&er Sec,45 o' t"e
Re$er-e Bank o' In&ia Act+ 19=4 05 o' 19=42I
0i-2 t"e net .alance in current account$ maintaine& in In&ia .y a $c"e&ule& .ankI
0-2 any .alance$ maintaine& .y a Regional Rural Bank in call or 98e& &e%o$it #it"
it$ $%on$or .ankI
$"all .e &eeme& to .e ca$" maintaine& in In&ia,G

115E FE8%anation,? Aor t"e %ur%o$e o' !l,0a2 o' t"i$ $u.?$ection+ t"e market %rice
o' an a%%ro-e& $ecurity $"all .e t"e %rice a$ on t"e &ate o' t"e i$$ue o' t"e
noti9cation or a$ on any earlier or later &ate a$ may .e noti9e& 'rom time to time
.y t"e Re$er-e Bank in re$%ect o' any cla$$ or cla$$e$ or $ecuritie$,G

11=E F05?B2 T"e Re$er-e Bank may+ .y noti9cation in t"e Lcial GaMette+ -ary
t"e %ercentage re'erre& to in $u.?$ection 05?A2 in re$%ect o' a Regional Rural
Bank 114FEEEG,

111E F0=2 Aor t"e %ur%o$e o' en$uring com%liance #it" t"e %ro-i$ion$ o' t"i$
$ection+ e-ery .anking com%any+ $"all not later t"an t#enty &ay$ a'ter t"e en& o'
t"e mont" to #"ic" it relate$+ 'urni$" to t"e Re$er-e Bank in t"e %re$cri.e& 'orm
an& manner a mont"ly return $"o#ing %articular$ o' it$ a$$et$ maintaine& in
accor&ance #it" t"i$ $ection+ an& it$ &eman& an& time an& lia.ilitie$ in In&ia at
t"e clo$e o' .u$ine$$ on eac" alternate Ari&ay &uring t"e mont"+ or i' any $uc"
Ari&ay i$ a %u.lic "oli&ay+ at t"e clo$e o' .u$ine$$ on t"e %rece&ing #orking &ayJ

4ro-i&e& t"at e-ery regional rural .ank $"all al$o 'urni$" a co%y o' t"e $ai& return
to t"e National Bank,

042 0a2 I' on any alternate Ari&ay or+ i' $uc" Ari&ay i$ a %u.lic "oli&ay+ on t"e
%rece&ing #orking &ay+ t"e amount maintaine& .y a .anking com%any at t"e
clo$e o' .u$ine$$ on t"at &ay 'all$ .elo# t"e minimum %re$cri.e& .y or un&er !l,
0a2 o' $u.?$ection 05?A2+ $uc" .anking com%any $"all .e lia.le to %ay to t"e
Re$er-e Bank in re$%ect o' t"at &ayU$ &e'ault+ %enal intere$t 'or t"at &ay at t"e
rate o' t"ree %er cent, %er annum a.o-e t"e .ank rate on t"e amount .y #"ic"
t"e amount actually maintaine& 'all$ $"ort o' t"e %re$cri.e& minimum on t"at
&ayI an&

0.2 I' t"e &e'ault occur$ again on t"e ne8t $uccee&ing alternate Ari&ay+ or i' $uc"
Ari&ay i$ a %u.lic "oli&ay+ on t"e %rece&ing #orking &ay+ an& continue$ on
$uccee&ing alternate Ari&ay$ or %rece&ing #orking &ay$+ a$ t"e ca$e may .e+ t"e
rate o' %enal intere$t $"all .e increa$e& to a rate o' 9-e %er cent, %er annum
a.o-e+ t"e .ank rate on eac" $uc" $"ort'all in re$%ect o' t"at alternate Ari&ay
an& eac" $uccee&ing alternate Ari&ay or %rece&ing #orking &ay+ i' $uc" Ari&ay i$
a %u.lic "oli&ay+ on #"ic" t"e &e'ault continue$,

012 0a2 Hit"out %rePu&ice to t"e %ro-i$ion$ o' $u.?$ection 0=2 t"e Re$er-e Bank
may re/uire a .anking com%any to 'urni$" to it return in t"e 'orm an& manner
$%eci9e& .y it $"o#ing %articular$ o' it$ a$$et$ maintaine& in accor&ance #it"
t"i$ $ection an& it$ &eman& an& time lia.ilitie$ in In&ia+ a$ at t"e clo$e o'
.u$ine$$ on eac" &ay o' a mont"I an&

0.2 #it"out %rePu&ice to t"e %ro-i$ion$ o' $u.?$ection 042 on t"e 'ailure o' a
.anking com%any to maintain a$ on any &ay+ t"e amount $o re/uire& to .e
maintaine& .y or un&er !l,0a2 o' $u.?$ection 05?A2 t"e Re$er-e Bank may+ in
re$%ect o' $uc" &e'ault+ re/uire t"e .anking com%any to %ay %enal intere$t 'or
t"at &ay a$ %ro-i&e& in !l,0a2 o' $u.?$ection 042 an& i' t"e &e'ault continue$ on
t"e ne8t $uccee&ing #orking &ay+ t"e %enal intere$t may .e increa$e& a$
%ro-i&e& in !l,0.2 o' $u.?$ection 042 'or t"e concerne& &ay$,

0*2 0a2 T"e %enalty %aya.le un&er $u.?$ection$ 042 an& 012 $"all .e %ai& #it"in a
%erio& o' 'ourteen &ay$ 'rom t"e &ate on #"ic" a notice i$$ue& .y t"e Re$er-e
Bank &eman&ing %ayment o' t"e $ame i$ $er-e& on t"e .anking com%any an& in
t"e e-ent o' 'ailure o' t"e .anking com%any to %ay t"e $ame #it"in $uc" %erio&+
t"e %enalty may .e le-ie& .y a &irection o' t"e %rinci%al !i-il !ourt "a-ing
Puri$&iction in t"e area #"ere an oLce o' t"e &e'aulting .anking com%any i$
$ituate&+ $uc" &irection to .e ma&e only u%on an a%%lication ma&e .y t"e
Re$er-e Bank in t"i$ .e"al' to t"e !ourtI an&

0.2 #"en t"e !ourt make$ a &irection un&er !l,0a2+ it $"all i$$ue a certi9cate
$%eci'ying t"e $um %aya.le .y t"e .anking com%any an& e-ery $uc" certi9cate
$"all .e en'orcea.le in t"e $ame manner a$ i' it #ere a &ecree ma&e .y t"e
!ourt in a $uit,

062 H"en un&er t"e %ro-i$ion$ o' !l,0.2 o' $u.?$ection 042 %enal intere$t at t"e
increa$e& rate o' 9-e %er cent, a.o-e t"e .ank rate "a$ .ecome %aya.le .y t"e
.anking com%any+ i' t"erea'ter t"e amount re/uire& to .e maintaine& on t"e
ne8t $uccee&ing alternate Ari&ay+ or i' $uc" Ari&ay i$ a %u.lic "oli&ay t"e ne8t
%rece&ing #orking &ay i$ $till .elo# t"e %re$cri.e& minimum+ e-ery &irector+ a
manager or $ecretary o' t"e .anking com%any+ #"o i$ kno#ingly an& #il'ully a
%arty to t"e &e'ault $"all .e %uni$"a.le #it" 9ne #"ic" may e8ten& to 9-e
"un&re& ru%ee$ an& #it" a 'urt"er 9ne #"ic" may e8ten& to 9-e "un&re& ru%ee$
'or eac" $u.$e/uent alternate Ari&ay or t"e %rece&ing #orking &ay+ a$ t"e ca$e
may .e+ on #"ic" t"e &e'ault continue$,

072 Not#it"$tan&ing anyt"ing containe& in t"i$ $ection+ i' t"e Re$er-e Bank i$
$ati$9e&+ on an a%%lication in #riting .y t"e &e'aulting .anking com%any+ t"at
t"e .anking com%any "a& $uLcient cau$e 'or it$ 'ailure to com%ly #it" t"e
%ro-i$ion$ o' !l,0a2 o' $u.?$ection 05?A2+ t"e Re$er-e Bank may not &eman& t"e
%ayment o' t"e %enal intere$t,

E8%lanation,? In t"i$ $ection+ t"e e8%re$$ion N%u.lic "oli&ayO+ mean$ a &ay #"ic"
i$ a %u.lic "oli&ay un&er t"e Negotia.le In$trument$ Act+ 1771 05* o' 17712,G

!))ENTS

Bank guarantee irre-oca.le,?It "a$ .een "el& t"at t"e %lea o' 'rau& in connection
#it" t"e .ank guarantee i$ to .e e8amine& in relation to t"e time 'actor &uring
#"ic" t"e un&erlying contract #a$ e8ecute&, In t"e %re$ent ca$e it i$ an a&mitte&
'act t"at no %lea o' 'rau& "a$ .een allege& in re$%ect o' e8ecution o' t"e .ank
guarantee relating to t"e time #"en t"e $ai& guarantee #a$ e8ecute&, In t"e
a.$ence o' %lea&ing$ o' commi$$ion o' any 'rau& at t"e time o' e8ecution o' t"e
.ank guarantee+ it i$ "el& t"at no 'rau& "a$ .een committe& .y t"e &e'en&ant
No,1 at t"e time o' e8ecution o' t"e .ank guarantee an&+ t"ere'ore+ t"e /ue$tion
o' t"e .ank guarantee .eing -itiate& on t"e 9r$t count "a$ no 'oun&ation at
all,11*E

Bank guarantee en'orcea.le,? T"e e/uitie$ o' t"e ca$e &eman& t"at t"e
&e'en&ant $"oul& "a-e %ai& at lea$t an amount o' R$,51,:5 lac$ #"ic" accor&ing
to t"em t"e %lainti( #a$ entitle& to com%en$ation an& li't t"eir .alance $tock o'
rice, T"e action o' t"e &e'en&ant in t"e circum$tance$ i$ clearly 'rau&ulent
mi$u$e o' t"eir %o$ition+ unPu$t an& ine/uita.le, n 15t" 3ecem.er+ 199* #"en
t"e argument$ #ere "ear&+ categorical $tatement #a$ ma&e on .e"al' o' t"e
%lainti( t"at t"ey "a& ne-er re'u$e& to allo# t"e remo-al o' t"e remaining $tock$
o' t"e goo&$ to t"e &e'en&ant .ut t"ere #a$ no o(er to %ay t"e a&mitte& amount
e-en on t"at &ate, It #a$ .ut Pu$t an& %ro%er on t"e %art o' t"e &e'en&ant to
"a-e remo-e& t"eir goo&$ an& in t"e meantime %ai& t"e amount o' R$,51,:5 lac$
#"ic" accor&ing to t"em i$ %aya.le to t"e %lainti( $u.Pect to t"e &i$%ute 'or t"e
.alance claim .eing &etermine& in %ro%er 'orum, T"e &e'en&ant 0ST!2 are tyring
to make ca%ital out o' t"eir o#n act$ o' omi$$ion an& commi$$ion i' not out o'
mi$con&uct on t"e %art o' $omeone 'rom t"eir $i&e,116E

51, A$$et$ in In&ia,? 117E F012 T"e a$$et$ in In&ia o' e-ery .anking com%any at
t"e clo$e o' .u$ine$$ on t"e la$t Ari&ay o' e-ery /uarter or+ i' t"at Ari&ay i$ a
%u.lic "oli&ay un&er Negotia.le In$trument$ Act+ 1771 05* o' 17712+ at t"e clo$e
o' t"e .u$ine$$ on t"e %rece&ing #orking &ay+ $"all not .e le$$ t"an $e-enty?9-e
%er cent, o' it$ &eman& an& time lia.ilitie$ in In&ia,

052 E-ery .anking com%any $"all+ #it"in one mont" 'rom t"e en& o' e-ery
/uarter+ $u.mit to t"e Re$er-e Bank a return in t"e %re$cri.e& 'rom an& manner
o' t"e a$$et$ an& lia.ilitie$ re'erre& to in $u.?$ection 012 a$ at t"e clo$e o'
.u$ine$$ on t"e la$t Ari&ay o' t"e %re-iou$ /uarter+ or i' t"at Ari&ay i$ a %u.lic
"oli&ay un&er t"e Negotia.le In$trument$ Act+ 1771 05* o'17712+ at t"e clo$e o'
.u$ine$$ on t"e %rece&ing #orking &ay,GJ

119E F4ro-i&e& t"at e-ery regional rural .ank $"all al$o 'urni$" a co%y o' t"e $ai&
return to t"e National Bank,G

0=2 Aor t"e %ur%o$e$ o' t"i$ $ection+?

1*:E F0a2 Na$$et$ in In&iaO $"all .e &eeme& to inclu&e e8%ort .ill$ &ra#n in+ an&
im%ort .ill$ &ra#n on an& %aya.le+ in In&ia an& e8%re$$e& in $uc" currencie$ a$
t"e Re$er-e Bank may 'rom time to time a%%ro-e in t"i$ .e"al'+ an& al$o $uc"
$ecuritie$ a$ t"e Re$er-e Bank may a%%ro-e in t"i$ .e"al' not#it"$tan&ing t"at
all or any o' t"e $ai& .ill$ or $ecuritie$ are "el& out$i&e In&iaIG

1*1E F0.2 Nlia.ilitie$ in In&iaO $"all not inclu&e t"e %ai&?u% ca%ital or t"e re$er-e$
or any cre&it .alance in t"e %ro9t an& lo$$ account o' t"e .anking com%anyIG

1*5E F0c2 N/uarterO mean$ t"e %erio& o' t"ree mont"$ en&ing on t"e la$t &ay o'
)arc"+ Sune+ Se%tem.er o' 3ecem.er,

5*, Return o' unclaime& &e%o$it$,? E-ery .anking com%any $"all+ #it"in t"irty
&ay$ a'ter t"e clo$e o' eac" calen&ar year+ $u.mit a return in t"e %re$cri.e& 'orm
an& manner to t"e Re$er-e Bank at t"e en& o' $uc" calen&ar year o' all account$
1*=E Fin In&iaG #"ic" "a-e not .een o%erate& u%on 'or ten year$ 1*4FEEEGJ

4ro-i&e& t"at in t"e ca$e o' money &e%o$ite& 'or a 98e& %erio& t"e $ame term o'
ten year$ $"all .e reckone& 'rom t"e &ate o' t"e e8%iry o' $uc" 98e& %erio&,

T"e account$ #"ic" "a-e not .een o%erate& 'or ten year$ $"all .e $u.mitte& a$ a
return in t"e %re$cri.e& 'orm to t"e Re$er-e Bank .y e-ery .anking com%any
#it"in t"irty &ay$ a'ter t"e clo$e o' eac" calen&ar year .ut t"e 98e& &e%o$it$ are
e8em%te& J

1*:E F4ro-i&e& 'urt"er t"at e-ery regional rural .ank $"all al$o 'urni$" a co%y o'
t"e $ai& return to t"e National Bank,G

56, )ont"ly return$ an& %o#er to call 'or ot"er return$ an& in'ormation,? 012
E-ery .anking com%any $"all+ .e'ore t"e clo$e o' t"e mont" $uccee&ing t"at to
#"ic" it relate$+ $u.mit to t"e Re$er-e Bank a return in t"e %re$cri.e& 'orm an&
manner $"o#ing it$ a$$et$ lia.ilitie$ 1*4E Fin In&iaG a$ t"e clo$e to .u$ine$$ on
t"e la$t Ari&ay o' e-ery mont" or i' t"at Ari&ay i$ a %u.lic "oli&ay un&er t"e
Negotia.le In$trument$ Act+ 1771 05* o' 17712+ at t"e clo$e o' .u$ine$$ on t"e
%rece&ing #orking &ay,

1*1E 052 T"e Re$er-e Bank may at any time &irect a .anking com%any to 'urni$"
it #it"in $uc" time a$ may .e $%eci9e& .y t"e Re$er-e Bank+ #it" $uc"
$tatement$ an& in'ormation relating to t"e .u$ine$$ or a(air$ o' t"e .anking
com%any 0inclu&ing any .u$ine$$ or a(air$ #it" #"ic" $uc" .anking com%any i$
concerne&2 a$ t"e Re$er-e Bank may con$i&er nece$$ary or e8%e&ient to o.tain
'or t"e %ur%o$e o' t"i$ Act+ an& #it"out %rePu&ice to t"e generality o' t"e
'oregoing %o#er may call 'or in'ormation e-ery "al'?year regar&ing 1**E Ft"e
in-e$tment$ o' a .anking com%any an& t"e cla$$i9cation o' it$ a&-ance$ in
re$%ect o' in&u$try commerce an& agriculture,G


1*6E F0=2 E-ery regional rural .ank $"all $u.mit a co%y o' t"e return #"ic" it
$u.mit$ to t"e Re$er-e Bank un&er $u.?$ection 012 al$o to t"e National Bank an&
t"e %o#er$ e8erci$a.le .y t"e Re$er-e Bank un&er $u.?$ection 052 may al$o .e
e8erci$e& .y National Bank in relation to regional rural .ank$,G

1*7E F57, 4o#er to %u.li$" in'ormation,? T"e Re$er-e Bank or t"e National Bank+
or .ot"+ i' t"ey con$i&er it in t"e %u.lic intere$t $o to &o+ may %u.li$" any
in'ormation o.taine& .y t"em un&er t"i$ Act in $uc" con$oli&ate& 'orm a$ t"ey
t"ink 9t,G

59, Account$ an& .alance?$"eet,? 012 At t"e e8%iration o' eac" calen&ar year
1*9E F or at t"e e8%iration o' a %erio& o' t#el-e mont"$ en&ing #it" $uc" &ate a$
t"e !entral Go-ernment may+ .y noti9cation in t"e Lcial GaMette+ $%eci'y in
t"i$ .e"al'+G e-ery .anking com%any incor%orate& 16:E Fin In&iaG+ in re$%ect to all
.u$ine$$ tran$acte& .y it+ an& e-ery .anking com%any incor%orate& 161E
Fout$i&e In&iaG+ in re$%ect o' all .u$ine$$ tran$acte& t"roug" it$ .ranc"e$ 16:Fin
In&iaG+ $"all %re%are #it" re'erence to 165E Ft"at year or %erio& a$ t"e ca$e may
.e+G a .alance?$"eet an& %ro9t an& lo$$ account+ a$ on t"e la$t #orking &ay o'
16=E Ft"at year or t"e %erio&+ a$ t"e ca$e may .e+G in t"e 'orm$ $et out in t"e
T"ir& Sc"e&ule or a$ near t"ereto a$ circum$tance$ a&mitJ

164E F4ro-i&e& t"at #it" a -ie# to 'acilitating t"e tran$ition 'rom one %erio& o'
accounting to anot"er %erio& o' accounting un&er t"i$ $u.?$ection+ t"e !entral
Go-ernment may+ .y or&er %u.li$"e& in t"e Lcial GaMette+ make $uc"
%ro-i$ion$ a$ it con$i&er$ nece$$ary or e8%e&ient 'or t"e %re%aration o'+ or 'or
ot"er matter$ relating to+ t"e .alance?$"eet or %ro9t an& lo$$ account in re$%ect
o' t"e concerne& year or %erio&+ a$ t"e ca$e may .e,G

052 T"e .alance?$"eet an& %ro9t an& lo$$ account $"all .e $igne& Q
0a2 in t"e ca$e o' a .anking com%any incor%orate& 161E Fin In&iaG+ .y t"e
manager or t"e %rinci%al oLcer o' t"e com%any an& #"ere t"ere are more t"an
t"ree &irector$ o' t"e com%any+ .y at lea$t t"ree o' t"o$e &irector$+ or #"ere
t"ere are not more t"an t"ree &irector$ .y all t"e &irector$I an&
0.2 in t"e ca$e o' .anking com%any incor%orate& 16*E Fout$i&e In&iaG .y t"e
manager or agent o' t"e %rinci%al oLce o' t"e com%any 161E Fin In&iaG,

0=2 Not#it"$tan&ing t"at t"e .alance?$"eet o' a .anking com%any i$ un&er $u.?
$ection 012 re/uire& to .e %re%are& in a 'orm ot"er t"an t"e 'orm 166F$et out in
%art I o' Sc", RI to t"e !om%anie$ Act+ 191* 01 o' 191*2G t"e re/uirement$ o' t"at
Act relating to t"e .alance?$"eet an& %ro9t an& lo$$ account o' a com%any $"all+
in $o 'ar a$ t"ey are not incon$i$tent #it" t"i$ Act+ a%%ly to t"e .alance?$"eet or
%ro9t an& lo$$ account+ a$ t"e ca$e may .e+ o' .anking com%any,
167E F0=?A2 Not#it"$tan&ing anyt"ing to t"e contrary containe& in $u.?$ection 0=2
o' Sec,51: o' t"e !om%anie$ Act+ 191* 01 o' 191*2 t"e %erio& to #"ic" t"e %ro9t
an& lo$$ account relate$ $"all+ in t"e ca$e o' a .anking com%any+ .e t"e %erio&
en&ing #it" t"e la$t #orking &ay o' t"e year imme&iately %rece&ing t"e year in
#"ic" t"e annual general meeting i$ "el&,G

169E FE8%lanation,? In $u.?$ection 0=?A2+ N yearO mean$ t"e year or+ a$ t"e ca$e
may .e+ t"e %erio& %re'erre& to in $u.?$ection 012,G

042 T"e !entral Go-ernment+ a'ter gi-ing not le$$ t"an t"ree mont"$U notice o' it$
intention $o to &o .y a noti9cation in t"e Lcial GaMette+ may 'rom time to time
.y a like noti9cation amen& t"e 'orm$ $et out in t"e T"ir& Sc"e&ule,

=:, Au&it,? 17:E F012 T"e .alance?$"eet an& %ro9t an& lo$$ account %re%are& in
accor&ance #it" Sec,59 $"all .e au&ite& .y a %er$on &uly /uali9e& un&er any la#
'or t"e time .eing in 'orce to .e an au&itor o' com%anie$,G

171E F01?A2 Not#it"$tan&ing anyt"ing containe& in any la# 'or t"e time .eing in
'orce or in any contract to t"e contrary+ e-ery .anking com%any $"all+ .e'ore
a%%ointing+ re?a%%ointing or remo-ing any au&itor+ or au&itor$+ o.tain t"e
%re-iou$ a%%ro-al o' t"e Re$er-e Bank,

01?B2 Hit"out %rePu&ice to anyt"ing containe& in t"e !om%anie$ Act+ 191* 01 o'
191*2+ or any ot"er la# 'or t"e time .eing in 'orce+ #"ere t"e Re$er-e Bank i$ o'
o%inion t"at it i$ nece$$ary in t"e %u.lic intere$t or in t"e intere$t o' t"e .anking
com%any or it$ &e%o$itor$ $o to &o 175E Fit may at any time .y or&er &irect t"at a
$%ecial au&it o' t"e .anking com%anyU$ account$+ 'or any $uc" tran$action or
cla$$ o' tran$action$ or 'or $uc" %erio& or %erio&$ a$ may .e $%eci9e& in t"e
or&er+ $"all .e con&ucte& an& may .y t"e $ame or a &i(erent or&er eit"er
a%%oint a %er$on &uly /uali9e& un&er any la# 'or t"e time .eing in 'orce to .e an
au&itor o' com%anie$ or &irect t"e au&it o' t"e .anking com%any "im$el' to
con&uct $uc" $%ecial au&itG+ an& t"e au&itor $"all com%ly #it" $uc" &irection$
an& make a re%ort o' $uc" au&it to t"e Re$er-e Bank an& 'or#ar& a co%y t"ereo'
to t"e com%any,

01?!2 T"e e8%en$e$ o'+ or inci&ental to+ 17=E Ft"e $%ecial au&itG $%eci9e& in t"e
or&er ma&e .y t"e Re$er-e Bank o' In&ia $"all .e .orne .y t"e .anking
com%anyG,

052 T"e au&itor $"all "a-e t"e %o#er$ o'+ e8erci$e t"e 'unction$ -e$te& in+ an&
&i$c"arge t"e &utie$ an& .e $u.Pect to t"e lia.ilitie$ an& %enaltie$ im%o$e& on+
au&itor$ o' com%anie$ .y 174E FSec,556 o' t"e !om%anie$ Act+ 191* 01 o' 191*2G
171E Fan& au&itor$+ i' any+ a%%ointe& .y t"e la# e$ta.li$"ing+ con$tituting or
'orming t"e .anking com%any concerne&,G

0=2 In a&&ition to t"e matter$ #"ic" un&er t"e a'ore$ai& Act t"e au&itor i$
re/uire& to $tate in "i$ re%ort+ "e $"all+ in ca$e o' a .anking com%any
incor%orate& 17*E Fin In&iaG+ $tate in "i$ re%ort ?

0a2 #"et"er or not t"e in'ormation an& e8%lanation re/uire& .y "im "a-e 'oun&
to .e $ati$'actoryI
0.2 #"et"er or not t"e tran$action$ o' t"e com%any #"ic" came to "i$ notice
"a-e .een #it" t"e %o#er$ o' t"e com%anyI
0c2 #"et"er or not t"e return$ recei-e& 'rom .ranc" oLce$ o' t"e com%any "a-e
.een 'oun& a&e/uate 'or t"e %ur%o$e$ o' "i$ au&itI
0&2 #"et"er t"e %ro9t an& lo$$ account $"o#$ a true .alance 176E For %ro9t or
lo$$G 'or t"e %erio& co-ere& .y $uc" accountI
0e2 any ot"er matter #"ic" "e con$i&er$ $"oul& .e .roug"t to t"e notice o' t"e
$"are"ol&er$ o' t"e com%any,

!))ENT

Amen&ment,? An amen&ment o' $u.$tanti-e la# i$ not retro$%ecti-e unle$$
e8%re$$ly lai& &o#n or .y nece$$ary im%lication in'erre&,177E

=1, Su.mi$$ion o' return$,? T"e account$ an& .alance?$"eet re'erre& to in Sec,59
toget"er #it" au&itorU$ re%ort $"all .e %u.li$"e& in t"e %re$cri.e& manner an&
t"ree co%ie$ t"ereo' $"all .e 'urni$"e& a$ return$ to t"e Re$er-e Bank #it"in
t"ree mont"$ 'rom t"e en& o' %erio& to #"ic" t"ey re'erJ

4ro-i&e& t"at t"e Re$er-e Bank may in any ca$e e8ten& t"e $ai& %erio& o' t"ree
mont"$ 'or t"e 'urni$"ing o' $uc" return$ .y a 'urt"er %erio& not e8cee&ing t"ree
mont"$ J

179E F4ro-i&e& 'urt"er t"at a regional rural .ank $"all 'urni$" $uc" return al$o to
t"e National Bank,G

!))ENT

4ro-i$o,? In A.&ul Sa.ar Butt -, State o' Sammu an& Ka$"mir+ 19:E it #a$ "el& t"at
a %ro-i$o mu$t .e con$i&ere& #it" relation to t"e %rinci%al matter to #"ic" it
$tan&$ a$ a %ro-i$o,191

=5, !o%ie$ o' .alance?$"eet$ an& account$ to .e $ent to Regi$trar,? 195E F012
H"ere a .anking com%any in any year 'urni$"e$ it$ account$ an& .alance?$"eet
in accor&ance #it" t"e %ro-i$ion$ o' Sec,=1+ it $"all at t"e $ame time $en& to t"e
Regi$trar t"ree co%ie$ o' $uc" account$ an& .alance?$"eet an& o' t"e au&itorU$
re%ort an& #"ere $uc" co%ie$ are $o $ent+ it $"all not .e nece$$ary to 9le #it"
t"e Regi$trar+ in t"e ca$e o' a %u.lic com%any co%ie$ o' t"e account$ an&
.alance?$"eet an& o' t"e au&itorU$ re%ort+ an& in t"e ca$e o' a %ri-ate com%any+
co%ie$ o' t"e .alance?$"eet an& o' t"e au&itorU$ re%ort a$ re/uire& .y $u.?$ection
012 o' Sec, 55: o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ an& t"e co%ie$ $o $ent
$"all .e c"argea.le #it" t"e $ame 'ee an& $"all .e &ealt #it" in all re$%ect$ a$ i'
t"ey #ere 9le& in accor&ance #it" t"at $ection,G
052 H"en in %ur$uance o' $u.?$ection 052 o' Sec,56+ t"e Re$er-e Bank re/uire$
any a&&itional $tatement o' in'ormation in connection #it" t"e .alance?$"eet an&
account 'urni$"e& un&er Sec,=1+ t"e .anking com%any $"all+ #"en $u%%ly $uc"
$tatement or in'ormation+ $en& a co%y t"ereo' to t"e Regi$trar,

==, 3i$%lay o' au&ite& .alance?$"eet .y com%anie$ incor%orate& out$i&e In&ia,?
E-ery .anking com%any incor%orate& 19=E Fout$i&e In&iaG $"all not later t"an t"e
9r$t )on&ay in Augu$t o' any year in #"ic" it carrie$ on .u$ine$$ &i$%lay in a
con$%icuou$ %lace in it$ %rinci%al oLce an& in e-ery .ranc" oLce 194E Fin In&iaG
a co%y o' it$ au&ite& .alance?$"eet an& %ro9t an& lo$$ account %re%are& un&er
Sec,59+ an& $"all kee% t"e co%y $o &i$%laye& until re%lace& .y a co%y o' t"e
$u.$e/uent .alance?$"eet an& %ro9t an& lo$$ account $o %re%are&+ an& e-ery
$uc" .anking com%any $"all &i$%lay in like manner co%ie$ o' it$ com%lete au&ite&
.alance?$"eet an& %ro9t an& lo$$ account relating to it$ .anking .u$ine$$ a$
$oon a$ t"ey are a-aila.le+ an& $"all kee% t"e co%ie$ $o &i$%laye& until co%ie$ o'
$uc" $u.$e/uent account$ are a-aila.le,

=4, Accounting %ro-i$ion$ o' t"i$ Act not retro$%ecti-e,? Not"ing in t"i$ Act $"all
a%%ly to t"e %re%aration o' account$ .y a .anking com%any an& t"e au&itor an&
$u.mi$$ion t"ereo' in re$%ect o' any accounting year #"ic" "a$ e8%ire& %rior to
t"e commencement o' t"i$ Act+ an& not#it"$tan&ing t"e ot"er %ro-i$ion$ o' t"i$
Act+ $uc" account$ $"all .e %re%are&+ au&ite& an& $u.mitte& in accor&ance #it"
t"e la# in 'orce imme&iately .e'ore t"e commencement o' t"i$ Act,

191E F=4?A, 4ro&uction o' &ocument$ o' con9&ential nature,? 012 Not#it"$tan&ing
anyt"ing containe& in Sec,11 o' t"e In&u$trial 3i$%ute$ Act+ 1946 014 o' 19462+ or
any ot"er la# 'or t"e time .eing in 'orce+ no .anking com%any $"all+ in any
%rocee&ing un&er t"e $ai& Act or in any a%%eal or ot"er %rocee&ing ari$ing
t"ere'rom or connecte& t"ere#it"+ .e com%elle& .y any aut"ority .e'ore #"ic"
$uc" %rocee&ing i$ %en&ing to %ro&uce+ or gi-e in$%ection o'+ any o' it$ .ook$ o'
account or ot"er &ocument or 'urni$" or &i$clo$e any $tatement or in'ormation+
#"en t"e .anking com%any claim$ t"at $uc" &ocument+ $tatement or
in'ormation i$ o' a con9&ential nature an& t"at t"e %ro&uction or in$%ection o'
$uc" &ocument or t"e 'urni$"ing or &i$clo$ure o' $uc" $tatement or in'ormation
#oul& in-ol-e &i$clo$ure o' in'ormation relating to Q

0a2 any re$er-e$ not $"o#n a$ $uc" in it$ %u.li$"e& .alance?$"eetI or
0.2 any %articular$ not $"o#n t"erein in re$%ect o' %ro-i$ion$ ma&e 'or .a& an&
&ou.t'ul &e.t$ an& ot"er u$ual or nece$$ary %ro-i$ion$,

052 I'+ in any $uc" %rocee&ing in relation to any .anking com%any ot"er t"an t"e
Re$er-e Bank o' In&ia+ any /ue$tion ari$e$ a$ to #"et"er any amount out o' t"e
re$er-e$ or %ro-i$ion$ re'erre& to in $u.?$ection 012 $"oul& .e taken into account
.y t"e aut"ority .e'ore #"ic" $uc" %rocee&ing i$ %en&ing+ t"e aut"ority may+ i' it
$o t"ink$ 9t+ re'er t"e /ue$tion to t"e Re$er-e Bank an& t"e Re$er-e Bank $"all+
a'ter taking into account %rinci%le$ o' $oun& .anking an& all rele-ant
circum$tance$ concerning t"e .anking com%any+ 'urni$" to t"e aut"ority a
certi9cate $tating t"at t"e aut"ority+ $"all not take into account any amount a$
$uc" re$er-e$ an& %ro-i$ion$ o' t"e .anking com%any or may take t"em into
account only to t"e e8tent o' t"e amount $%eci9e& .y it in t"e certi9cate+ an&
t"e certi9cate o' t"e Re$er-e Bank on $uc" /ue$tion $"all .e 9nal an& $"all not
.e calle& in /ue$tion in any $uc" %rocee&ing,

19*E F0=2 Aor t"e %ur%o$e$ o' t"i$ $ection N.anking com%anyO inclu&e$ t"e
Re$er-e Bank+ t"e 3e-elo%ment Bank+ t"e E8im Bank+ 196E Ft"e Recon$truction
BankG+ 197E Ft"e National Cou$ing Bank+G t"e National Bank+ 199E Ft"e Small
In&u$trie$ BankG+ t"e State Bank o' In&ia+ a corre$%on&ing ne# .ank+ a regional
rural .ank an& a $u.$i&iary .ank,G

!))ENTS

Section "a$ a $tatutory recognition,? Section =4?A o' t"e Banking Regulation Act
"a$ gi-en $tatutory recognition to t"e maintenance o' $ecret account$ .y
.anking com%anie$, H"ile Pu&icially recogni$ing t"e %ractice o' .anking
com%anie$ "a-ing $ecret account$ #"ic" are not re>ecte& in t"eir %u.li$"e&
.alance?$"eet+ t"e o.Pect o' t"i$ enactment #a$ $umme& u% .y t"eir Lor&$"i%$ o'
t"e Su%reme !ourt in t"e ca$e o' All In&ia Bank Em%loyee$U A$$ociation -
National In&u$trie$ Tri.unal,5::E

H"et"er Sec,6=?BB o' t"e )a"ara$"tra !o?o%erati-e Societie$ Act i$ in con>ict
#it" t"e Banking Regulation Act,? Section 6=?BB o' t"e )a"ara$"tra !o?o%erati-e
Societie$ Act+ 19*1+ in $o 'ar a$ it relate$ to !o?o%erati-e Bank$ &oe$ not con>ict
#it" Banking Regulation Act+ 1949,5:1E

=1, In$%ection,? 012 Not#it"$tan&ing anyt"ing to t"e contrary containe& in 5:5E
FSec,5=1 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ t"e Re$er-e Bank at any time
may+ an& on .eing &irecte& $o to &o .y t"e !entral Go-ernment $"all cau$e an
in$%ection to .e ma&e .y one or more o' it$ oLcer$ o' any .anking com%any an&
it$ .ook$ an& account$I an& t"e Re$er-e Bank $"all $u%%ly to t"e .anking
com%any a co%y o' it$ re%ort on $uc" in$%ection,

5:=E F01?A2 0a2 Not#it"$tan&ing anyt"ing to t"e contrary containe& in any la# 'or
t"e time .eing in 'orce an& #it"out %rePu&ice to t"e %ro-i$ion$ o' $u.?$ection 012+
t"e Re$er-e Bank + at any time+ may al$o cau$e a $crutiny to .e ma&e .y any
one or more o' it$ oLcer$ o' any .anking com%any an& it$ .ook$ an& account$I
an&

0.2 a co%y o' t"e re%ort o' t"e $crutiny $"all .e 'urni$"e& to t"e .anking com%any
i' t"e .anking com%any make$ a re/ue$t 'or t"e $ame or i' any a&-er$e action i$
contem%late& again$t t"e .anking com%any on t"e .a$i$ o' t"e $crutiny,G

052 It $"all .e t"e &uty o' e-ery &irector or ot"er oLcer 5:4E For em%loyeeG o' t"e
.anking com%any to %ro&uce to any oLcer making an in$%ection un&er $u.?
$ection 012 5:1E F or a $crutiny un&er $u.?$ection 01?A2G all $uc" .ook$+ account$
an& ot"er &ocument$ in "i$ cu$to&y or %o#er an& to 'urni$" "im #it" any
$tatement$ an& in'ormation relating to t"e a(air$ o' t"e .anking com%any a$ t"e
$ai& oLcer may re/uire o' "im #it"in $uc" time a$ t"e $ai& oLcer may $%eci'y,

0=2 Any %er$on making an in$%ection un&er $u.?$ection 012 5:*E For a $crutiny
un&er $u.?$ection 01?A2G may e8amine on oat" any &irector or ot"er oLcer 5:*E
For em%loyeeG o' t"e .anking com%any in relation to it$ .u$ine$$+ an& may
a&mini$ter an oat" accor&ingly,

042 T"e Re$er-e Bank $"all+ i' it "a$ .een &irecte& .y t"e !entral Go-ernment to
cau$e an in$%ection to .e ma&e+ an& may in any ot"er ca$e+ re%ort to t"e !entral
Go-ernment on any in$%ection 5:*E For $crutinyG ma&e un&er t"i$ $ection+ an&
t"e !entral Go-ernment+ i' it i$ o' o%inion a'ter con$i&ering t"e re%ort t"at t"e
a(air$ o' t"e .anking com%any are .eing con&ucte& to t"e &etriment o' t"e
intere$t$ o' it$ &e%o$itor$+ may a'ter gi-ing $uc" o%%ortunity to t"e .anking
com%any to make a re%re$entation in connection #it" t"e re%ort a$+ in t"e
o%inion o' t"e !entral Go-ernment+ $eem$ rea$ona.ly .y or&er in #riting ?

0a2 %ro"i.it t"e .anking com%any 'rom recei-ing 're$" &e%o$it$I
0.2 &irect t"e Re$er-e Bank to a%%ly un&er Sec,=7 'or t"e #in&ing u% o' t"e
.anking com%anyJ

4ro-i&e& t"at t"e !entral Go-ernment may &e'er+ 'or $uc" %erio& a$ it may t"ink
9t+ t"e %a$$ing o' an or&er un&er t"i$ $u.?$ection+ or cancel or mo&i'y any $uc"
or&er+ u%on $uc" term$ an& con&ition$ a$ it may t"ink 9t to im%o$e,

012 T"e !entral Go-ernment may+ a'ter gi-ing rea$ona.le notice to t"e .anking
com%any+ %u.li$" t"e re%ort $u.mitte& .y t"e Re$er-e Bank or $uc" %ortion
t"ereo' a$ may a%%ear nece$$ary,

4E F0*2 T"e %o#er$ e8erci$a.le .y t"e Re$er-e Bank un&er t"i$ $ection in relation
to regional rural .ank$ may 0#it"out %rePu&ice to t"e e8erci$e o' $uc" %o#er$ .y
t"e Re$er-e Bank may in relation to any regional rural .ank #"ene-er it
con$i&er$ nece$$ary $o to &o2 .e e8erci$e& .y t"e National Bank in relation to t"e
regional rural .ank$+ an& accor&ingly+ $u.?$ection$ 012 to 012 $"all a%%ly in
relation to regional rural .ank$ a$ i' e-ery re'erence t"erein to t"e Re$er-e Bank
inclu&e& al$o a re'erence to t"e National Bank,G

5:6E FE8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $ection+ t"e e8%re$$ion N.anking
com%anyO $"all inclu&e Q

0i2 in t"e ca$e o' a .anking com%any incor%orate& out$i&e In&ia+ all it$ .ranc"e$
in In&iaI an&
0ii2 in t"e ca$e o' a .anking com%any incor%orate& in In&ia Q
0a2 all it$ $u.$i&iarie$ 'orme& 'or t"e %ur%o$e o' carrying on t"e .u$ine$$ o'
.anking e8clu$i-ely out$i&e In&iaI
0.2 all it$ .ranc"e$ #"et"er $ituate& in In&ia or out$i&e In&ia,G

5:7E F=1?A, 4o#er o' t"e Re$er-e Bank to gi-e &irection$,? 012 H"ere t"e Re$er-e
Bank i$ $ati$9e& t"at ?

0a2 in t"e 5:9E F%u.lic intere$tGI or
51:E F0aa2 in t"e intere$t o' .anking %olicyI or
0.2 to %re-ent t"e a(air$ o' any .anking com%any .eing con&ucte& in a manner
&etrimental to t"e intere$t$ o' t"e &e%o$itor$ or in a manner %rePu&icial to t"e
intere$t$ o' t"e .anking com%anyI or
0c2 to $ecure t"e %ro%er management o' any .anking com%any generallyI
it i$ nece$$ary to i$$ue &irection$ to .anking com%anie$ generally or to any
.anking com%any in %articular+ i' may+ 'rom time to time+ i$$ue $uc" &irection$
a$ it &eem$ 9t+ an& t"e .anking com%anie$ or t"e .anking com%any+ a$ t"e ca$e
may .e+ $"all .e .oun& to com%ly #it" $uc" &irection$,

052 T"e Re$er-e Bank may+ on re%re$entation ma&e to it or on it$ o#n motion+
mo&i'y or cancel any &irection$ i$$ue& un&er $u.?$ection 012 an& in $o mo&i'ying
or cancelling any &irection may im%o$e $uc" con&ition$ a$ it t"ink$ 9t+ $u.Pect to
#"ic" t"e mo&i9cation or cancellation $"all "a-e e(ect,G

!))ENTS

4o#er$ o' Re$er-e Bank o' In&ia,? T"e T.anking %olicyU an& T.ankingU are not
in&e%en&ent .ut co?or&inating $u.Pect$ an& .ot" are co-ere& #it"in t"e
$u%er-i$ory %o#er$ o' t"e Re$er-e Bank o' In&ia #it"in t"e meaning o' Sec,=1?A
o' t"e Banking Regulation Act, E-en ot"er#i$e+ t"e &irection$ i$$ue& .y t"e
Re$er-e Bank o' In&ia .eing a .o&y o' e8%ert$ in .anking+ t"e &irection$ gi-en .y
it $"oul& not .e lig"tly .ru$"e& a$i&e,511E

Un&er t"i$ $ection+ t"e Re$er-e Bank o' In&ia "a$ .een gi-en t"e %o#er to i$$ue
$%eci9c &irection$ in t"e intere$t o' .anking %olicy in %u.lic intere$t+ to %re-ent
t"e a(air$ o' any .anking com%any .eing con&ucte& in a manner &etermine& to
t"e intere$t$ o' t"e &e%o$itor$ or in a manner %rePu&icial to t"e intere$t$ o' t"e
.anking com%any,515E

Tran$action$ not in-ali& 'or .reac" o' R,B,I, in$truction$,? Hit" regar& to t"e
9n&ing o' t"e S%ecial !ourt t"at t"e tran$action$ in /ue$tion #ere illegal+ a$ t"ey
#ere in contra-ention o' t"e circular$ #"ic" #ere i$$ue& .y t"e Re$er-e Bank o'
In&ia un&er t"e %ro-i$ion o' t"e Act+ it #a$ conten&e& .y )r, !oo%er+ learne&
coun$el+ t"at t"e circular$ i$$ue& #ere no more t"an gui&eline$ #"ic" #ere
re/uire& to .e 'ollo#e& .y t"e .ank an& t"ey #ere not man&atory in nature,
Ela.orating t"i$ contention+ )r, !oo%er $u.mitte& t"at t"e Banking Regulation
Act contain$ %ro-i$ion$ #"ic" ena.le t"e Re$er-e Bank o' In&ia to i$$ue
&irection$ #"ic" #ere man&atory an& al$o to gi-e a&-ice to t"e .ank$,51=E

Su%er-i$ory &uty an& %o#er$ o' t"e Re$er-e Bank o' In&ia o-er t"e a(air$ o' t"e
in$ure& !o?o%erati-e Bank$ Q Sco%e o' t"e %ro-i$ion o' t"e $ection,? It i$ t"e &uty
an& t"e .u$ine$$ o' t"e Re$er-e Bank o' In&ia to $u%er-i$e t"e a(air$ o' t"e
in$ure& !o?o%erati-e Bank$, Section =1?A o' t"e Banking Regulation Act
aut"ori$e$ t"e Re$er-e Bank to gi-e nece$$ary &irection$ to $ecure t"e %ro%er
management o' any .anking com%any, It i$ not in &i$%ute t"at t"i$ %ro-i$ion
a%%lie$ to an in$ure& !o?o%erati-e Bank al$o,514E

Su%er-i$ory %o#er$ o' Q Re$er-e Bank #it"in t"e meaning o' t"e $ection Q
3irection$ o' t"e Re$er-e Bank $"oul& not .e lig"tly .ru$"e& a$i&e,? NBanking
%olicyO an& N.ankingO are not in&e%en&ent .ut co?or&inating $u.Pect$ an& .ot"
are co-ere& #it"in t"e $u%er-i$ory %o#er$ o' t"e Re$er-e Bank o' In&ia #it"in
t"e meaning o' Sec, =1?A o' t"e Banking Regulation Act, E-en ot"er#i$e it i$ 'elt
t"at t"e &irection$ i$$ue& .y t"e Re$er-e Bank o' In&ia are in t"e larger intere$t
o' t"e %u.lic an& t"e Re$er-e Bank o' In&ia .eing a .o&y o' e8%ert$ in .anking
t"e &irection$ gi-en .y it $"oul& not .e lig"tly .ru$"e& a$i&e,511E

=1?B Amen&ment$ o' %ro-i$ion$ relating to a%%ointment$ o' managing &irector$+
etc, to .e $u.Pect to %re-iou$ a%%ro-al o' t"e Re$er-e Bank,? 012 In t"e ca$e o'
.anking com%any Q

0a2 no amen&ment o' any %ro-i$ion relating to 51*E Ft"e ma8imum %ermi$$i.le
num.er o' &irector$ orG t"e 516E Fa%%ointment or re?a%%ointment or termination
o' a%%ointment or remuneration o' a c"airman+G 517E Fa managing &irector or
any ot"er &irector+ #"ole?time or ot"er#i$eG or o' a manager or a c"ie' e8ecuti-e
oLcer .y #"ate-er name calle&+ #"et"er t"at %ro-i$ion .e containe& in t"e
com%anyU$ memoran&um or article$ o' a$$ociation+ or in agreement entere& into
.y it+ or in any re$olution %a$$e& .y t"e com%any in general meeting or .y it$
Boar& o' 3irector$ $"all "a-e e(ect unle$$ a%%ro-e& .y t"e Re$er-e BankI

519E 0.2 no a%%ointment or re?a%%ointment or termination o' a%%ointment o' a
c"airman+ a managing or #"ole?time &irector+ manager or c"ie' e8ecuti-e oLcer
.y #"ate-er name calle&+ $"all "a-e e(ect unle$$ $uc" a%%ointment+ re?
a%%ointment+ or termination o' a%%ointment i$ ma&e #it" t"e %re-iou$ a%%ro-al
o' t"e Re$er-e BankIG

55:E FE8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $u.?$ection any %ro-i$ion con'erring
any .ene9t o' %ro-i&ing any amenity or %er/ui$ite+ in #"ate-er 'orm+ #"et"er
&uring or a'ter t"e termination o' t"e term o' oLce 551E Fo' t"e c"airman or t"e
managerG or t"e c"ie' e8ecuti-e oLcer .y #"ate-er name calle& or t"e
managing &irector+ or any ot"er &irector+ #"ole time or ot"er#i$e+ $"all .e
&eeme& to .e a %ro-i$ion relating to "i$ remuneration,G

052 Not"ing containe& in Sec$, 555E F5*7 an& 5*9+ t"e %ro-i$o to $u.?$ection 0=2
o' Sec,=:9+ Sec$, =1: an& =11+t"e %ro-i$o to Sec,=76+ an& Sec,=77G 0in $o 'ar a$
Sec,=77 make$ t"e 55=E F%ro-i$ion$ o' Sec,5*9+ =1:G an& =11 a%%ly in relation to
t"e manager o' a com%anyG o' t"e !om%anie$ Act+ 191* 01 o' 191*2 $"all 554E
Fa%%ly to any matter in re$%ect o' #"ic" t"e a%%ro-al o' t"e Re$er-e Bank "a$ to
.e o.taine& un&er $u.?$ection 012G,

55:E F05?A2 Not"ing containe& in Sec,197 o' t"e !om%anie$ Act+ 191* 01 o' 191*2
$"all a%%ly to a .anking com%any an& t"e %ro-i$ion$ o' $u.?$ection 012 o'
Sec,=:9 an& o' Sec,=76 o' t"at Act $"all+ in $o 'ar a$ t"ey are a%%lica.le to a
.anking com%any+ "a-e e(ect a$ i' no re'erence "a$ .een ma&e in t"e $ai&
%ro-i$ion$ to Sec,197 o' t"at Act,G

0=2 No act &one .y a %er$on 551E Fa$ c"airman or a managing or #"ole?time
&irector or a &irector not lia.le to retire .y rotation or manager or c"ie' e8ecuti-e
oLcer .y #"ate-er name calle&+ $"all .e &eeme& to .e in-ali& on t"e groun&
t"at it i$ $u.$e/uently &i$co-ere& t"at "i$ 55*E Fa%%ointment or re?a%%ointmentG
"a& not taken e(ect .y rea$on o' any o' t"e %ro-i$ion$ o' t"i$ ActI .ut not"ing in
t"i$ $u.?$ection $"all .e con$true& a$ ren&ering -ali& any act &one .y $uc"
%er$on a'ter "i$ 556E Fa%%ointment or re?a%%ointmentG "a$ .een $"o#n to t"e
.anking com%any not to "a-e "a& e(ect,G

=*, Aurt"er %o#er$ an& 'unction$ o' Re$er-e Bank,? 012 T"e Re$er-e Bank may ?

0a2 caution or %ro"i.it .anking com%anie$ generally or any .anking com%any in
%articular again$t entering into any %articular tran$action or cla$$ o'
tran$action$+ an& generally gi-e a&-ice to any .anking com%anyI
0.2 on a re/ue$t .y t"e com%anie$ concerne& an& $u.Pect to t"e %ro-i$ion$ o'
Sec, 557E F44?AG+ a$$i$t a$ interme&iary or ot"er#i$e in %ro%o$al$ 'or t"e
amalgamation o' $uc" .anking com%anie$I
0c2 gi-e a$$i$tance to any .anking com%any mean$ o' t"e grant o' a loan or
a&-ance to it un&er !l,0=2 o' $u.?$ection 012 o' Sec,17 o' t"e Re$er-e Bank o'
In&ia Act+ 19=4 05 o' 19=42I
559E F0&2 5=:E Fat any time i' it i$ $ati$9e& t"at in t"e %u.lic intere$t or in t"e
intere$t o' .anking %olicy or 'or %re-enting t"e a(air$ o' t"e .anking com%any
.eing con&ucte& in a manner &etrimental to t"e intere$t$ o' t"e .anking
com%any or it$ &e%o$itor$ it i$ nece$$ary $o to &oG .y or&er in #riting an& on
$uc" term$ an& con&ition$ a$ may .e $%eci9e& t"erein?

0i2 re/uire t"e .anking com%any to call a meeting o' it$ &irector$ 'or t"e %ur%o$e
o' con$i&ering any matter relating to or ari$ing out o' t"e a(air$ o' t"e .anking
com%any+ or re/uire an oLcer o' t"e .anking com%any to &i$cu$$ any $uc"
matter #it" an oLcer o' t"e Re$er-e Bank I
0ii2 &e%ute one or more o' it$ oLcer$ to #atc" t"e %rocee&ing$ at any meeting o'
t"e Boar& o' 3irector$ o' t"e .anking com%any or o' any committee or o' any
ot"er .o&y con$titute& .y itI re/uire t"e .anking com%any to gi-e an o%%ortunity
to t"e oLcer$ $o &e%ute& to .e "ear& at $uc" meeting$ an& al$o re/uire $uc"
oLcer$ to $en& a re%ort o' $uc" %rocee&ing$ to Re$er-e BankI
0iii2 re/uire t"e Boar& o' 3irector$ o' t"e .anking com%any or any committee or
any ot"er .o&y con$titute& .y it to gi-e in #riting to any oLcer $%eci9e& .y t"e
Re$er-e Bank in t"i$ .e"al' at "i$ u$ual a&&re$$ all notice$ o'+ an& ot"er
communication$ relating to any meeting o' t"e Boar&+ committee or ot"er .o&y
con$titute& .y itI
0i-2 a%%oint one or more o' it$ oLcer$ to o.$er-e t"e manner in #"ic" t"e a(air$
o' t"e .anking com%any or o' it$ oLcer$ or .ranc"e$ are .eing con&ucte& an&
make a re%ort t"ereonI
0-2 re/uire t"e .anking com%any to make+ #it"in $uc" time a$ may .e $%eci9e&
in t"e or&er+ $uc" c"ange$ in t"e management a$ t"e Re$er-e Bank may
con$i&er nece$$ary 5=1FEEEG,

052 T"e Re$er-e Bank $"all make an annual re%ort to t"e !entral Go-ernment on
t"e tren& an& %rogre$$ o' .anking in t"e country+ #it" %articular re'erence to it$
acti-itie$ un&er !l,052 o Sec,16 o' t"e Re$er-e Bank o' In&ia Act+19=4 05 o' 19=42+
inclu&ing in $uc" re%ort it$ $ugge$tion$+ i' any+ 'or t"e $trengt"ening o' .anking
.u$ine$$ t"roug"out t"e country,

0=2 T"e Re$er-e Bank may a%%oint $uc" $ta( at $uc" %lace$ a$ it con$i&er$
nece$$ary 'or t"e $crutiny o' t"e return$+ $tatement$ an& in'ormation 'urni$"e&
.y .anking com%anie$ un&er t"i$ Act+ an& generally to en$ure t"e eLcient
%er'ormance o' it$ 'unction$ un&er t"i$ Act,

!))ENTS

Rali&ity o' circular$ i$$ue& .y R,B,I,? T"e circular$ i$$ue& .y R,B,I, #ere
con9&ential &ocument$ an& re/uire& t"e .anking com%anie$ to tran$act t"eir
.u$ine$$ in a %articular manner+ namely+ t"ey $"oul& not enter into any .uy?.ack
contract$ #"ic" #ere not accor&ing to t"e term$ o' t"e circular$, T"e Act it$el'
&oe$ not %ro-i&e t"at #"ere t"e &irection$ i$$ue& .y t"e con9&ential circular$
are -iolate& .y t"e .ank t"e contract$ entere& into #it" t"e t"ir& %artie$ #oul& in
any #ay .e in-ali&ate&, T"e $ai& circular$ al$o+ &i& not $ay t"at t"e con$e/uence
o' t"e &irection$ containe& t"erein not .eing 'ollo#e& .y t"e .anking com%anie$
#ill re$ult in $uc" tran$action$ .eing regar&e& a$ -oi&, In&ee& no $uc" $ti%ulation
coul& .e ma&e #"ic" #oul& a&-er$ely a(ect t"ir& %artie$ to #"om no &irection$
"a-e .een or coul& .e i$$ue& an& #"o #ere not a#are o' $uc" &irection i$$ue& to
t"e .ank$,5=5

Im%lication o' t"e #or&$ Ncaution or %ro"i.itO, ? Section =* 012 0a2 em%o#er$ t"e
Re$er-e Bank to Ncaution or %ro"i.itO t"e .anking com%anie$ 'rom entering into
any %articular ty%e o' tran$action or generally to gi-e a&-ice to t"e $ai& .anking
com%anie$, T"e u$e o' #or&$ Ncaution or %ro"i.itO in Sec,=*012 0a2 clearly im%lie$
t"at #"en t"e Re$er-e Bank o' In&ia %ro"i.it$ t"e .anking com%anie$ 'rom
entering into any %articular tran$action t"en $uc" a &irection #"ic" i$ i$$ue&
#oul& .e .in&ing on t"e .ank$ an& "a$ to .e com%lie& #it",5==E

5=4E F=*?A, !ertain %ro-i$ion$ o' t"e Act not to a%%ly to certain .anking
com%anie$,? 012 T"e %ro-i$ion$ o' Sec,11+ $u.?$ection 012 o' Sec,15+ an& Sec$,16+
17+ 54 an& 51 $"all not a%%ly to a .anking com%any Q

0a2 #"ic"+ #"et"er .e'ore or a'ter t"e commencement o' t"e Banking !om%anie$
0Amen&ment2 Act+ 1919 0== o' 19192+ "a$ .een re'u$e& a licence un&er Sec,55 or
%ro"i.ite& 'rom acce%ting 're$" &e%o$it$ .y a com%romi$e+ arrangement or
$c"eme $anctione& .y a !ourt or .y any or&er ma&e in any %rocee&ing relating
to $uc" com%romi$e+ or arrangement or $c"eme+ or %ro"i.ite& 'rom acce%ting
're$" &e%o$it$ .y -irtue o' any alteration ma&e in it$ memoran&umI or
0.2 #"o$e licence "a$ .een cancelle& un&er Sec,55+ #"et"er .e'ore or a'ter t"e
commencement o' t"e Banking !om%anie$ 0Amen&ment2 Act+ 1919 0== o' 19192,

052 H"ere t"e Re$er-e Bank i$ $ati$9e& t"at any $uc" .anking com%any a$ i$
re'erre& to in $u.?$ection 012 "a$ re%ai&+ or "a$ ma&e a&e/uate %ro-i$ion 'or
re%aying all &e%o$it$ acce%te& .y t"e .anking com%any+ eit"er in 'ull or to t"e
ma8imum e8tent %o$$i.le+ t"e Re$er-e Bank may+ .y notice %u.li$"e& in t"e
Lcial GaMette+ noti'y t"at t"e .anking com%any "a$ cea$e& to .e a .anking
com%any #it"in t"e meaning o' t"i$ Act+ an& t"ereu%on all t"e %ro-i$ion$ o' t"i$
Act a%%lica.le to $uc" .anking com%any $"all cea$e to a%%ly to it+ e8ce%t a$
re$%ect$ t"ing$ &one or omitte& to .e &one .e'ore $uc" notice,G

!))ENT

Rea&y Aor#ar& Tran$action$ Q Illegal an& -oi&, ? Un&er t"e circum$tance$+ it #ill
"a-e to .e "el& t"at Rea&y Aor#ar& Tran$action$ are illegal an& -oi& an& t"e no
rig"t$ can .e create& in 'a-our o' any t"ir& %arty un&er $uc" contract$, It #ill
"a-e to .e "el& t"at e-en t"oug" un&er $uc" an agreement+ %ro%ertie$ are in t"e
"an&$ o' t"ir& %er$on$+ t"e rig"t+ title an& intere$t in t"o$e %ro%ertie$ remain in
t"e Noti9e& 4arty an& t"o$e %ro%ertie$ $tan& attac"e& un&er t"e %ro-i$ion$ o'
t"e S%ecial !ourt Act,5=1E

Aoot?note

1 Su.$, .y Act,== o' 1919+ Sec,4+ 'or Nmanaging agentO 0#,e,',1$t cto.er+ 19192,
5 Raramani 3a-i&+ !, -, Bank o' )a&urai Lt&,+ A,I,R, 197= )a&, 11 at %,1*,
= Rimal !"an&ra Gro-er -, Bank o' In&ia+ 05:::2 1 S,!,!, 155 at %%,1=1+ 1=5 J
A,I,R, 5::: J S,!, 5171 J 5::: 012 S,T, 0S,!,2 576 J 5::: 042 S,L,T, 5:5 0S,!,2 J 5:::
042 !,L,T, 5*4 0S,!,2,
4 Bi$"o% o' Kottayam -, Union o' In&ia+ A,I,R, 197* Ker, 15* at %, 159,
1 Sri Sogen&ra Nama -, Union o' In&ia+ A,I,R, 1979 Gau, *:I State Bank o' In&ia -,
APit Sain 019912 75 !om%, !a$, =17 0S,!,2,
* AuPla !om%any 4-t, Lt&,+ -, Kaluram )a"a&eo 4ra$a&+ A,I,R, 197= !al, 1:* at
%%,114+ 111+ 11*+ 117I Bank o' Baro&a -, Sitaram+ 019912 75 !om%, !a$,4=1
0),4,2I La8mi )arketing !or%oration -, Kar, S,E,3, !or%oration+ 019912 75 !om%,
!a$, 446 0Knt,2,
6 3el"i Lotterie$ -, RaPe$" Aggar#al+ A,I,R, 1997 3el"i ==5 at %, ==9I 3SS )o.ile
!ommunication$ Limite& -, Union o' In&ia+ 66 019992 3,L,T, 96 at %,1:1,
7 Bi$"o% o' Kottayam -, Union o' In&ia+ A,I,R, 197* Ker, 15* at %, 159, 1=:,
9 4ure#al ; A$$ociate$ -, 4unPa. National Bank+ A,I,R, 199= S,!,914 at %,911I
Aoo& !or%oration o' In&ia - Aro$an Enter%ri$e$ Lt&,+ A,I,R, 199* 3el"i 15*,
1: 4ure#al ; A$$ociate$ -, 4unPa. National Bank+ 199= 012 Bank !,L,R,41= at
%,411 0S,!,2,
11 In&ian !"arge !"rome Lt&,+ -, A$ea Stal A,B,+ 199= 012 Bank L,S, =94 at %,=99
0ri$$a2,
15 B#arike$" Sugar In&u$trie$ -, 4rem Cea-y Engineering+ 1996 052 S,!,!,R, 19*
at %,5:1,
1= Su.$,.y Act 11 o' 19*=+ Sec,6+ 'or t"e 'ormer Sec,6 0#,e,', 1$t Ae.ruary+
19*42,
14 In$, .y Act 1 o' 1974+ Sec, 14+ 0#,e,', 11t" Ae.ruary+ 19742,
11 ), ), )a/lik -, 4rem Kumar Gayal+ 1991 052 Bank !,L,R, 49* at %,1:: 04,C,2,
1* Tra&er$ Bank Lt&, -, S, Kalyan Sing"+ A,I,R, 191= 4unP, 194 at %,191I 4rat"ana
Bank -, RiPai Kumar Goel+ 0199:2 *6 !om, !a$,61 at %, 66 0S,!,2,
16 Santo$" Kumar -, King+ A,I,R, 1915 !al, 19= at %, 194I S,A, Kini -, Union o'
In&ia+ A,I,R, 1971 S,!, 799 at %%, 791+ 79*I Rinay Engineering -, Nay-ele Lignite
!or%oration Lt&,+ A,I,R, 1971 )a&,51= at %, 519,
17 Su.$, .y Act 1 o' 1974+ Sec, 11+ 0#,e,', 11t" Ae.ruary+ 19742,
19 Sri Ri$alam !"it Aun& Lt&, -, Union o' In&ia+ A,I,R, 1979 Knit, 151 at %, 149,
5: )o"amma& )a".oo. K"an -, State Tran$%ort A%%ellate Tri.unal+ U,4,+ 1975
A,L,S, =:: at =:1I State o' C,4, -, Su&ar$"an Kumar+ 199: 01:2 E,A,R, 11 at %, 17
0C,4,2I Agya Ram -, State o' U,4, 199: 0562 A,!,!, 59 at %,=1I B"arat Cari
Sing"ania -, H,T, !ommi$$ioner+ 1994 Ta8 L,R, 416 0S,!,2I )V$ nkarmal
Nanakram -, !ommi$$ioner o' Sale$?ta8+ 1999 012 ri$$a L,R, 1 at %,1,
51 Su.$, .y Act 91 o' 191*+ Sec,5+ 'or Sec,1: 0#,e,', 14t" Sanuary+ 19162,
55 Su.$, .y Act == o' 1919+ Sec,*+ 'or t"e %ro-i$o 0#,e,', 1$t cto.er+ 19192,
5= Su.$, .y Act == o' 1919+ 'or $u.?clau$e 0i2 0#,e,', 1$t cto.er+ 19192,
54 Su.$, .y Act 11 o' 19*=+ Sec,7+ 'or certain #or&$ 0#,e,', 1$t Ae.ruary+ 19*42,
51 Su.$, .y i.i&I 'or t"e 9r$t %ro-i$o 0#,e,', 1$t Ae.ruary+ 19*42
5* Su.$, .y Act == o' 1919+ Sec,*+ 'or $u.?$ection 0=2 0#,e,', 1$t cto.er+ 19192,
56 Su.?$ection$ 0=2+ 042+ an& 012 omitte& .y Act 11 o' 19*=+ Sec,7 0#,e,', 1$t
Ae.ruary+ 19*42,
57 S"iam Kumar )o&ugil -, State Bank o' In&ia+ 199: La., I,!, 14*9 at %, 146=
04,; C,2,
59 Su&ar$an 3a$ -, State o' He$t Bengal+ 1991 052 !,L,R, 591 at %,595 0!al,2,
=: G, )o"an -, A$$tt, !ollector o' !u$tom$+ )a&ra$+ 199: Bank S, 45= at %%,454+
451 0)a&,2,
=1 Bank o' )a"ara$"tra -, m 4raka$" )al-iya+ 1996 La., I,!, 19=5 at %, 19=1+
19=* 03el"i2,
=5 S"iam Kumar )o&ugil -, State Bank o' In&ia+ 199: La., I,!, 14*9 at %%, 1461+
146* 04,; C,2,
== Giree$an -, In&ian -er$ea$ Bank+ Kerala+ 1994 012 B,L,S, 4:1 at %%, 4:1+ 4:5+
4:1,
=4 In&ian Bank$ A$$ociation -, Horkmen o' Syn&icate Bank+ 5::1 Bank S, 4== at
%, 441,
=1 In&ian Bank$ A$$ociation -, Horkmen o' Syn&icate Bank+ 1996 0=2 L,L,N, 111
at %,117,
=* T,3, 3igam.ar -, !entral Bank o' In&ia+ 1995 0II2 )a&, L,S, 76 at %%, 91+ 95
0)a&,2,
=6 Union o' In&ia+ -, Bak$"i+ A,I,R, 199: S,!, 976 J 0199:2 La., I,!,7:*I !entral
Bank o' In&ia+ !"an&igar" -, Bal#ant Rai Nayyar+ 199* La.,I,!, 5459 at %, 54=5
04,; C,2,
=7 )anagement o' In&ian Bank -, 4re$i&ing Lcer+ In&u$trial Tri.unal 0c2 0)a&,2+
199: 012 !,L,R, 179 at %, 196 0)a&,2,
=9 K, Gana%at"y Sa$try -, 3e%uty General )anager+ 0Sta(2 An&"ra Bank+ 199*
052 Bank, L,S,=11 at %%,=14+ =11 0A,4,2,
4: Bonal )anager ; 3i$ci%linary Aut"ority In&ian Bank -, 4aru%ure&&y
Sayanarayana+ 199: 052 !rime$ 61 at %%, 6*+ 66 0A,4,2,
41 Section$ 1:?A to 1:?3+ in$, .y Act 17 o' 19*7+ Sec,= 0#,e,',1$t Ae.ruary+ 19*92
45 In$, .y Act No,1 o' 1974+ Sec,1* 0#,e,', 11t" Ae.ruary+ 19742,
4= T,S, Arumugam -, R, La8mi Rila$ Bank Lt&,+ 1995 052 L,L,S, 51: at %,517
0)a&,2 J 199= Bank S, 4=1 at %, 441 0)a&,2,
44 T,S, Arumugam -, R, La8mi Rila$ Bank Lt&,+ 199= Bank S,4=1 at %%,444+ 441
0)a&,2 J 1995 052 L,L,S, 51: at %,517 0)a&,2,

41 Su.$, .y Act 5: o' 1994+ Sec,5 0#,e,',=1$t Sanuary+ 19942,
4* Su.$, .y Act 5: o' 1994+ Sec,5 0#,e,',=1$t Sanuary+ 19942,
46 I.i&,
47 T"e #or&$ N.ut $"all continue in oLce until "i$ $ucce$$or$ a$$ume$ oLceO
omitte& .y Act No,1 o' 1974+ Sec,16 0#,e,', 11t" Ae.ruary+ 19742,
49 In$, .y i.i&,
1: Su.$, .y Act 5: o' 1994+ Sec,5 0#,e,',=1$t Sanuary+ 19942,
11 In$, .y Act No,1 o' 1974+ Sec,17 0#,e,', 11t" Ae.ruary+ 19742,
15 Su.$, .y Act 5: o' 1994+ Sec,= 0#,e,',=1$t Sanuary+ 19942,
1= Su.$, .y Act 5: o' 1994+ Sec,= 0#,e,',=1$t Sanuary+ 19942,
14 Su.$, .y Act No,1 o' 1974+ Sec,19 0#,e,', 11t" Ae.ruary+ 19742,
11 Su.$, .y Act 5: o' 1994+ Sec,4,
1* Su.$, .y i.i&,+ Sec,1,
16 In$, .y Act No,1 o' 1974+ Sec,5: 0#,e,', 11t" Ae.ruary+ 19742,
17 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec 1:= o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t" Sanuary+ 19162,
19 Su.$, .y 5: o' 191: Sec,=+ 'or Nin any $tateO,
*: Su.$, .y Act == o' 1919+ Sec,6+ 'or certain #or&$ 0#,e,',1$t cto.er+ 19192,
*1 Su.$, .y i.i&,+ 'or $u.?$ection 052 0#,e,', 1$t cto.er+ 19192,
*5 Su.$, .y Act =* o' 19*5+ Sec,5+ 'or certain #or&$,
*= T"e #or& Ncalen&arO omitte& .y Act ** o' 1977+ Sec,6 0#,e,', =:t" 3ecem.er+
19772,
*4 In$, .y Act =* o' 19*5+ Sec,5 0ii2,
*1 In$, .y Sec,5 Act =* o' 19*5,
** Su.$, .y Act *5 o' 191*+ Sec,5 an& Sc"e&ule+ 'or Nin In&iaO,
*6 T"e #or&$ Nt"e %ro-i$o toO omitte& .y Act == o' 1919+ Sec,6 0#,e,', 1$t
cto.er+ 19192,
*7 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nel$e#"ere t"an in a StateO,
*9 Su.$, .y Sec,=+ i.i&,+ 'or Nin t"e StateO,
6: Su.$, .y Act == o' 1919+ Sec,6+ 'or $u.?$ection 012 0#,e,', 1$t cto.er+ 19192,
61 Su.$, .y Act 91 o' 191*+ Sec,=+ 'or $ec,15 0#,e,', 14t" Sanuary+ 19162,
65 In$, .y Act == o' 1919+ Sec,7 0#,e,', 1$t cto.er+ 19192,
6= Su.$, .y Act 11 o' 19*=+ Sec,9+ 'or Nin e8ce$$ o' 9-e %ercentO, 0#,e,', 1$t
Ae.ruary+19*42,
64 Su.$, .y Act 5: o' 1994+ Sec,* 0#,e,', =1$t Sanuary+ 19942,
61 Na$i. Sing" -, Union o' In&ia+ 199* 012 Bank, L,S, 19 at %,*1 04,;C,2,
6* So$e%" )ic"ael -, Sout" In&ian Bank Lt&,+ 1967 Ta8, L,R, 1616 at %%,1651+
165=,
66 T,R, Sreiram -, K,), 3urai Bu.u+ 1994 01=2 !om%, La# A,3,S, 111 at %, 156,
67 Su.$, .y Act 91 o' 191* Sec,4 0#,e,',14t" Sanuary+ 19162,
69 Su.$, .y Act 91 o' 191* Sec,14 an& Sc"e&ule+ 'or NSec$,1:1 an& 1:1?A o' t"e
In&ian !om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t" Sanuary+19162,
7: In$, .y Act == o' 1919+ Sec,9 0#,e,', 1$t cto.er+ 19192,
71 Re?num.ere& a$ $u.?$ection 012 o' Sec, 11 .y Act == o' 1919+ Sec,1: 0#,e,',
1$t cto.er 19192,
75 In$, .y Act == o' 1919+ Sec,11 0#,e,', 1$t cto.er+ 19192,
7= Su.$, .y Act 91 o' 191*+ Sec,1+ 'or Sec,1* 0#,e,',14t" Sanuary+ 19162,
74 Su.$, .y Act 5: o' 1994+ Sec,6 0#,e,', =1$t Sanuary+ 19942,
71 In$, .y Act 17 o' 19*7+ Sec,4 0#,e,' 1$t Ae.ruary+ 19*92,
7* Su.$, .y Act == o' 1919+ Sec,11+ 'or Sec$,16 an& 17 0#,e,',1$t cto.er+ 19192,
76 !ertain #or&$ omitte& .y Act =* o' 19*5+ Sec,=,
77 In$, .y Act == o' 19*5+ Sec,=,
79 An&"ra Bank Lt&, -, !ommi$$ioner o' Income?ta8+ 1991 051*2 I,T,R,**7 at
%,*61 0S,!,2 J 1991 052 A,I, Bank L,S,9,
9: Su.$, .y Act No,1 o' 1974+ Sec,51 #,e,', 59t" )arc"+ 1971,
91 In$, .y Act *5 o' 1974+ Sec,61+ Sc",III 0#,e,', 5:t" )arc"+ 19712,
95 In$, .y Act 1= o' 1976+ Sec,1* an& Sc",II 0#,e,',9t" Suly+ 19772,
9= In$, .y Act =9 o' 1979+ Sec,1= an& Sc",II+ 4t,III 0#,e,',6t" )arc"+ 199:2,
94 Su.$, .y Act No,1 o' 1974+ Sec,55 0#,e,', 11t" Ae.ruary+ 19742,
91 Su.$, .y Act 17 o' 19*7+ Sec,1+ 'or Sec, 5: 0#,e,', 1$t Ae.ruary+ 19*92,
9* In$,.y Act No,1 o' 1974+ Sec,5= 0#,e,', 11t" Ae.ruary+ 19742,
96 Kamal !"an& Sain -, Banking m.u&$man+ A,I,R, 199* ),4, 17: at %,171 J
199* 0=2 Bank S, =7= at %, =74 0),4,2,
97 In$, .y Act 11 o' 19*=+ Sec,15 0#,e,', 1$t Ae.ruary+ 19*42,
99 In$, .y i.i&,+ Sec,1= 0#,e,', 1$t Ae.ruary+ 19*42,
1:: In$, .y Act 17 o' 19*7+ Sec,* 0#,e,', 1$t Ae.ruary+ 19*92
1:1 Su.$, .y Act 11 o' 19*=+ Sec 1=+ 'or certain #or&$ 0#,e,',1$t Ae.ruary+ 19*42,
1:5 In$, .y Act 11 o' 19*= Sec,1=+ 'or certain #or&$ 0#,e,',1$t Ae.ruary+ 19*42,
1:= Renkite$#ara Rice )ill -, Union Bank o' In&ia+ 019772 *= !om%, !a$,47= J
T"am%an -, 3"anMlak$"mi Bank Lt&,+ 1979 052 K,L,T, 74: JK,+ Sameeta Bee-el -,
State Bank o' Tra-ancore+ 1991012 Bank !,L,R, *66 at %%, *69 0Ker,2I 3e.a$i$ 4al
!"ou&"ari -, Alla"a.a& Bank+ 1991 012 !al, L,T, 1: at %,54,
1:4 4unPa. National Bank -, Ri&ya Catc"ery 0C,4,2I 1999 0972 !om%, !a$,4:9 at
%,41= 0C,4,2,
1:1 Sameela Bee-i -, State Bank o' Tra-ancore+ 1991 Bank S, 456 at %,459 0Ker,2,
1:* Sag&am.a Rice )ill$ -, riental Bank o' !ommerce+ Karnal+ A,I,R, 199: 4, ; C,
*: at %,*5,
1:6 In&ian Bank+ Tiru-annamalai -, R,A, Bala$u.ramania Gurukal+ A,I,R, 1975
)a&,59* at %,=:: J 019752 5 ),L,S, 5=7,
1:7 !anara Bank+ Bangalore -, B,E, NanPun&aia"+ 5::1 0=2 Knt, L,S, 5: at %, 56
0Knt,2,
1:9 Go#&a+ 3,S, -, !or%oration Bank+ 019752 5 Knt, L,S, 49: at %%, 499+ 1:1I
Re$er-e Bank o' In&ia -, State Bank o' In&ia+ 0199*2 71 !om%, !a$e$ 114 at
%,1*6 0Bom,2I !anara Bank -, 4,R,N, U%a&"yaya+ 019972 * S,!,!, 15* at %%, 1=:+
1=1,
11: In$, .y Act 1 o' 1974+ Sec,54 0#,e,',11t" Ae.ruary+ 19742,
111 )e&ikon&a Satyanarayana -, An&"ra Bank Lt&,+ Eluru+ A,I,R, 1971 A,4, 66 at
%, 69I C,4, Kri$"na Re&&y -, !anara Bank+ Bangalore+ A,I,R, 1971 Knt, 557 at
%,5=1I Bank o' )a"ara$"tra -, Unite& !on$truction !o,+ A,I,R, 1971 Bom,4=5 at
%%,4==I Bank o' )a&ura -, B"arat Tra&ing !o, Lt&,+ 199= Bank S, 7 at %,19 0!al,2I
Gula. !"an& -, !entral Bank o' In&ia+ 199= 012 Bank !,I,R,175 0Bom,2I Bank o'
Baro&a -, )V$ 4erc"em In&u$trie$+ 1995 052 Bank !,L,R, =11 0Bom,2I K, A%%a Rao
-, State Bank o' Cy&era.a&+ 199= Bank S, 56* 0)a&,2I RiPaya Bank -, Art Tren&
!or%n, A,I,R, 1995 !al, 15 at %,51I Ro$y George -, State Bank o' In&ia+ A,I,R, 199=
Ker, 174I State Bank Cy&era.a& -, A&-ot" Sakru+ A,I,R, 1994 A,4, 16: at %%,174?
171,
115 Syn&icate Bank+ 4ollac"i Branc" -, 3, )at"ean+ 199: Bank S,=14 at %%, =17+
=19 0)a&,2,
11= N,), Reera%%a -, !anara Bank+ A,I,R, 1997 S,!, 11:1 at %, 11:*J 1997 052
),4,L,S,74 at %,94,
114 State Bank o' Cy&era.a& -, A&-at" Sakru+ 199= 012 A,L,T, *:7 at %,*=7 J
199= 012 An,H,R,=7: at %,41: 0A,4,2I Syn&icate Bank -, Kaila$" !"an&ra+ 199=
06*2 !om%, !a$, =95 at %%, =96+ =97 0Bom,2 An&"ra Bank -, ), Butc"ayya
!"ou&"ary+ 1996 012 An&", L,3, 1=4 at %%,1=6+ 1=7+ 1=9?41,
111 !entral Bank o' In&ia -, Sarangaia"+ 1991 012 An&", L,T, 411 at %%,417+ 419+
4*1I Kogen&ranat" RaP -, State Bank o' In&ia+ 1976 012 An&", L,T, =1* 03,B,2,
11* State Bank o' In&ia -, Gir&"ari Lal+ 1991 012 Bank !,L,R, 14= at %, 144 0),4,2 J
1995 Bank S,191 at %, 195,
116 N, Sa-it"ri -, Unite& !ommercial Bank+ 0199*2 7* !om, !a$,=4 at %%,41?45
0)a&,2,
117 Ri&e Kogen&ranat" RaP -, State Bank o' In&ia+ 1976 012 An&", L,T, =1* 03,B,2I
!entral Bank o' In&ia -, 4o%uri Sarangaia"+ 1991 012 An&", L,T, 411 at %, 417,
119 !anara Bank o' In&ia -, Nalaku&iti Bullaia"+ 05::12 1:1 !om%, !a$,=74 at
%%,=74?=71 0A,4,2I Union Bank o' In&ia -, Ko&uri Reera Rag"a-ayya+ 05:::2 1:1
!om%, !a$, ==7 at %, =4= 0A,4,2,
15: !entral Bank o' In&ia -, 4o%uri Sarangaia"+ 1991 012 An&", L,T,411 at %, 419+
Union Bank o' In&ia -, Sogi )o"an Rao+ 019912 65 !om%, !a$,=51 at %%, =57+ =59
0A,4,2,
151 In&ian Bank -, Te8tile Inlan& Agencie$ 019912 74 !om%, !a$e 699 at %%, 7:=+
7:4 0!al,2,
155 State Bank o' In&ore -, Ne# Aoun&ry an& !a$ting 4-t, Lt&,+ 05::12 1:* !om%,
!a$,1:4 at %, 1:7 0),4,2,
15= 4unPa. National Bank -, Ki$"anlal Soni+ A,I,R, 1996 ),4, 56 at %%, =1+=5,
154 riental Bank o' !ommerce -, 3,4, Rerma+ 019992 91 !om%, !a$,49: at %,
491 0),4,2,
151 4unPa. National Bank -, )ullu Sing"+ 1995 Bank S,69 at %%, 69+ 7: J 1991
Bank !,L,R, 157 0),4,2 J 199= ),4,L,S, 195 at %,19=,
15* Kamla 4ra$a& Sai$#al -, 4unPa. National Bank+ 1991 Banker$ S, 116 at %,117
0),4,2I Bank o' )a&ura Lt&, -, )a&&i Uenkak Su.ra"manyam+ 1995 06=2 !om%,
!a$,141 at %,144 0A,4,2,
156 RiPaya Bank -, San$u In&u$trie$ 03el"i2+ 199= 06*2 !om%, !a$, *15 at %,*19 J
1995 !,!,!, 515 at %%, 51*+ 516,
157 B"an#arlal -, Bank o' Baro&a+ 1995 0=2 H,L,!, 45 at %%, 4*+46,
159 R, Su..a Rao -, In&ian Bank+ 1996 042 An&", L,T, 115 at %,11*,
1=: 019772 *= !om%,!a$,47= 0A,4,2,
1=1 0197925 K,L,T, 74: J 019952 6= !om%, !a$,*:: 0Ker,2,
1=5 Sameela Bee-i -, State Bank o' Tra-ancore+ 1995 0642 !om%,!a$,6=* at
%,6=9 J 1995 052 K,L,T, 7*7 at %, 76:,
1== Su.$, .y Act == o' 1919+ Sec,1=+ 'or $u.?$ection 012 0#,e,', 1$t cto.er+
19192,
1=4 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or N in any StateO,
1=1 Su.$, .y Act == o' 1919+ Sec,1=+ 'or N$u.?$ection 052O 0#,e,' 1$t cto.er+
19192,
1=* T"e #or&$ Nall or any o' N omitte& .y Act 1 o' 1974+ Sec, 51 0#,e,', 11t"
Ae.ruary+ 19742,
1=6 Su.$, .y Act == o' 1919+ Sec,1=+ 'or !l$, 0a2 an& 0.2 0#,e,', 1$t cto.er+
19192,
1=7 Su.$, .y Act 1 o' 1974+ Sec,51 0#,e,' 11t" Ae.ruary+ 19742,
1=9 In$, .y i.i&,+ 0#,e,', 11t" Ae.ruary+ 19742,
14: Su.$, .y Act == o' 1919+ Sec,1=+ 'or $u.?$ection$ 042 an& 012 0#,e,', 1$t
cto.er+ 19192,
141 In$, .y Act 1 o' 1974+ Sec,51 0#,e,', 11t" Ae.ruary+ 19742,
145 Binni Lt&, -, NiMam Sugar$ Lt&,+ 1996 012 !,L,T,1: at %%, 15+1= 0A,4,2,
14= 3#arike$" Sugar In&u$trie$ -, 4rem Cea-y Engineering 4-t, Lt&,+ 1996 052
S,!,!,R,19* at %%,5:=+ 5:4,
144 Su.$, .y Act == o' 1919+ Sec,5= 0#,e,', 1$t cto.er+ 19192,
141 In$, .y Act *1 o' 1971+ t"e Secon& Sc"e&ule+ 4t, II 0#,e,', 1$t )ay+ 19752,
14* In$, .y Act == o' 1919+ Sec, 11 0#,e,',1$t cto.er+ 19192,
146 Su.$, .y Act 1 o' 1974+ Sec,5* 0#,e,', 59t" )arc"+ 19712,
147 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or N in t"e State$O,
149 Su.$, .y Act == o' 1919+ Sec, 11+ 'or e8%lanation 0#,e,',1$t cto.er+ 19192,
11: Su.$, .y i.i&,+ 'or $u.?$ection 052 0#,e,' 1$t cto.er+ 19192,
111 In$, .y Act =* o' 19*5+ Sec,*,
115 In$, .y Act 1 o' 1974+ Sec,5* 0#,e,' 59t" )arc"+ 19712,
11= In$, .y Act 51 o' 196*+ Sec,== 0#,e,',5*t" Se%tem.er+ 19612,
114 T"e #or&$ Ne$ta.li$"e& un&er Sec,= o' t"e Regional Rural Bank Act+ 196* 051
o' 196*2O omitte& .y Act 1 o' 1974+ Sec,5* 0#,e,', 59t" )arc"+ 19712,
111 Su.$, .y i.i&,
11* Kiri A$$ociate$ 4, Lt&, -, !o%aro )aruti Lt&, 1996 0*12 3,L,T,*1: at %, *14
03el"i2,
116 K"u$"i Ram Bi"ari Lal -, State Tra&ing !or%oration+ 1996 0*12 3,L,T,45: at
%,456 03el"i2,
117 Su.$, .y Act == o' 1919+ Sec,1*+ 'or $u.?$ection 012 an& 052 0#,e,' 1$t
cto.er+ 19192,
119 In$, .y Act *1 o' 1971+ Sec,*1+ t"e Secon& Sc"e&ule+ 4t, II 0#,e,', 1$t )ay+
19752,
1*: Su.$, .y Act 5: o' 191:+ Sec,6+ 'or !l, 0a2,
1*1 In$, .y Act == o' 1919+ Sec,1* 0#,e,', 1$t cto.er+ 19192,
1*5 !lau$e 0.2 re?lettere& a$ !l,0c2 .y i.i&,+ 0#,e,', 1$t cto.er+ 19192,
1*= Su.$, Act 5: o' 191:+ Sec,=+ 'or Nin t"e State$O,
1*4 !ertain #or&$ omitte& .y Act 11 o' 19*=+ Sec,14 0#,e,', 1$t Ae.ruary+ 19*42,
1*1 Su.$, .y Act 91 o' 191*+ Sec,*+ 'or $u.?$ection 052 0#,e,', 14t" Sanuary+
19162,
1** Su.$, .y Act == o' 1919+ Sec,16 0#,e,', 1$t cto.er+ 19192,
1*6 In$, .y Act *1 o' 1971+ Sec,*1+ Secon& Sc"e&ule+ 4t,II 0#,e,', 1$t )ay+ 19752,
1*7 Su.$, .y i.i&,
1*9 In$, .y Act ** o' 1977+ Sec,7 0a2 0i2 0A2 0#,e,', =:t" 3ecem.er+ 19772,
16: Su.$, .y Act 5: o' 191:+ Sec,=+ 'or N in t"e State$O,
161 Su.$, .y i.i&,+ 'or Nout$i&e t"e StateO,
165 Su.$, .y Act ** o' 1977+ Sec,70a2 0i2+ 0B2+ 'or t"e #or&$ Nt"at yearO 0#,e,',
=:t" 3ecem.er+ 19772,
16= Su.$, .y i.i&,+ Sec,7 0a2 0i2 0!2+ 'or t"e #or&$ Nt"e yearO 0#,e,', =:t"
3ecem.er+ 19772,
164 Su.$, .y i.i&,+ Sec,7 0a2 0ii2 0#,e,', =:t" 3ecem.er+ 19772+ 'or t"e %ro-i$o a$
amen&e& .y Act 5: o' 191:+ Sec,=,
161 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nin t"e State$O,
16* Su.$, .y i.i&,+ 'or Nout$i&e t"e StateO,
166 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule 'or Nmarke& A in t"e T"ir&
Sc"e&ule to t"e In&ian !om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t"Sanuary+
19162,
167 In$, .y Act 1 o' 1974+ Sec,56 0#,e,', 11t" Ae.ruary+ 19742,
169 In$, .y Act ** o' 1977+ Sec,7 0.2 0#,e,' =:t" 3ecem.er+ 19772,
17: Su.$, .y Act 17 o' 19*7+ Sec,7+ 'or $u.?$ection 012 0#,e,', 1$t Ae.ruary+
19*92,
171 In$, .y i.i&,+ 0#,e,', 1$t Ae.ruary+ 19*92,
175 Su.$, .y Act ** o' 1977+ Sec,9 0a2+ 'or t"e #or&$ Nit may &irect to au&itor o'
t"e .anking com%any to au&it t"e account$ o' t"e .anking com%any in relation
to any tran$action or cla$$ o' tran$action+ $%eci9e& in t"e or&erO 0#,e,',=:t"
3ecem.er+ 19772,
17= Su.$, .y Act ** o' 1977+ Sec,9 0.2+ 'or t"e #or&$ Nt"e au&it o' t"e
tran$action or cla$$ o' tran$actionO 0#,e,', =:t" 3ecem.er+ 19772,
174 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec,141 o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2 N 0 #,e,', 14t" Sanuary+ 19162,
171 In$, .y Act ** o' 1977+ Sec,9 0c2 0#,e,', =:t" 3ecem.er+ 19772,
17* Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nin a StateO,
176 Su.$, .y Act 11 o' 19*=+ Sec,11+ 'or No' %ro9t an& lo$$O 0#,e,',1$t
Ae.ruary+19*42,
177 K, Arul Na&ar -, Aut"oriMe& Lcer+ Lan& Re'orm$+ A,I,R, 199: )a&, == at %,
=1 0A,B,2I B,G, Ganga&"ara%%a -, S, !"an&ra$"ekar+ 019952 19* I,T,R,566 at %,576
0Knt,2I Gula.rai Canuman.u8 -, !ommr, H,T,+ 019952 197 I,T,R, 1=1 at %, 1=6
0Gau,2,
179 In$, .y Act *1 o' 1971+ t"e Secon& Sc"e&ule+ 4t, II 0#,e,', 1$t )ay+ 19752,
19: 1916 S,!,R,11,
191 State o' 4unPa. -, Kaila$" Nat"+ 1979 012 !,L,R, *: at %, *4 0S,!,2I I,A, Lt&,+ -,
!,I, o' Aactorie$ an& Boiler$+ 199= 0**2 A,L,R, 161 at %%,166+ 167 0ri,2I I,T,
!ommi$$ioner -, CI! 4ro&uct$ 4, Lt&,+ 1994 Ta8 L,R, 519 0Bom2I State o'
Karnataka -, Kri$"na%%a+ 05:::2 4 S,!,!,61 at %%,71+ 75 J A,I,R, 5::: S,!, 146: J
5::: 0=2 S,T, 11* J5::: 0=2 S,L,T, 557 0S,!,2 J 5::: !r, L,S, 169= J 5::: 052 !rime$
1: 0S,!,2 J 5::: S,!,!, 0!r,2 611,
195 Su.$, .y Act == o' 1919+ Sec,19+ 'or $u.?$ection 012 0#,e,', 1$t cto.er+
19192,
19= Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nout$i&e t"e StateO,
194 Su.$, .y i.i&,+ 'or t"e #or&$ Nin t"e State$O,
191 In$, .y Act 5= o' 19*:+ Sec,5,
19* Su.$, Act 1 o' 1974+ Sec,57 0#,e,',11t" Ae.ruary+ 19742,
196 In$, .y Act *5 o' 1974+ Sec,61+ Sc",III 0#,e,', 5:t" )arc"+ 19712,
197 In$, .y Act 1= o' 1976+ Sec,1* an& Sc",II 0#,e,', 9t" Suly+ 19772,
199 In$, .y Act =9 o' 1979+ Sc",II+ 4t, III 0#,e,', 6t" )arc"+199:2,
5:: 19*5 0=52 !om%, !a$, 414I !,I,T, -, State Bank o' 4atiala+ 0199=2 5:=
I,T,R,11: at %,116,
5:1 Sara$#at !o?o%erati-e Bank Limite& -, 4,G, Koranne+ A,I,R, 197= Bom, =16 at
%,=41,
5:5 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec,1=7 o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t" Sanuary+ 19162,
5:= In$, .y Act 1 o' 1974+ Sec,59 0#,e,', 11t" Ae.ruary+ 19742,
5:4 In$, .y Act 11 o' 19*=+ Sec,16 0#,e,', 1$t Ae.ruary+ 19*42,
5:1 In$, .y Act 1 'or 1974+ Sec,59 0#,e,',11t" Ae.ruary+ 19742,
5:* In$, .y Act *1 o' 1971+ t"e Secon& Sc"e&ule+ 4t,II 0#,e,', 1$t )ay+ 19752,
5:6 In$, .y Act 11 o' 19*=+ Sec,16 0#,e,', 1$t Ae.ruary+ 19*42,
5:7 In$, .y Act 91 o' 191*+ Sec,6 0#,e,', 14t" Sanuary+ 19162,
5:9 Su.$, .y Act 6 o' 19*1+ Sec,5+ 'or Nnational intere$tO,
51: In$, .y Act,17 o' 19*7+ Sec,1: 0#,e,',1$t Ae.ruary+ 19*92,
511 Santa Sa"kari Bank Lt&, -, State o' )a"ara$"tra+ A,I,R, 199= Bom, 515 at %,
511 J 019912 75 !om%, !a$e$ 6:6 0Bom,2I T,S, Arumug"am -, Lak$"mi Rila$ Bank+
019942 7: !om%, !a$, 714 0)a&,2I Cemangni Ainance an& Lea$ing 042 Lt&, -,
Tamilna& )ercantile Bank Lt&,+ 0199*2 = !om%, L,S, 5=7 0!,L,B,2I Re$er-e Bank o'
In&ia -, State Bank o' In&ia+ 0199*2 71 !om%, !a$e$ 114 0Bom,2,
515 B"arat !o?o%erati-e Bank Lt&, -, Bank o' Baro&a+ 05::12 1:1 !om%, !a$,76:
at %,769 0GuP,2,
51= B,,I, Ainance Lt&, -, !u$to&ian+ 1996 052 !or%, L,A, 111 at %%, 111 at %%,
151+ 155 0S,!,2I A,I,R, 1996 S,!, 1915 at %,19*:,
514 Re$er-e Bank o' In&ia -, Cari$i&" !o?o%, Bank Lt&,+ 1977 Bank, L,S, =1 at %,
=9 0GuP,2 0A,B,2,
511 Santa Sa"akari Bank Lt&, -, State o' )a"ara$"tra+ A,I,R, 199= Bom, 515 at
%,511I !anara Bank -, 4,R,N, U%a&"yaya+ 019972 * S,!,!, 15* at %%, 1=:+ 1=1,
51* In$, .y Act 1 o' 1974+ Sec,=: 0#,e,', 11t" Ae.ruary+ 19742,
516 Su.$, .y Act 17 o' 19*7+ Sec,11+ 'or certain #or&$ 0#,e,', 1$t Ae.ruary+
19*92,
517 Su.$, .y Act == o' 1919+ Sec,51+ 'or Nmanaging or #"ole?time &irector or a
&irector not lia.le to retire .y rotationO 0#,e,', 1$t cto.er+ 19192,
519 Su.$, .y Act 17 o' 19*7+ Sec,11+ 'or !l,0.2 0#,e,', 1$t Ae.ruary+ 19*92,
55: In$, .y Act == o' 1919+ Sec,51 0#,e,', 1$t cto.er+ 19192,
551 Su.$, .y Act 17 o' 19*7+ Sec,11+ 'or No' t"e managerO 0#,e,',1$t Ae.ruary+
19*92,
555 Su.$, .y Act =* o' 19*5+ Sec,6 'or N5*7+ 5*9+ =1:+ =11 an& =77O
55= Su.$, .y Act 1 o' 1974+ Sec,=: 0#,e,', 11t" Ae.ruary+ 19742,
554 Su.$, .y Act == o' 1919+ Sec,51+ 'or certain #or&$ 0#,e,',1$t cto.er+ 19192,
551 Su.$, .y Act 17 o' 19*7+ Sc",II 'or Na$ a managing or #"ole?time &irectorO
0#,e,', 1$t Ae.ruary+ 19*92,
55* Su.$, .y Act 17 o' 19*7+ Sc", I+ 'or Na%%ointmentO 0#,e,', 1$t Ae.ruary+
19*92,
556 Su.$, .y Act 17 o' 19*7+ Sc", I+ 'or Na%%ointmentO 0#,e,', 1$t Ae.ruary+
19*92,
557 Su.$, .y Act == o' 1919+ Sec, 55+ 'or N41O 0#,e,',1$t cto.er+ 19192,
559 Su.$, .y Act 91 o' 191*+ Sec,7+ 'or !l, 0&2 0#,e,', 14t" Sanuary+ 19162,
5=: Su.$, .y Act 17 o' 19*7+ Sec,15+ 'or certain #or&$ 0#,e,', 1$t Ae.ruary+
19*92,
5=1 !ertain #or&$ omitte& .y Act 17 o' 19*7+ Sec, 15 0#,e,' 1$t Ae.ruary+ 19*92,
5=5 B,,I, Ainance Lt&, -, T"e !u$to&ian+ A,I,R, 1996 S,!, 1915 at %,19*: J 1996
052 !or%, L,A, 111 at %, 155 0S,!,2,
5== I.i&, At %%, 1919+ 19*:,
5=4 In$, .y Act == o' 1919+ Sec, 5= 0#,e,',1$t cto.er+ 19192,
5=1 A,K, )enon -, Aairgro#t" Ainancial Ser-ice$ Lt&,+ 1994 Bank,S, **5 at %,*95
0S%l, !ourt Q Bom,2,


Banking Regulation Act 1949 > Bare Act > 4art :5 > Bu$ine$$ o' Banking !om%anie$
BRA 02 March 10, 1949
4ART II
BUSINESS A BANKING !)4ANIES
*, Aorm$ o' .u$ine$$ in #"ic" .anking com%anie$ may engage,? 012 In a&&ition to
t"e .u$ine$$ o' .anking+ .anking com%any may engage in any one or more o' t"e
'ollo#ing 'orm$ o' .u$ine$$+ namely J
0a2 t"e .orro#ing+ rai$ing+ or taking u% o' moneyI t"e len&ing or a&-ancing o'
money eit"er u%on or #it"out $ecurityI t"e &ra#ing+ making acce%ting+
&i$counting+ .uying+ $elling collecting an& &ealing in .ill$ o' e8c"ange+ "un&i$+
%romi$$ory note$+ cou%on$+ &ra't$+ .ill$ o' la&ing+ rail#ay recei%t$ #arrant$+
&e.enture$+ certi9cate$+ $cri%$ an& ot"er in$trument$+ an& $ecuritie$ #"et"er
tran$'era.le or negotia.le or notI t"e granting an& i$$uing o' letter$ o' cre&it+
tra-ellerU$ c"e/ue$ an& circular note$I t"e .uying+ $elling an& &ealing in .ullion
an& $%ecieI t"e .uying an& $elling+ o' 'oreign e8c"ange inclu&ing 'oreign .ank
note$I t"e ac/uiring "ol&ing+ i$$uing on commi$$ion+ un&er#riting an& &ealing in
$tock+ 'un&$+ $"are &e.enture$+ &e.enture $tock+ .on&$+ o.ligation$+ $ecuritie$
an& in-e$tment$ o' all kin&$I t"e %urc"a$ing an& $elling o' .on&$+ $cri%$ or ot"er
'orm$ o' $ecuritie$ on .e"al' o' con$tituent$ or ot"er$+ t"e negotiating o' loan$
an& a&-ance$I t"e recei-ing o' all kin&$ o' .on&$+ $cri%$ or -alua.le$ on &e%o$it
or 'or $a'e cu$to&y or ot"er#i$eI t"e %ro-i&ing o' $a'e &e%o$it -ault$I t"e
collecting an& tran$mitting o' money an& $ecuritie$I
0.2 acting a$ agent$ 'or any Go-ernment or local aut"ority or any ot"er %er$on or
%er$on$I t"e carrying on o' agency .u$ine$$ o' any &e$cri%tion inclu&ing t"e
clearing an& 'or#ar&ing o' goo&$+ gi-ing o' recei%t$ an& &i$c"arge$ an& ot"er#i$e
acting a$ an attorney on .e"al' o' cu$tomer$+ .ut e8clu&ing t"e .u$ine$$ o' a 1E
Fmanaging agent or $ecretary an& trea$urerG o' a com%anyI
0c2 contracting 'or %u.lic an& %ri-ate loan$ an& negotiating an& i$$uing t"e $ameI
0&2 t"e e(ecting+ in$uring+ guaranteeing+ un&er#riting+ %artici%ating in managing
an& carrying out o' any i$$ue+ %u.lic or %ri-ate+ o' State+ munici%al or ot"er loan$
or o' $"are$+ $tock+ &e.enture$+ or &e.enture $tock o' any com%any+ cor%oration
or a$$ociation an& t"e len&ing o' money 'or t"e %ur%o$e o' any $uc" i$$ueI
0e2 carrying on an& tran$acting e-ery kin& o' guarantee an& in&emnity .u$ine$$I
0'2 managing+ $elling an& realiMing any %ro%erty #"ic" may come into t"e
%o$$e$$ion o' t"e com%any in $ati$'action or %art $ati$'action o' any o' it$ claim$I
0g2 ac/uiring an& "ol&ing an& generally &ealing #it" any %ro%erty or any rig"t+
title or intere$t in any $uc" %ro%erty #"ic" may 'orm t"e $ecurity or %art o' t"e
$ecurity 'or any loan$ or a&-ance$ or #"ic" may .e connecte& #it" any $uc"
$ecurityI
0"2 un&ertaking an& e8ecuting tru$t$I
0i2 un&ertaking t"e a&mini$tration o' e$tate$ a$ e8ecutor+ tru$tee or ot"er#i$eI
0P2 e$ta.li$"ing an& $u%%orting or ai&ing in t"e e$ta.li$"ment an& $u%%ort o'
a$$ociation+ in$titution$+ 'un&$+ tru$t$ an& con-enience$ calculate& to .ene9t
em%loyee$ or e8?em%loyee$ o' t"e com%any or t"e &e%en&ent$ or connection$ o'
$uc" %er$on$I granting %en$ion$ an& allo#ance$ an& making %ayment$ to#ar&$
in$uranceI $u.$cri.ing to or guaranteeing money$ 'or c"arita.le or .ene-olent
o.Pect$ or 'or any e8"i.ition or 'or any %u.lic+ general or u$e'ul o.PectI
0k2 t"e ac/ui$ition+ con$truction+ maintenance an& alteration o' any .uil&ing
#ork$ nece$$ary or con-enient 'or t"e %ur%o$e$ o' t"e com%anyI
0l2 $elling+ im%ro-ing+ managing+ &e-elo%ing+ e8c"anging+ lea$ing+ mortgaging+
&i$%o$ing o' or turning into account or ot"er#i$e &ealing #it" all or any %art o'
t"e %ro%erty an& rig"t$ o' t"e com%anyI
0m2 ac/uiring an& un&ertaking t"e #"ole or any %art o' t"e .u$ine$$ o' any
%er$on or com%any+ #"en $uc" .u$ine$$ i$ o' nature enumerate& or &e$cri.e& in
t"i$ $u.?$ectionI
0n2 &oing all $uc" ot"er t"ing$ a$ are inci&ental or con&uci-e to t"e %romotion or
a&-ancement o' t"e .u$ine$$ o' t"e com%anyI
0o2 any ot"er 'orm$ o' .u$ine$$ #"ic" t"e !entral Go-ernment may .y
noti9cation in t"e Lcial GaMette+ $%eci'y a$ a 'orm o' .u$ine$$ in #"ic" it i$
la#'ul 'or a .anking com%any to engage,
052 No .anking com%any $"all engage in any 'orm o' .u$ine$$ ot"er t"an t"o$e
re'erre& to in $u.?$ection 012,
!))ENTS
Sco%e o' t"e $ection,? Section * o' t"e Act %ro-i&e$ ela.orately 'or a #i&e -ariety
o' .u$ine$$ #"ic" a .anking com%any may engage it$el' in, A 'air con$i&eration
o' t"i$ $ection a$ #ell a$ t"e &e9nition o' N.ankingO in t"e Banking Regulation
Act+ 1949+ #oul& "a-e no &ou.t in any oneU$ min& t"at c"it 'un& tran$action
in&ulge& in .y a .anking com%any at any rate %artake$ t"e c"aracter o' a
.anking acti-ity,5E
Grant o' o-er&ra't 'acilitie$,? Section * o' t"e Banking Regulation Act+ 1949
&e$cri.e$ t"e 'orm$ o' .u$ine$$ #"ic" can .e con&ucte& .y a .anking com%any
in a&&ition to t"e .u$ine$$ o' .anking, H"en t"e .ank i$ engage& in &i(erent
ty%e$ o' .u$ine$$ a$ mentione& in t"i$ $ection+ it $ a%%arent t"at #"en t"e .ank
i$ granting t"e o-er&ra't 'acilitie$ to it$ client #"ic" i$ a cu$tomer+ it i$ %ro-i&ing
$er-ice to "im,=E
)oratorium on t"e .ank in 'orce Q H"et"er t"e .ank can tran$act .u$ine$$ a$ an
aut"ori$e& &ealer in 'oreign e8c"ange un&re Aoreign E8c"ange Regulation Act,?
Un&er Sec,* o' t"e Act a .anking com%any may engage in any ot"er .u$ine$$+
$%eci9e& t"erein in a&&ition to t"e .u$ine$$ o' .anking, T"u$ t"e Bank can .uy
an& $ell 'oreign e8c"ange inclu&ing 'oreign .ank note$+ collect an& &eal in .ill$ o'
e8c"ange+ recei-e -alua.le on &e%o$it or 'or $a'e cu$to&y an& tran$act $e-eral
'orm$ o' .u$ine$$, T"e moratorium contem%late& un&er Sec,41 012 o' t"e Act i$
Nin re$%ect o' a .anking com%anyO an& not con9ne& to .anking .u$ine$$ only,
)oratorium+ a$ t"e #or& $igni9e$ i$ a $u$%en$ion o' acti-ity+ a tem%orary .an on
t"e %er'ormance o' a legal o.ligation, Section 41 0=2 o' t"e Banking Regulation
Act t"ere'ore enPoin$ t"at t"e Banking !om%any $"all not &uring t"e %erio& o'
moratorium make any %ayment to any &e%o$itor or &i$c"arge any lia.ilitie$ or
o.ligation$ to any cre&itor+ e8ce%t a$ ot"er#i$e &irecte& .y t"e !entral
Go-ernment, T"e acti-ity o' t"e .anking com%any i$ t"u$ $u$%en&e& an& t"e
Bank cannot tran$act any .anking .u$ine$$ or e8c"ange in ot"er 'orm$ o'
.u$ine$$, T"e 'act t"at 'or certain ty%e$ o' .u$ine$$+ a 'urt"er aut"ori$ation or
%ermi$$ion i$ in$i$te& un&er t"e 'oreign 0$ic2 &oe$ not a(ect t"e content o' t"e
%o#er o' moratorium $anctione& un&er Sec,41 o' t"e Banking Regulation Act an&
&oe$ not aut"oriMe any .u$ine$$+ .anking or ot"er#i$e+ &uring t"e o%eration o'
t"e moratorium, T"e Bank i$ in $tatu$ /uo &uring t"i$ %erio&, T"u$+ #"en t"e
moratorium on t"e Bank i$ in 'orce+ t"e Bank cannot tran$act .u$ine$$ a$ an
aut"ori$e& &ealer in 'oreign e8c"ange un&er t"e Aoreign E8c"ange Regulation Act
al$o4E
rgani$ation o' Loan )ela,? Cel& t"e $c"eme neit"er -iolate$ t"e gui&eline$ o'
t"e Re$er-e Bank o' In&ia nor t"e commercial Banking La#$,1E
InPunction re$training %ayment in term$ o' t"e letter o' cre&it ? Grant o',? It i$ #ell
$ettle& t"at letter$ o' cre&it coul& .e .ot" re-oca.le an& irre-oca.le, H"ile t"e
irre-oca.le an& con9rme& letter$ o' cre&it $tan& on a &i(erent 'ooting irre-oca.le
letter$ o' cre&it #it"in t"e time can .e re-oke& .e'ore negotiation$, It i$ $tate&
t"at t"e contract .et#een t"e i$$uing .ank an& t"e interme&iary &e%en&e& u%on
t"e term$ in #"ic" t"e 'ormerU$ %romi$e to %ay #a$ couc"e&, It #oul& .ecome
.in&ing in t"e ca$e o' a con9rme& cre&it+ t"at i$ an irre-oca.le cre&it #"ic" "a$
.een con9rme& .y t"e interme&iary or %aying .anker a$ $oon a$ it i$ in&icate& to
t"e .ene9ciary, I' t"e cre&it #a$ re-oca.le+ t"ere #a$ no %oint in "a-ing it
con9rme&+ $uc" a cre&it #a$ &eeme& to .e re-oca.le at any time #it"out notice
t"oug" it #a$ t"oug"t t"at a .anker %aying un&er a re-oca.le cre&it coul&
&eman& to .e reim.ur$e& in re$%ect o' any %ayment "e "a& ma&e u%to t"e time
o' re-ocation, But in or&er to en'orce %ayment t"e &ocument$ ten&ere& mu$t
con'orm to t"e e8act term$ an& con&ition$ $ti%ulate& in t"e letter o' cre&it, It
#oul& not &o to .e more or le$$ $imilar, T"e !ourt$ u$ually re'rain 'rom granting
inPunction to re$train t"e %er'ormance o' t"e contractual o.ligation$ ari$ing out o'
t"e letter o' cre&it or a .ank guarantee .et#een one .anker an& ot"er, I' $uc"
tem%orary inPunction$ #ere to .e grante& in tran$action .et#een a .anker an& a
.anker re$training a .ank 'rom recalling t"e amount &ue #"en %ayment #a$
ma&e un&er re$er-e to anot"er .ank or in term$ o' t"e letter o' guarantee or
cre&it+ e8ecute& .y it+ t"e #"ole .anking $y$tem in t"e country #oul& 'ail, It i$
only in e8ce%tional ca$e$ t"at t"e !ourt$ #oul& inter'ere #it" t"e mac"inery o'
irre-oca.le o.ligation$ a$$ume& .y .anker$, nce a letter o' cre&it i$ e$ta.li$"e&
t"ere i$ a contract .et#een t"e i$$uing .ank an& t"e $eller, T"e .uyer "a$ no
rig"t to inter-ene, I' t"e .ank %ay$ in -iolation o' t"e letter o' cre&it t"en t"e
.uyer can al#ay$ $ue t"e .ank 'or any &amage$ or .reac" o' "i$ contract, I'+ on
t"e ot"er "an&+ t"ere are certain ot"er claim$ o' t"e .uyer again$t t"e $eller t"en
t"e .uyer can 9le a $uit 'or reco-ery o' $uc" &amage$ an& money 'rom t"e $eller,
In -ie# o' #ell?$ettle& %rinci%le o' .alance o' con-enience in $uc" a ca$e in t"e
a.$ence o' clear ca$e o' 'rau& to t"e kno#le&ge o' t"e .ank t"e !ourt $"oul& not
grant inPunction re$training %ayment in term$ o' t"e letter o' cre&it a$ t"oug" in
t"i$ ca$e t"e letter o' cre&it #a$ irre-oca.le one+ it "a$ not yet .een re-oke&,
T"u$ t"e or&er o' inPunction #a$ -acate&,*E
Re$traint again$t enca$"ment o' .ank guarantee,? H"ere t"e amount #a$ in 'act
&ue #"ic" im%elle& t"e %etitioner to in-oke t"e .ank guarantee+ t"e re$traint
or&er %a$$e& .y t"e !ourt again$t enca$"ment o' .ank guarantee #a$ not
Pu$ti9e& .eing .a$e& on no e-i&ence,6E
!on$titutional -ali&ity o' Art, 5* 0&2,? T"e !oun$el rai$e$ an ingeniou$ argument
t"at t"e la# re'erre& to in Art, 5*0&2 can .e c"allenge& only on t"e groun& t"at it
o(en&$ %u.lic or&er+ morality an& "ealt", T"e !oun$el &eri-e$ in$%iration 'rom
t"i$ $u.mi$$ion 'rom t"e o%ening #or&$ o' t"e article, T"e !on$titution+ in Art,
5*+ guarantee$ to e-ery religiou$ &enomination or any $ection t"ereo' certain
rig"t$ relating to matter$ o' religion an& t"o$e a(ecting %ro%ertie$ an& t"eir
a&mini$tration, T"e$e rig"t$ are+ "o#e-er+ $u.Pect to %u.lic or&er+ morality an&
"ealt", T"e$e rig"t$ cannot t"ere'ore .e a$$erte& or recogni$e& #"en t"ey are
%lainly o%%o$e& to %u.lic or&er+ morality an& "ealt", It i$ t"i$ re$tricte& rig"t t"at
i$ guarantee&, Article 5*0&2 regulate$ t"at rig"t in accor&ance #it" la#, T"e la#
naturally may co-er #i&er 9el&$ an& cannot .e limite& to t"e t"ree $%eci9e&
$u.Pect$+ %u.lic or&er+ morality an& "ealt", Similarly+ #"ile t"i$ la# may .e
c"allenge& a$ .eyon& t"e legi$lati-e com%etence o' t"e State or a$ o(en&ing
Art$, 14 an& 19 o' t"e !on$titution+ i' cannot .e conten&e& t"at t"e c"allenge
$"oul& al$o .e re$tricte& to t"e$e groun&$ .a$e& on %u.lic or&er+ morality an&
"ealt", A legi$lation .eyon& t"e legi$lati-e com%etence cannot &eri-e $u%%ort
un&er t"i$ Article on t"e groun& t"at it i$ a legi$lation relating to %u.lic or&er+
morality an& "ealt" an& a(ecting t"e rig"t to a&mini$ter %ro%ertie$ o' a religiou$
in$titution, T"i$ %oint i$ a.$olutely .a$ele$$ an& "a$ to .e rePecte&,7E
3e'ault in re%ayment o' .ank &ue$ Q Bank not Pu$ti9e& in &enying it$ $er-ice$ to
t"e &e.tor,? Lea-ing all t"e contention$ o' t"e %artie$ o%en+ t"e re$%on&ent Bank
may not &eny .anking 'acilitie$ to t"e a%%ellant$ 'or o%eration o' a current
account to ena.le t"em to kee% t"eir .u$ine$$ going, It #oul& .e to no.o&yU$
.ene9t t"at a$ a re$ult o' a total &enial o' .anking 'acilitie$ V $er-ice$+ t"e
.u$ine$$ o' a%%ellant$ $"oul& come to a grin&ing "alt, Su%reme !ourt+ t"ere'ore+
&irecte& t"at #it"out %rePu&ice to t"e re$%ecti-e contention$ o' t"e %artie$+ t"e
re$%on&ent $"all allo# t"e o%eration o' one current account+ #"ic" #ill .e 'ree
'rom t"e inci&ent$ o' t"e .ankerU$ lien claime& .y t"e re$%on&ent $o a$ to ena.le
t"e a%%ellant to carry on it$ normal &ay?to?&ay .u$ine$$ tran$action$+ to o.tain
letter$ o' cre&it a 'ull margin an& to ena.le %ayment o' $tatutory outgoing$+
ta8e$+ #age$+ $alarie$+ ra#?material$+ etc, #"ic" are t"e u$ual .u$ine$$
re/uirement$ o' a manu'acturing unit, T"ere $"all .e not o.ligation on t"e %art o'
t"e Bank to %ro-i&e any cre&it 'acility in t"i$ account, Co#e-er in%ut$ o' money
into t"i$ account $"all not .e $u.Pecte& to or a%%ro%riate& un&er t"e lien claime&
.y t"e Bank,9E
Bank &ue$ Q Banking 'acilitie$ cannot .e $to%%e&,? It a%%ear$ t"at lea-ing all t"e
contention$ o' t"e %artie$ o%en+ t"e re$%on&ent?.ank may not &eny .anking
'acilitie$ to t"e a%%ellant$ 'or o%eration o' a current account to ena.le t"em to
kee% t"eir .u$ine$$ going, It #oul& .e to no.o&yU$ .ene9t t"at a$ a re$ult o' a
total &enial o' a .anking 'acilitie$V$er-ice$+ t"e .u$ine$$ o' a%%ellant $"oul& come
to a grin&ing "alt,1:E
In'erence o' 'rau&,? In'erence o' 'rau& i$ to .e &ra#n not 'rom in&i-i&ual e-ent$,
Eac" e-ent .y it$el' may not .e $uLcient 'or &ra#ing in'erence o' 'rau&, Totality
o' t"e e-ent$ cumulati-ely "a-e t"e e(ect o' 'rau&, In t"i$ ca$e+ i' t"e 'act$ an&
corre$%on&ence$ 'rom t"e $tage o' glo.al ten&er till t"e $uit i$ 9le& are
con$i&ere& toget"er+ a clear im%re$$ion o' 'rau& in t"e tran$action o' ca%ti-e
%o#er %lant .y &e'en&ant No$,1 to = i$ create& an& &e'en&ant No,4 cannot .e
'ully &i$$ociate& 'rom it,11E
In t"e in$tant ca$e it i$ an a&mitte& 'act t"at in t"e %laint it$el'+ t"ere #a$ no
allegation o' 'rau&, It #a$ initially only in t"e 9r$t a%%lication 'or t"e grant o'
inPunction t"at in a %aragra%" it "a$ .een mentione& t"at t"e a%%ellant "a&
in-oke& t"e .ank guarantee ar.itrarily, T"i$ a%%lication contain$ no 'act or
%articular$ in $u%%ort o' t"e allegation o' 'rau&, A $imilar .al& a-erment alleging
'rau& i$ al$o containe& in t"e $econ& a%%lication 'or inPunction relating to .ank
guarantee No, 4:V46, T"i$ i$ not a ca$e #"ere &e'en&ant No,1 "a& at any time
allege& 'rau& %rior to t"e 9ling o' inPunction a%%lication, T"e main contract+
%ur$uant to #"ic" t"e .ank guarantee #ere i$$ue& #a$ not $oug"t to .e a-oi&e&
.y alleging 'rau&+ nor #a$ it at any %oint o' time allege& t"at t"e .ank guarantee
#a$ i$$ue& .ecau$e any 'rau& "a& .een %laye& .y t"e a%%ellant, T"ere i$ no
&ou.t t"at t"e .al& a$$ertion o' 'rau& "a& .een ma&e $olely #it" a -ie# to o.tain
an or&er o' inPunction, In t"e a.$ence o' e$ta.li$"e& 'rau& an& not a mere
allegation o' 'rau& an& t"at al$o "a-ing .een ma&e only in t"e inPunction
a%%lication+ t"e !ourt coul& not+ in t"e %re$ent ca$e+ "a-e grante& an inPunction
relating to t"e enactment o' t"e .ank guarantee$,15E
1=E F6, U$e o' #or&$ N.ankO+ N.ankerO+ N.ankingO+ or N.anking com%anyO,? 012 No
com%any ot"er t"an a .anking com%any $"all u$e a$ %art o' it$ name 14E For in
connection #it" it$ .u$ine$$G any o' t"e #or&$ N.ankO+ N.ankerO or N.ankingO an&
no com%any $"all carry on t"e .u$ine$$ o' .anking in In&ia unle$$ it u$e$ a$ %art
o' it$ name at lea$t one o' $uc" #or&$,
052 No 9rm+ in&i-i&ual or grou% o' in&i-i&ual$ $"all+ 'or t"e %ur%o$e o' carrying on
any .u$ine$$ u$e a$ %art o' it$ or "i$ name any o' t"e #or&$ N.ankO+ N.ankingO+
or N.anking com%anyO,
0=2 Not"ing in t"i$ $ection $"all a%%ly to Q
0a2 $u.$i&iary to a .anking com%any 'orme& 'or one or more o' t"e %ur%o$e$
mentione& in $u.?$ection 012 o' Sec,19+ #"o$e name in&icate$ t"at it i$ $u.$i&iary
o' t"at .anking com%anyI
0.2 any a$$ociation o' .ank$ 'orme& 'or %rotection o' !om%anie$ Act+ 191* 01 o'
191*2,
!))ENTS
Sa'eguar&$ 'or genuine an& "one$t .ank cu$tomer$,? In or&er to en$ure t"at
genuine an& "one$ .ank cu$tomer$ are not "ara$$e& or %ut to incon-enience
$uLcient $a'eguar&$ "a-e al$o .een %ro-i&e& in !"a%ter IR+ Negotia.le
In$trument$ Act, Suc" $a'eguar&$ are J
0a2 t"at no !ourt $"all take cogniMance o' $uc" o(ence e8ce%t on a com%laint+ in
#riting+ ma&e .y t"e %ayee or "ol&er in &ue cour$e o' t"e c"e/ueI
0.2 t"at $uc" com%laint i$ ma&e #it"in one mont" o' t"e &ate on #"ic" t"e cau$e
o' action ari$e$I an&
0c2 t"at no !ourt in'erior to t"at o' a )etro%olitan )agi$trate or a Su&icial
)agi$trate o' t"e 9r$t cla$$ $"all try any $uc" o(ence,11E
Banker? )eaning o',? T"ere can .e no &ou.t t"at or&inarily t"e %o$ition o' t"e
.ank -i$?a?-i$ a %er$on &ealing #it" t"e .ank i$ t"at o' &e.tor an& cre&itor, It i$+
o' cour$e+ %er'ectly o%en to $uc" %er$on to $"o# t"at in a %articular tran$action
t"e .ank "a$ recei-e& money in tru$t, A common in$tance i$ #"ere a .ank i$ %ai&
money 'or t"e e8%re$$ %ur%o$e o' it .eing remitte& to a %er$on at $ome ot"er
%lace, In any %articular ca$e it i$ 'or t"e %er$on alleging tru$t to e$ta.li$" it, In
t"e %re$ent ca$e t"ere i$ no e-i&ence #"ate-er to $"o# t"at t"e tran$action #a$
anyt"ing more t"an t"e or&inary %urc"a$e &eman& &ra't on anot"er .ranc" o'
t"e .ank, T"e %lainti( "a$ a&mitte& in "i$ e-i&ence t"at "e "a$ %re-iou$ly
%urc"a$e& &ra't 'rom t"e &e'en&ant .ank on $e-eral occa$ion in connection #it"
"i$ .u$ine$$, Ce $tate& t"at "e 9lle& in a 'orm .e'ore %urc"a$e o' t"e &ra't .ut
t"i$ 'orm containe& no mention o' t"e %ur%o$e 'or #"ic" t"e &ra't #a$ .eing
%urc"a$e& on t"e 'act$+ t"ere'ore+ t"ere i$ not ca$e t"at t"e relation$"i% .et#een
t"e %lainti( an& t"e &e'en&ant .ank #a$ anyt"ing ot"er t"an o' cre&itor an&
&e.tor,1*E
T"e relation$"i% .et#een a &e%o$itor an& a .ank i$ t"e $im%le relation$"i% o' a
cre&itor an& a &e.tor, A &e%o$itor #"o &e%o$it$ money in .ank in "i$ current
account i$ not"ing more t"an a cre&itor an& it cannot .e $ai& t"at t"ere "a$ .een
any entru$tment to t"e .ank 'or any %articular %ur%o$e, T"e .ank i$+ o' cour$e+
lia.le to re'un& t"e money to t"e &e%o$itor #"en t"e &e%o$itor call$ 'or it+ .ut t"e
money &e%o$ite& .elong$ to t"e .ank an& t"e .ank i$ entitle& to &eal #it" it a$ it
like$,16E
7, 4ro"i.ition o' tra&ing,? Not#it"$tan&ing anyt"ing containe& in Sec,* or in any
contract+ no .anking com%any $"all &irectly or in&irectly &eal in t"e .uying or
$elling or .artering o' goo&$+ e8ce%t in conne8ion #it" t"e realiMation o' $ecurity
gi-en to or "el& .y it+ or engage in any tra&e+ or .uy+ $ell o' .arter goo&$ 'or
ot"er$ ot"er#i$e t"an in conne8ion #it" .ill$ o' e8c"ange recei-e& 'or collection
or negotiation or #it" $uc" o' it$ .u$ine$$ a$ i$ re'erre& to in !l,0i2 o' $u.?$ection
012 o' Sec,*J
17E F4ro-i&e& t"at t"i$ $ection $"all not a%%ly to any $uc" .u$ine$$ a$ i$ $%eci9e&
in %ur$uance o' !l, 02 o' $u.?$ection 012 o' Sec,*,G
E8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $ection+ Ngoo&$O mean$ e-ery kin& o'
mo-a.le %ro%erty+ ot"er t"at actiona.le claim$+ $tock$+ $"are$+ money+ .ullion
an& $%ecie+ an& all in$trument$ re'erre& to in !l,0a2 o' $u.?$ection 012 o' Sec,*,
!))ENT
Section 7 o' t"e Act i$ a %ointer to t"e re$triction im%o$e& .y Sec,15 o' t"e !"it
Aun& Act 04: o' 19752, 19E
9, 3i$%o$al o' non?.anking a$$et$,? Not#it"$tan&ing anyt"ing containe& in Sec,*+
no .anking com%any $"all "ol& any immo-a.le %ro%erty+ "o#$oe-er ac/uire&+
e8ce%t $uc" a$ i$ re/uire& 'or it$ o#n u$e+ 'or any %erio& e8cee&ing $e-en year$
'rom t"e ac/ui$ition t"ereo' or 'rom t"e commencement o' t"i$ Act+ #"ic"e-er i$
later or any e8ten$ion o' $uc" %erio& a$ in t"i$ $ection %ro-i&e&+ an& $uc"
%ro%erty $"all .e &i$%o$e& o' #it"in $uc" %erio& or e8ten&e& %erio&+ a$ t"e ca$e
may .eJ
4ro-i&e& t"at t"e .anking com%any may+ #it"in t"e %erio& o' $e-en year$ a$
a'ore$ai&+ &eal or tra&e in any $uc" %ro%erty 'rom t"e %ur%o$e o' 'acilitating t"e
&i$%o$al t"ereo'J
4ro-i&e& 'urt"er t"at t"e Re$er-e Bank may in any %articular ca$e e8ten& t"e
a'ore$ai& %erio& o' $e-en year$ .y $uc" %erio& not e8cee&ing 9-e year$ #"ere it
i$ $ati$9e& t"at $uc" e8ten$ion #oul& .e in t"e intere$t$ o' t"e &e%o$itor$ o' t"e
.anking com%anyJ
!))ENT
T"e #or& N$"allO ? )eaning o',? It "a$ .een lai& &o#n con$i$tently .y t"e
Su%reme !ourt t"at t"e mere u$e o' t"e #or& N$"allO .y it$el' in t"e $tatute &oe$
not make t"e %ro-i$ion man&atory+ .ut it i$ t"e &uty o' t"e !ourt$ o' Pu$tice to try
to get at t"e real intention o' t"e Legi$lature .y care'ully atten&ing to t"e #"ole
$co%e o' t"e $tatute to .e con$true&, In eac" ca$e+ one "a$ to look to t"e $u.Pect?
matter+ con$i&er t"e im%ortance o' t"e %ro-i$ion$ an& t"e relation o' t"at
%ro-i$ion #it" t"e general o.Pect inten&e& to .e $ecure& .y t"e Act an& u%on t"e
re-ie# o' t"e ca$e in t"at a$%ect &eci&e #"et"er t"e enactment i$ man&atory or
only &irectory,5:E
51E F1:, 4ro"i.ition o' em%loyment o' managing agent$ an& re$triction$ on
certain 'orm$ o' em%loyment,? 012 No .anking com%any Q
0a2 $"all em%loy or .e manage& .y a managing agentI or
0.2 $"all em%loy or continue t"e em%loyment o' any %er$on?
0i2 #"o i$+ or at any time "a$ .een+ a&Pu&icate& in$ol-ent+ or "a$ $u$%en&e&
%ayment or "a$ com%oun&e& #it" "i$ cre&itor$+ or #"o i$+ or "a$ .een+ con-icte&
.y !riminal !ourt o' an o(ence in-ol-ing moral tur%itu&eI or
0ii2 #"o$e remuneration or %art o' #"o$e remuneration take$ t"e 'orm o'
commi$$ion or o' a $"are in t"e %ro9t$ o' t"e com%anyJ
55E F4ro-i&e& t"at not"ing containe& in t"i$ $u.?clau$e $"all a%%ly to t"e
%ayment .y .anking com%any o' Q
0a2 any .onu$ in %ur$uance o' a $ettlement or a#ar& arri-e& at or ma&e un&er
any la# relating to in&u$trial &i$%ute$ or in accor&ance #it" any $c"eme 'rame&
.y $uc" .anking com%any or in accor&ance #it" t"e u$ual %ractice %re-ailing in
.anking .u$ine$$ I
0.2 any commi$$ion to any .roker 0inclu&ing guarantee .roker2+ ca$"ier?
contractor+ clearing an& 'or#ar&ing agent+ auctioneer or any ot"er %er$on+
em%loye& .y t"e .anking com%any un&er a contract ot"er#i$e t"an a$ regular
mem.er o' t"e $ta( o' t"e com%any I orG
0iii2 #"o$e remuneration i$+ in t"e o%inion o' t"e Re$er-e Bank+ e8ce$$i-eI or
0c2 $"all .e manage& .y any %er$on ?
5=E F0i2 #"o i$ a &irector o' any ot"er com%any not .eing Q
0a2 a $u.$i&iary o' t"e .anking com%any+ or
0.2 a com%any regi$tere& un&er Sec,51 o' t"e !om%anie$ Act+ 191* 01 o' 191*2J
4ro-i&e& t"at t"e %ro"i.ition in t"i$ $u.?clau$e $"all not a%%ly in re$%ect o' any
$uc" &irector 'or a tem%orary %erio& not e8cee&ing t"ree mont"$ or $uc" 'urt"er
%erio& not e8cee&ing nine mont"$ a$ t"e Re$er-e Bank may allo#I orG
0ii2 #"o i$ engage& in any ot"er .u$ine$$ or -acation or
0iii2 54EF#"o$e term$ o' oLce a$ a %er$on managing t"e com%any i$G 'or a %erio&
e8cee&ing 9-e year$ at any one timeJ
51E F4ro-i&e& t"at t"e term o' oLce o' any $uc" %er$on may .e rene#e& or
e8ten&e& .y 'urt"er %erio&$ not e8cee&ing 9-e year$ on eac" occa$ion $u.Pect to
t"e con&ition t"at $uc" rene#al or e8ten$ion $"all not .e $anctione& earlier t"an
t#o year$ 'rom t"e &ate on #"ic" it i$ to come into 'orce J
4ro-i&e& al$o t"at #"ere t"e term o' oLce o' $uc" %er$on i$ 'or an in&e9nite
%erio&+ $uc" term+ unle$$ it ot"er#i$e come$ to an en& earlier+ $"all come to an
en& imme&iately on t"e e8%iry o' 9-e year$ 'rom t"e &ate o' "i$ a%%ointment or
on t"e e8%iry o' t"ree mont"$ 'rom t"e &ate o' commencement o' Sec, 7 o' t"e
Banking La#$ 0)i$cellaneou$ 4ro-i$ion$2 Act+ 19*= 011 o' 19*=2+ #"ic"e-er i$
laterGJ
4ro-i&e& 'urt"er t"at not"ing in t"i$ clau$e $"all a%%ly to a &irector+ ot"er t"an
t"e managing &irector+ o' a .anking com%any .y rea$on only o' "i$ .eing $uc"
&irector,
E8%lanation,? Aor t"e %ur%o$e o' $u.?clau$e 0iii2 o' !l,0.2+ t"e e8%re$$ion
NremunerationO+ in relation to a %er$on em%loye& or continue& in em%loyment+
$"all inclu&e $alary+ 'ee$ an& %re/ui$ite$ .ut $"all not inclu&e any allo#ance$ or
ot"er amount$ %ai& to "im 'or t"e %ur%o$e o' reim.ur$ing "im in re$%ect o' t"e
e8%en$e$ actually incurre& .y "im in t"e %er'ormance$ o' "i$ &utie$,
052 In 'orming it$ o%ining un&er $u.?clau$e 0iii2 o' !l,0.2 o' $u.?$ection 012+ t"e
Re$er-e Bank may "a-e regar& among ot"er matter$ to t"e 'ollo#ingJ
0i2 t"e 9nancial con&ition an& "i$tory o' t"e .anking com%any+ it$ $iMe an& area o'
o%eration+ it$ re$ource$+ t"e -olume o' it$ .u$ine$$+ an& t"e tren& o' it$ earning
ca%acityI
0ii2 t"e num.er o' it$ .ranc"e$ or oLce$ I
0iii2 t"e /uali9cation$+ age an& e8%erience o' t"e %er$on concerne&I
0i-2 t"e remuneration %ai& to ot"er %er$on$ em%loye& .y t"e .anking com%any or
to any %er$on occu%ying a $imilar %o$ition in any ot"er .anking com%any
$imilarly $ituate&I an&
0-2 t"e intere$t$ o' it$ &e%o$itor$,
5*E F56 E E E E G
0*2 Any &eci$ion or or&er o' t"e Re$er-e Bank ma&e un&er t"i$ $ection $"all .e
9nal 'or all %ur%o$e$,G
!))ENTS
Suri$&iction o' !i-il !ourt$, Q !i-il $uit c"allenging &i$mi$$al o' an em%loyee o'
State Bank Q Not $eeking relie' un&er t"e In&u$trial 3i$%ute$ Act Q Suri$&iction o'
!i-il !ourt not .arre&,57E
BankU$ circular No, 4, A1V77V*)V151V77+ &ate& 51$t No-em.er+ 1977 Q
A%%lica.ility an& $co%e o', Q nly %aragra%" 1 o' t"e circular i$ material, T"e $ai&
%aragra%"+ inter alia+ %ro-i&e$ t"at 'or 9lling u% t"e -acancy o' %art timeV'ull time
$#ee%er 'or t"e ne#ly o%ene& .ranc"e$VoLce$+ re/ui$ition i$ to .e $ent to t"e
local em%loyment e8c"ange &etailing t"erein t"e nature o' -acancy+
remuneration to .e %ai& to t"e $electe& can&i&ate$ a$ #ell a$ t"e eligi.ility
criteria o' t"e can&i&ate$ 'or t"e $ai& %o$t, T"e $ai& %olicy 'urt"er %ro-i&e$ t"at
ot"er $ource$ may .e ta%%e& #"en em%loyment e8c"ange 'aile& to $u%%ly
$uita.le can&i&ate$ 'or recruitment in t"e %o$t o' $#ee%er, It may .e mentione&
t"at t"i$ circular i$ a%%lica.le in t"e ca$e$ o' 9lling u% t"e %o$t o' $uc" $#ee%er$
'or t"e ne#ly o%ene& .ranc"e$ an& oLce$ o' t"e .ank, In t"e gi-en ca$e it #a$
o%en to t"e .ank aut"oritie$ to "a-e 'ollo#e& t"e %ro-i$ion$ o' t"e circular .e'ore
gi-ing t"e a%%ointment on a tem%orary .a$i$ to t"e %etitioner .ut #"en once t"e
re$%on&ent .ank "a$ alrea&y a%%ointe& a %er$on "ol&ing out 'uture "o%e$ an&
&ream$ #"et"er t"e .ank $"oul& .e or&ere& to $"atter $uc" &ream$ taking
$"elter un&er $uc" recruitment %olicy,59E
(ence in-ol-ing moral tur%itu&e, ? (ence in-ol-ing moral tur%itu&e i$ one
#"ic" in-ite$ $"ame on t"e %er$on #"o .ecame guilty t"ereo', In 'act+ in t"e
mo&ern #orl&+ t"ere are $o many o(ence$ 'or in$tance+ o(ence$ relating to traLc
rule$+ #it" #"ic" any %er$on em%loye& may .ecome guilty o' at any time,
T"ere'ore+ a $im%le con-iction .y a !riminal !ourt #oul& not nece$$arily entail
&i$/uali9cation to em%loyment in %u.lic $er-ice or in a .ank, T"at i$ #"y+ t"e la#
maker "a$ care'ully circum$cri.e& t"e nature o' t"e o(ence+ t"e con-iction+
t"ere'ore+ #oul& "a-e im%lication in t"e matter o' em%loyment an& t"e only
category o' o(ence$ are t"o$e #"ic" in-ite $"ame on t"e %er$on #"o .ecame
guilty+ #"ic" $"ame #ill irra&iate on t"e in$titution #"ic" em%loy$, In t"i$ ca$e+
t"e %etitioner #a$ not in a %o$ition to $"o# t"e !u$tom$ !learance !erti9cate in
re$%ect o' t#o item$ o' article$, T"e 'act o' %o$$e$$ing R!R an& -i&eo camera
#it"out t"e corre$%on&ing cu$tom$ &ocument$ i$ .y no $tretc" o' imagination an
o(ence in-ol-ing moral tur%itu&e an&+ t"ere'ore+ no automatic termination o'
$er-ice can take %lace on t"e .a$i$ o' t"e con-iction recor&e& again$t t"e
accu$e&=:E
)oral tur%itu&e Q Te$t,? T"e te$t #"ic" can .e a%%lie& 'or Pu&ging #"et"er an
o(ence &oe$ or &oe$ not in-ol-e Tmoral tur%itu&eU can .e $ummari$e& a$ 'ollo#$J
012 #"et"er t"e act lea&ing to a con-iction #a$ $uc" a$ coul& $"ock t"e moral
con$cience o' $ociety in generalI
052 #"et"er t"e moti-e #"ic" le& to t"e act #a$ a .a$e one+ an&
0=2 #"et"er on account o' t"e act "a-ing .een committe& t"e %er%etrator coul&
.e con$i&ere& to .e o' a &e%ra-e& c"aracter or a %er$on #"o #a$ to .e looke&
&o#n u%on .y t"e $ociety,
It i$ not %o$$i.le to lay &o#n any a.$tract $tan&ar& #"ic" con$titute$ moral
tur%itu&e, T"ere are certain criminal o(ence$ like t"e't+ ro..ery+ criminal .reac"
o' tru$t+ mi$a%%ro%riation o' %ro%erty+ #"ic" &irectly in-ol-e moral tur%itu&e, In
$uc" ca$e$ no ela.orate in-e$tigation i$ re/uire& to 9n& out t"e &e%ra-e&
con&uct o' t"e &elin/uent em%loyee, I' t"e o(ence &oe$ not $"o# any element o'
-ilene$$+ &e%ra-ity an& #eakne$$ o' c"aracter o' t"e o(en&er t"e &i$ci%linary
aut"ority i$ re/uire& to con$i&er t"e 'act an& circum$tance$ o' t"e ca$e to 9n&
out #"et"er t"e moti-e #"ic" le& to t"e con-iction #a$ &e%ra-e, It i$ a $ettle&
la# t"at Tmoral tur%itu&eU cannot .e a%%lie& in it$ #i&e$t term, Co#e-er+ t"e ratio
&eci&en&i o' t"e -ariou$ ca$e$ in&icate t"at t"e /ue$tion #"et"er a certain
o(ence in-ol-e$ Nmoral tur%itu&eO or not #ill nece$$arily &e%en& on t"e
circum$tance$ in #"ic" t"e o(ence i$ committe&, It i$ not e-ery %uni$"a.le act
t"at can .e con$i&ere& to .e an o(ence in-ol-ing moral tur%itu&e, Any criminal
con-iction %er $e &oe$ not amount to Tmoral tur%itu&eU, So it 'ollo#$ t"at #"en
t"e em%loyee i$ con-icte& on criminal c"arge "i$ &i$mi$$al cannot .e automatic
unle$$+ t"ere i$ a $%eci9c rule in t"at regar&,=1E
r&er o' &i$mi$$al,? r&er o' &i$mi$$al cannot .e c"allenge& on groun& t"at i$
#a$ .a$e& on mere con-iction an& not on con&uct #"ic" le& to con-iction or t"at
it #a$ not a $%eaking or&er or t"at t"e em%loyee #a$ $u.$e/uently relea$e& on
%ro.ation,=5E
Bi%artite agreement,?In t"e in$tant ca$e in &e%artmental en/uiry an em%loyee
#a$ %uni$"e& to increment $to%%age an& later on con-icte& o' criminal c"arge$
on c"arge?$"eet $u.mitte& .y !,B,I, It #a$ "el& t"at t"e con-iction #a$ not
-iolati-e o' Art, 5:052 o' t"e !on$titution,==E
Em%loyment o' %er$on$ on commi$$ion .a$i$,? Section 1: o' t"e Banking
Regulation Act &oe$ not %re-ent em%loyment o' %er$on$ on commi$$ion .a$i$,
T"e %ro-i$o to Sec,1: make$ it clear t"at commi$$ion can .e %ai& to %er$on$ #"o
are not in regular em%loyment, Un&ou.te&ly t"e 3e%o$it !ollector$ are not
regular em%loyee$ o' t"e Bank, But t"ey ne-ert"ele$$ are #orker$ #it"in t"e
meaning o' t"e term$ a$ &e9ne& in t"e In&u$trial 3i$%ute$ Act, T"ere i$ clearly
relation$"i% o' ma$ter an& $er-ant .et#een t"e 3e%o$it !ollector$ an& t"e
concerne& Bank,=4E
Sta( #orking on commi$$ion cannot .e &eeme& a$ regular em%loyee,? A rea&ing
o' t"e $u.$tanti-e %ro-i$ion$ a$ #ell a$ t"e e8ce%tion unmi$taka.ly $"o#$ t"e
intention o' t"e 4arliament t"at t"e %er$on to #"om a commi$$ion i$ %aya.le a$
remuneration cannot .e a regular $ta( o' t"e .ank .ut t"at "e may .e em%loye&
on contract, Em%loyment on t"e .a$i$ o' contract i$+ un&er t"e $c"eme o' t"e
$ection+ treate& on a &i(erent 'ooting t"an a %er$on #"o i$ a regular $ta( o' t"e
.ank, A &e%o$it collector+ like t"e re$%on&ent+ #oul& .e one #"o i$ $/uarely
co-ere& .y t"e e8ce%tion+ i,e, t"e %ro-i$o+ $ince "i$ remuneration totally con$i$t$
o' commi$$ion 'or #"ic" rea$on "e coul& not .e a regular $ta(, I' "e #oul& "a-e
.een a regular $ta( 'rom t"e &ate o' "i$ engagement a$ a &e%o$it collector+ "e
coul& not "a-e .een %ai& remuneration .y #ay o' commi$$ion, Suc" engagement
o' "im+ an& o' t"e &e%o$it collector$ #"o #ere a&mitte&ly engage& a'ter t"e 1949
Act+ #oul& "a-e .een again$t t"e %ro-i$ion o' la# an& #oul& "a-e .een null an&
-oi&,=1E
Su$%en$ion o' %ayment, T"e 9ling o' an in$ol-ency %etition in t"e %re$ent ca$e
"a-ing t"e $ame %rinci%le an& cau$ing t"e i$$ue o' notice an& %u.lication ma&e
in t"e GaMette a$ #ell a$ $er-ice o' notice on $ome o' t"e re$%on&ent$ to t"e
%etition #oul&+ con$titute $uLcient .a$i$ to $u.$tantiate t"e claim o' t"e
re$%on&ent t"at t"e %etitioner T$u$%en&e& %aymentU #it"in t"e meaning o'
Sec,1:012 0.2 0i2 o' t"e Act, !on$e/uently+ &e "or$ any ot"er material$ on t"e -ery
a&mitte& con&uct an& cour$e o' action a&o%te& .y t"e %etitioner an& "a-ing
regar& to t"e $ti%ulation containe& in t"e Banking Regulation Act+ 1949 t"e
termination on account o' lo$$ o' con9&ence cannot .e $ai& to .e one in-ol-ing
any mi$con&uct an& con$e/uently+ t"e non?com%liance #it" %aragra%" 151 o' t"e
Bi?%artite $ettlement &oe$ not -itiate t"e or&er o' termination, T"e %lea o'
-iolation o' Art, 14 o' t"e !on$titution o' In&ia an& c"allenge to %aragra%" 155 o'
t"e Bi?%artite $ettlement al$o &o not merit acce%tance, !on$e/uently+ t"e
%ro-i$ion$ containe& in %ara 151 an& 155 "a& &i(erent an& &i$tinct role$ to %lay
an& "a& .een "el& to .e .in&ing all along u%on t"e %artie$ an& t"e %lea .a$e& on
Art,14 o' t"e !on$titution o' In&ia+ i$ #"olly mi$concei-e&,=*E
4ro.ation &oe$ not o.literate t"e $tigma o' con-iction,? In t"e in$tant ca$e it #a$
$u.mitte& .y t"e learne& coun$el a%%earing 'or re$%on&ent No,1 t"at once a
%er$on "a$ .een relea$e on %ro.ation+ $uc" %er$on &oe$ not $u(er 'rom any
&i$/uali9cation attac"ing to "i$ con-iction o' an o(ence un&er any la# an& t"at
t"e Banking Aut"ority #ere not Pu$ti9e& in %rocee&ing again$t re$%on&ent N,1
un&er t"e &i$ci%linary rule$, A &ee% t"oug"t #a$ gi-en to t"i$ matter an& it #a$
"el& t"at relea$e o' t"e o(en&er on %ro.ation &oe$ not o.literate t"e $tigma o'
con-iction on $uc" %er$on an& an em%loyee i$ not entitle to rein$tatement in
$er-ice automatically .y getting t"e .ene9t o' %ro.ation o' goo& con&uct,=6E
Bank #orker collecting &e%o$it 'rom &oor to &oor #orkmen,? T"e $econ&
re$%on&ent i$ a #orkman a$ &e9ne& .y t"e Act on t"e 'act$ an& circum$tance$ o'
t"i$ ca$e+ "a-ing regar& to t"e term$ an& con&ition$ $et out in t"e agreement
.et#een t"e Bank an& t"e $econ& re$%on&ent, T"e e-i&ence in t"i$ ca$e clearly
e$ta.li$"e$ t"at t"e $econ& re$%on&ent i$ a $er-ant o' t"e Bank an& not an
in&e%en&ent contractor,=7E
Cu$.an& com%elling "i$ #i'e to accom%any "im to "i$ o#n "ou$e Q Action &oe$
not in-ol-e moral tur%itu&e,? In t"e %re$ent ca$e+ t"e con-iction #a$ ultimately
ma&e .y t"e a%%ellate !ourt only un&er Sec,=*1+ I,4,!, a$ one o' an a.&uction,
T"e learne& Su&ge note& t"at t"e com%lainant #a$ t"e %etitionerU$ #i'e an& t"ere
coul& not .e a con-iction un&er Sec,=*4+ I,4,!, 'or #"ic" "e #a$ c"arge&, Ce
u%"el& t"e con-iction un&er Sec,=*1+ I,4,!, only on t"e groun& t"at $"e #a$
'orce& to come 'rom one %lace to anot"er again$t "er #i$", But+ t"e 'act t"at $"e
#a$ "i$ #i'e+ cannot .e ignore&, I' a "u$.an& e-en mi$takenly com%el$ "i$ #i'e to
accom%any "im to "i$ o#n "ou$e+ no rea$ona.le %er$on can $ay t"at t"i$ action
in-ol-e& moral tur%itu&e,=9E
3i$/uali9cation 'or continuing in $er-ice,? It i$ rele-ant to notice t"at un&er
Se,1:012 0.2 o' t"e Banking Regulation Act+ any an& e-ery con-iction .y a
!riminal !ourt &oe$ not o%erate a$ a &i$/uali9cation 'or continuing in $er-ice+
only t"e con-iction .y a !riminal !ourt o' an o(ence in-ol-ing moral tur%itu&e
o%erate$ a$ $uc" &i$/uali9cation, nce it i$ 'oun& t"at an em%loyee "a$ .een
con-icte& o' an o(ence in-ol-ing moral tur%itu&e+ t"e em%loyer "a$ no o%tion
.ut to terminate "i$ $er-ice, T"at i$ t"e comman& o' Sec,1: 012 0.2, No#+ t"e
re$%on&entU$ contention+ #"ic" "a$ .een acce%te& .y t"e learne& $ingle Su&ge+ i$
t"at .y -irtue o' Sec, 15 o' t"e 4ro.ation o' (en&er$ Act+ 1917+ t"e
&i$/uali9cation containe& in Sec,1:012 0.2 &oe$ not attac" to "im,
Accor&ing to Sec,15 o' t"e 4ro.ation o' o(en&er$ Act+ 1917+ t"ere'ore+ a %er$on
con-icte& o' an o(ence .ut &ealt #it" un&er Sec,4 N$"all not $u(er
&i$/uali9cation+ i' any+ attac"ing to a con-iction o' an o(ence un&er $uc" la#O,
Section 1:012 0.2 o' t"e Banking Regulation Act &oe$+ in&ee& %ro-i&e 'or a
&i$/uali9cation, T"oug" t"e #or& T&i$/uali9cationU not u$e& t"erein+ it $ay$
e8%re$$ly t"at a %er$on con-icte& .y a criminal !ourt o' an o(ence in-ol-ing
moral tur%itu&e $"all not .e continue& in t"e em%loyment o' a .anking
!om%any,4:E
41E F1:?A, Boar& o' 3irector$ to inclu&e %er$on$ #it" %ro'e$$ional or ot"er
e8%erience, Q 012 Not#it"$tan&ing anyt"ing containe& in any ot"er la# 'or t"e
time .eing in 'orce+ e-ery .anking com%any+?
0a2 in e8i$tence on t"e commencement o' Sec,= o' t"e Banking La#$
0Amen&ment2 Act+ 19*7 019 o' 19*72+ or
0.2 #"ic" come$ into e8i$tence t"erea'ter+
$"all com%ly #it" t"e re/uirement$ o' t"i$ $ection J
4ro-i&e& t"at not"ing containe& in t"i$ $u.?$ection $"all a%%ly to a .anking
com%any re'erre& to in !l,0a2 'or a %erio& o' t"ree mont"$ 'rom $uc"
commencement,
052 Not le$$ t"at 9'ty?one %er cent o' t"e total num.er o' mem.er$ o' t"e Boar&
o' 3irector$ o' a .anking com%any $"all con$i$t o' %er$on$+ #"o?
0a2 $"all "a-e $%ecial kno#le&ge or %ractical e8%erience in re$%ect o' one or more
o' t"e 'ollo#ing matter$+ namely J
0i2 accountancy+
0ii2 agriculture an& rural economy+
0iii2 .anking+
0i-2 co?o%eration+
0-2 economic$+
0-i2 9nance+
0-ii2 la#+
0-iii2 $mall?$cale in&u$try+
0i82 any ot"er matter+ t"e $%ecial kno#le&ge o'+ an& %ractical e8%erience in+
#"ic" #oul&+ in t"e o%inion o' t"e Re$er-e Bank+ .e u$e'ul to t"e .anking
com%anyJ
4ro-i&e& t"at out o' t"e a'ore$ai& num.er o' &irector$+ not le$$ t"an t#o $"all .e
%er$on$ "a-ing $%ecial kno#le&ge or %ractical e8%erience in re$%ect o'
agriculture an& rural economy+ co?o%erati-e or $mall?$cale in&u$tryI an&
0.2 $"all not Q
012 "a-e $u.$tantial intere$t in+ or .e connecte& #it"+ #"et"er a$ em%loyee+
manager or managing agent+?
0i2 any com%any+ not .eing a com%any regi$tere& un&er Sec,51 o' t"e !om%anie$
Act+ 191* 01 o' 191*2+ or
0ii2 any 9rm+
#"ic" carrie$ on any tra&e+ commerce or in&u$try an& #"ic"+ in eit"er ca$e+ i$
not a $mall?$cale in&u$trial concern+ or
052 .e %ro%rietor$ o' any tra&ing commercial or in&u$trial concern+ not .eing a
$mall?$cale in&u$trial concern,
45E F05?A2 Not#it"$tan&ing anyt"ing to t"e contrary containe& in t"e !om%anie$
Act+ 191* 01 o' 191*2+ or in any ot"er la# 'or t"e time .eing in 'orce+?
0i2 no &irector o' a .anking com%any+ ot"er t"an it$ !"airman or #"ole?time
&irector+ .y #"ate-er name calle&+ $"all "ol& oLce continuou$ly 'or a %erio&
e8cee&ing eig"t year$I
0ii2 a !"airman or ot"er #"ole?time &irector o' a .anking com%any #"o "a$ .een
remo-e& 'rom oLce a$ $uc" !"airman or #"ole time &irector+ a$ t"e ca$e may
.e+ un&er t"e %ro-i$ion$ o' t"i$ Act+ $"all al$o cea$e to .e a &irector o' t"e
.anking com%any an& $"all al$o not .e eligi.le to .e a%%ointe& a$ a &irector o'
$uc" .anking com%any+ #"et"er .y election or co?o%tion or ot"er#i$e+ 'or a
%erio& o' 'our year$ 'rom t"e &ate o' "i$ cea$ing to .e t"e !"airman or #"ole?
time &irector+ a$ t"e ca$e may .e,G
0=2 I'+ in re$%ect o' any .anking com%any+ t"e re/uirement$+ a$ lai& &o#n in $u.?
$ection 052 are not 'ul9lle& at any time+ t"e Boar& o' 3irector$ o' $uc" .anking
com%any $"all re?con$titute $uc" Boar& $o a$ to en$ure t"at t"e $ai&
re/uirement$ are 'ul9lle&,
042 I'+ 'or t"e %ur%o$e o' re?con$tituting t"e Boar& un&er $u.?$ection 0=2 it i$
nece$$ary to retire any &irector or &irector$+ t"e Boar& may+ .y lot$ &ra#n in $uc"
manner a$ may .e %re$cri.e&+ &eci&e #"ic" &irector or &irector$ $"all cea$e to
"ol& oLce an& $uc" &eci$ion $"all .e .in&ing on e-ery &irector o' t"e Boar&,
012 H"ere t"e Re$er-e Bank i$ o' o%inion t"at t"e com%o$ition o' t"e Boar& o'
3irector$ o' a .anking com%any i$ $uc" t"at it &oe$ not 'ul9l t"e re/uirement$ o'
$u.?$ection 052+ it may+ a'ter gi-ing to $uc" .anking com%any rea$ona.le
o%%ortunity o' .eing "ear&+ .y an or&er in #riting+ &irect t"e .anking com%any to
$o recon$titute it$ Boar& o' 3irector$ a$ to en$ure t"at t"e $ai& re/uirement$ are
'ul9lle& an&+ i' #it"in t#o mont"$ 'rom t"e &ate o' recei%t o' t"at or&er+ t"e
.anking com%any &oe$ not com%ly #it" t"e &irector$ ma&e .y Re$er-e Bank+
t"at .ank may+ a'ter &etermining .y lot$ &ra#n in $uc" manner a$ may .e
%re$cri.e&+ t"e %er$on #"o oug"t to .e remo-e& 'rom t"e mem.er$"i% o' t"e
Boar& o' 3irector$+ remo-e $uc" %er$on 'rom t"e oLce o' t"e &irector o' $uc"
.anking com%any an& #it" a -ie# to com%lying #it" t"e %ro-i$ion$ o' $u.?$ection
052+ a%%oint a $uita.le %er$on a$ a mem.er o' t"e Boar& o' 3irector$ in t"e %lace
o' t"e %er$on $o remo-e& #"ereu%on t"e %er$on $o a%%ointe& $"all .e &eeme&
to "a-e .een &uly electe& .y .anking com%any a$ it$ &irector,
0*2 E-ery a%%ointment+ remo-al or recon$titution &uly ma&e an& e-ery election
&uly "el&+ un&er t"i$ $ection $"all .e 9nal an& $"all not .e calle& into /ue$tion in
any !ourt,
062 E-ery &irector electe& or+ a$ t"e ca$e may .e+ a%%ointe& un&er t"i$ $ection
$"all "ol& oLce until t"e &ate u%to #"ic" "i$ %re&ece$$or #oul& "a-e "el& oLce+
i' t"e election "a& not .een "el&+ or+ a$ t"e ca$e may .e+ t"e a%%ointment "a&
not .een ma&e,
072 No act or %rocee&ing o' t"e Boar& o' 3irector$ o' a .anking com%any $"all .e
in-ali& .y rea$on only o' any &e'ect in t"e com%o$ition t"ereo' or on t"e groun&
t"at it i$ $u.$e/uently &i$co-ere& t"at any o' it$ mem.er$ &i& not 'ul9l t"e
re/uirement$ o' t"i$ $ection,
!))ENTS
I$$ue o' &irection to 9ll u% -acancy o' #orkman .a&,? In $o 'ar a$ t"e Sc"e&ule&
Bank$ are concerne&+ t"ere i$ no $uc" %ro-i$ion ena.ling t"e em%loyee$ to
re%re$ent in t"e Boar& o' 3irector$ o' t"e Banking !om%any, In a.$ence o' any
%ro-i$ion ena.ling t"e Re$er-e Bank o' In&ia to i$$ue &irection$ t"e 9r$t
re$%on&ent Bank+ to 9ll u% t"e -acancy cau$e& a$ a re$ult o' t"e retirement o'
t"e #rit %etitioner 'rom t"e Boar& o' 3irector$+ t"ere cannot .e any &irection to
t"e Re$er-e Bank o' In&ia to i$$ue &irection a$ %raye& 'or,4=E
!om%any la# i$ a $el'?containe& !o&e,? T"e !om%any La# i$ a $el'?containe&
!o&e an& t"e %ro-i$ion$ o' t"e !om%any La# $"all .e a%%lica.le to t"e 9r$t
re$%on&ent Bank an& in $o 'ar a$ t"e a%%ointment o' t"e 3irector i$ concerne&+
t"e %ro-i$ion$ o' t"e Act $"all %re-ail, Sec,51* 0=2 o' t"e !om%anie$ Act %ro-i&e$
t"at at t"e annual general meeting at #"ic" a 3irector retire$ t"e !om%any may
9ll u% t"e -acancy .y a%%ointing t"e retiring &irector or $ome ot"er %er$on
t"ereto, Co#e-er+ in -ie# o' t"e 'act t"at t"e %ro-i$ion$ o' t"e Banking
Regulation Act are al$o a%%lica.le+ $uc" a%%ointment o' &irector$ $"all .e
con$i$tent #it" t"e %ro-i$ion containe& un&er Sec,1:?A o' t"e Act, Section 1:?A o'
t"e Act 'urt"er %ro-i&e$ t"at #"ere t"e Re$er-e Bank o' In&ia i$ o' o%inion t"at
t"e com%o$ition o' t"e Boar& o' 3irector$ o' a .anking com%any i$ $uc" t"at it
&oe$ not 'ul9l t"e re/uirement$ o' $u.?$ection 052 it may+ a'ter gi-ing to $uc"
.anking com%any a rea$ona.le o%%ortunity o' .eing "ear&+ .y an or&er in #riting
&irect t"e .anking com%any to $o recon$titute t"e Boar& o' 3irector$ a$ to en$ure
t"at t"e $ai& re/uirement$ are 'ul9lle& an& i' t"e Banking !om%any &oe$ not
com%ly #it" t"e &irection$ ma&e .y t"e Re$er-e Bank+ t"e Re$er-e Bank may
remo-e $uc" %er$on 'rom t"e oLce o' 3irector an& #it" a -ie# to com%lying #it"
t"e %ro-i$ion$ o' $u.?$ection 0=2 a%%oint a $uita.le %er$on a$ a mem.er o' t"e
Boar& o' 3irector$+ in t"e %lace o' t"e %er$on $o remo-e& #"ereu%on t"e %er$on
$o a%%ointe& $"all .e &eeme& to "a-e .een &uly electe& .y t"e .anking
com%any a$ it$ &irector, Arom t"e a.o-e+ it i$ mani'e$t t"at i' t"e com%o$ition o'
&irector$ .y t"e com%any &oe$ not 'ul9l t"e re/uirement$ o' $u.?$ection 052 o'
Sec,1:?A o' t"e Act+ t"e Re$er-e Bank "a$ aut"ority to &irect t"em to recon$titute
t"e Boar& o' 3irector$ $o a$ to en$ure t"at t"e re/uirement$ o' $u.?$ection are
'ul9lle&, In ca$e t"e Bank &oe$ not com%ly #it" t"e &irection$+ t"e Re$er-e Bank
"a$ aut"ority to remo-e t"e t#o 3irector$ an& to a%%oint $uita.le %er$on $o a$ to
en$ure t"at t"e re/uirement$ o' $u.?$ection 052 o' Sec,1:?A o' t"e Act are
'ul9lle&, Un&er Sec,=1?A o' t"e Banking Regulation Act+ t"e Re$er-e Bank "a$
%o#er to i$$ue &irection$ #"en it i$ $ati$9e& t"at in t"e %u.lic intere$t or in t"e
inter$ o' .anking %olicy or to %re-ent t"e a(aire$ o' any .anking com%any .eing
con&ucte& in a manner &etrimental to t"e intere$t o' t"e &e%o$itor$ or in a
manner %rePu&icial to t"e intere$t o' t"e .anking com%any or to $ecure t"e
%ro%er management o' any .anking com%any generally an& t"e .anking
com%any $"all com%ly #it" $uc" &irection$, T"e$e are t"e contingencie$ at #"ic"
Re$er-e Bank "a$ aut"ority to a%%oint &irector$,44E
1:?B, Banking com%any to .e manage& .y #"ole?time !"airman,?
41E F012 Not#it"$tan&ing anyt"ing containe& in any la# 'or t"e time .eing in
'orce or in any contract to t"e contrary+ e-ery .anking com%any in e8i$tence on
t"e commencement o' t"e Banking Regulation 0Amen&ment2 Act+ 1994+ or #"ic"
come$ into e8i$tence t"erea'ter $"all "a-e one o' it$ &irector$+ #"o may .e
a%%ointe& on a #"ole?time or a %art?time .a$i$ a$ !"airman o' it$ Boar& o'
3irector$+ an& #"ere "e i$ a%%ointe& on a #"ole?time .a$i$+ a$ !"airman o' it$
Boar& o' 3irector$+ "e $"all .e entru$te& #it" t"e management o' t"e #"ole o'
t"e a(air$ o' t"e .anking com%anyJ
4ro-i&e& t"at t"e !"airman $"all e8erci$e "i$ %o#er$ $u.Pect to t"e
$u%erinten&ence+ control an& &irection o' t"e Boar& o' &irector$,
4ro-i&e& 'urt"er t"at not"ing in t"i$ $u.?$ection $"all a%%ly to a .anking
com%any in e8i$tence on t"e commencement o' t"e $ai& $ection 'or a %erio& o'
t"ree mont"$ 'rom $uc" commencement,
01?A2 H"ere a !"airman i$ a%%ointe& on a %art?time .a$i$+?
0i2 $uc" a%%ointment $"all .e #it" t"e %re-iou$ a%%ro-al o' t"e Re$er-e Bank an&
.e $u.Pect to $uc" con&ition$ a$ t"e Re$er-e Bank may $%eci'y #"ile gi-ing $uc"
a%%ro-alI
0ii2 t"e management o' t"e #"ole o' t"e a(air$ o' $uc" .anking com%any $"all .e
entru$te& to a managing &irector #"o $"all e8erci$e "i$ %o#er$ $u.Pect to t"e
$u%erinten&ence+ control an& &irection o' t"e Boar& o' &irector$,G
052 4*EFE-ery !"airman o' t"e Boar& o' 3irector$ #"o i$ a%%ointe& on a #"ole?
time .a$i$ an& e-ery managing &irectorG o' a .anking com%any $"all .e in t"e
#"ole?time em%loyment o' $uc" com%any an& $"all "ol& oLce 'or $uc" %erio&+
not e8cee&ing 9-e year$+ a$ t"e Boar& o' 3irector$ may 98+ .ut $"all+ $u.Pect to
t"e %ro-i$ion$ o' t"e $ection+ .e eligi.le 'or re?election or re?a%%ointmentJ
4ro-i&e& t"at not"ing i$ t"i$ $u.?$ection $"all .e con$true& a$ %ro"i.iting a
!"airman 'rom .eing a &irector o' a $u.$i&iary o' t"e .anking com%any or a
&irector o' a com%any regi$tere& un&er Sec,51 o' t"e !om%anie$ Act+ 191* 01 o'
191*2,
0=2 E-ery %er$on "ol&ing oLce on t"e commencement o' Sec,= o' t"e Banking
La#$ 0Amen&ment2 Act+ 19*7 017 o' 19*72+ a$ managing &irector o' t"e .anking
com%any $"all ?
0a2 i' t"ere i$ a !"airman o' it$ Boar& o' 3irector$+ -acate oLce on $uc"
commencement+ or
0.2 i' t"ere i$ no !"airman o' it$ Boar& o' 3irector$+ -acate oLce on t"e &ate on
#"ic" t"e !"airman o' it$ Boar& o' 3irector$ i$ electe& or a%%ointe& in
accor&ance #it" t"e %ro-i$ion$ o' t"i$ $ection,
042 4*FE-ery !"airman #"o i$ a%%ointe& on a #"ole?time .a$i$ an& e-ery
)anaging 3irector o' a .anking com%any a%%ointe& un&er $u.?$ection 01?A2 $"all
.e a %er$on #"o "a$ $%ecial kno#le&ge an& %ractical e8%erience o' ?
0a2 t"e #orking o' a .anking com%any+ or o' t"e State Bank o' In&ia or any
$u.$i&iary .ank or 9nancial in$titution$I or
0.2 9nancial+ economic or .u$ine$$ a&mini$trationJ
4ro-i&e& t"at a %er$on $"all .e &i$/uali9e& 'or .eing 4*F!"airman #"o i$
a%%ointe& on a #"ole?time .a$i$ a$ a )anaging 3irectorG+ i' "e Q
0a2 i$ a &irector o' any com%any ot"er t"an a com%any re'erre& to in t"e %ro-i$o
to $u.?$ection 052I or
0.2 i$ a %artner o' any 9rm #"ic" carrie$ on any tra&e+ .u$ine$$ or in&u$tryI or
0c2 "a$ $u.$tantial intere$t in any ot"er com%any or 9rmI or
0&2 i$ a &irector+ manager+ managing agent+ %artner or %ro%rietor o' any tra&ing+
commercial or in&u$trial concernI or
0e2 i$ engage& in any ot"er .u$ine$$ or -ocation,
012 46E FA !"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or
a )anaging 3irectorG o' a .anking com%any may+ .y #riting un&er "i$ "an&
a&&re$$e& to t"e com%any+ re$ign "i$ oLce 47FEEEG,
49E F01?A2 4*E FA !"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time
.a$i$ or )anaging 3irectorG #"o$e term$ o' oLce "a$ come to an en&+ eit"er .y
rea$on o' "i$ re$ignation or .y rea$on o' e8%iry o' t"e %erio& o' "i$ oLce+ $"all+
$u.Pect to t"e a%%ro-al o' t"e Re$er-e Bank continue in oLce until "i$ $ucce$$or
a$$ume$ oLce,G
0*2 Hit"out %rePu&ice to t"e %ro-i$ion$ o' Sec,=*?AA+ #"ere t"e Re$er-e Bank i$
o' o%inion t"at any %er$on #"o i$+ or "a$ .een electe& to .e+ t"e 1:E F !"airman
o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or a )anaging
3irectorG o' a .anking com%any i$ not a 9t an& %ro%er %er$on to "ol& $uc" oLce+
it may+ a'ter gi-ing to $uc" %er$on an& to t"e .anking com%any a rea$ona.le
o%%ortunity o' .eing "ear&+ .y or&er in #riting re/uire t"e .anking com%any to
elect or a%%oint any ot"er %er$on a$ t"e 1:E F!"airman o' t"e Boar& o' 3irector$
#"o i$ a%%ointe& on a #"ole time .a$i$ or a )anaging 3irectorG an& i'+ #it"in a
%erio& o' t#o mont"$ 'rom t"e &ate o' recei%t o' $uc" or&er+ t"e .anking
com%any 'ail$ to elect or a%%oint a $uita.le %er$on a$ t"e 1:E F!"airman o' t"e
Boar& o' 3irector$+ #"o i$ a%%ointe& on a #"ole?time .a$i$ or a )anaging
3irectorG t"e Re$er-e Bank may+ .y or&er+ remo-e t"e 9r$t Qmentione& %er$on
'rom t"e oLce o' t"e 1:E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a
#"ole Q time .a$i$ or a )anaging 3irectorG o' t"e .anking com%any an& a%%oint
a $uita.le %er$on in "i$ %lace #"ereu%on t"e %er$on $o a%%ointe& $"all .e
&eeme& to "a-e .een &uly electe& or a%%ointe&+ a$ t"e ca$e may .e+ a$ t"e 1:E
F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or )anaging
3irectorG o' $uc" .anking com%any an& any %er$on electe& or
1:E Fa%%ointe& a$ c"airman on a #"ole?time .a$i$ or managing &irectorG un&er
t"i$ $u.?$ection $"all "ol& oLce 'or t"e re$i&ue o' t"e %erio& o' oLce o' t"e
%er$on in #"o$e %lace "e "a$ .een $o electe& or a%%ointe&,
062 T"e .anking com%any an& any %er$on again$t #"om an or&er o' remo-al i$
ma&e un&er $u.?$ection 0*2 may+ #it"in t"irty &ay$ 'rom t"e &ate o'
communication to it or to "im o' t"e or&er+ %re'er an a%%eal to t"e !entral
Go-ernment an& t"e &eci$ion o' t"e !entral Go-ernment t"ereon+ an& $u.Pect
t"ereto+ t"e or&er ma&e .y t"e Re$er-e Bank un&er $u.?$ection 0*2+ $"all .e 9nal
an& $"all not .e calle& into /ue$tion in any !ourt,
072 Not#it"$tan&ing anyt"ing containe& in t"i$ $ection+ t"e Re$er-e Bank may+ i'
in it$ o%inion it i$ nece$$ary in t"e %u.lic intere$t $o to &o+ %ermit 1:F!"airman o'
t"e Boar& o' 3irector$ #"o i$ a%%ointe& on a #"ole?time .a$i$ or t"e )anaging
3irectorG to un&ertake $uc" %art?time "onorary #ork a$ i$ not likely to inter'ere
#it" "i$ &utie$ a$ 1:F$uc" !"airman or managing &irectorG,
092 Not#it"$tan&ing anyt"ing containe& in t"i$ $ection+ #"ere a %er$on 1:E
Fa%%ointe& on a #"ole?time .a$i$+ a$ !"airman o' t"e Boar& o' 3irector$ or
)anaging 3irectorG &ie$ or re$ign$ or i$ .y in9rmity or ot"er#i$e ren&ere&
inca%a.le o' carrying out "i$ &utie$ or i$ a.$ent on lea-e or ot"er#i$e in
circum$tance$ not in-ol-ing t"e -acation o' "i$ oLce+ t"e .anking com%any may+
#it" t"e a%%ro-al o' t"e Re$er-e Bank+ make $uita.le arrangement$ 'or carrying
out t"e 1:E F&utie$ o' !"airman or )anaging 3irectorG 'or a total %erio& not
e8cee&ing 'our mont"$,
11E F1:?BB, 4o#er o' Re$er-e Bank to a%%oint !"airman o' a .anking com%any,?
012 H"ere t"e oLce o' t"e 15E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on
a #"ole?time .a$i$ or a )anaging 3irectorG o' a .anking com%any i$ -acant+ t"e
Re$er-e Bank may+ i' it i$ o' o%inion t"at t"e continuation o' $uc" -acancy i$
likely to a&-er$ely a(ect t"e intere$t o' t"e .anking com%any+ a%%oint a %er$on+
eligi.le un&er $u.?$ection 042 o' Sec, 1:?B to .e $o a%%ointe&+ to .e t"e !"airman
o' t"e .anking com%any an& #"ere t"e %er$on $o a%%ointe& i$ not a &irector o'
$uc" .anking com%any+ "e $"all+ $o long a$ "e "ol&$ t"e oLce o' t"e 1=E
F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$ or a
)anaging 3irectorG+ .e &eeme& to .e a &irector o' t"e .anking com%any,
052 T"e 1=E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$
or a )anaging 3irectorG $o a%%ointe& .y t"e Re$er-e Bank $"all .e in t"e #"ole?
time em%loyment o' t"e .anking com%any an& $"all "ol& oLce 'or $uc" %erio&
not e8cee&ing t"ree year$+ a$ t"e Re$er-e Bank may $%eci'y+ .ut $"all+ $u.Pect to
ot"er %ro-i$ion$ o' t"i$ Act+ .e eligi.le to re?a%%ointment,
0=2 T"e 1=E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on a #"ole?time .a$i$
or a )anaging 3irectorG $o a%%ointe& .y t"e Re$er-e Bank $"all &ra# 'rom t"e
.anking com%any $uc" %ay an& allo#ance$ a$ t"e Re$er-e Bank may &etermine
an& may .e remo-e& 'rom oLce only .y t"e Re$er-e Bank,
042 Sa-e a$ ot"er#i$e %ro-i&e& in t"i$ $ection+ t"e %ro-i$ion$ o' Sec,1:?B $"all+ a$
'ar a$ may .e+ a%%ly to t"e 1=E F!"airman o' t"e Boar& o' 3irector$ a%%ointe& on
a #"ole?time .a$i$ or a )anaging 3irectorG a%%ointe& .y t"e Re$er-e Bank un&er
$u.?$ection 012 a$ t"ey a%%ly to t"e 1=F!"airman o' t"e Boar& o' 3irector$
a%%ointe& on a #"ole?time .a$i$ or a )anaging 3irectorG a%%ointe& .y t"e
.anking com%any,G
14E F1:?!, !"airman an& certain &irector$ not to .e re/uire& to "ol& /uali9cation
$"are$,? 11E FA !"airman o' t"e Boar& o' 3irector$ #"o i$ a%%ointe& on a #"ole?
time .a$i$ or a )anaging 3irectorG o' a .anking com%any 0.y #"om$oe-er
a%%ointe&2 an& a &irector o' a .anking com%any 0a%%ointe& .y t"e Re$er-e Bank
un&er Sec,1:?A2 $"all not .e re/uire& to "ol& /uali9cation $"are$ in t"e .anking
com%any,G
1:?3, 4ro-i$ion$ o' Sec$,1:?A an& 1:?B to o-erri&e all ot"er la#$+ contract$+ etc,?
Any a%%ointment or remo-al o' a 1*E F&irector+ !"airman o' t"e Boar& o'
3irector$ #"o i$ a%%ointe& on a #"ole?time .a$i$ or )anaging 3irectorG in
%ur$uance o' Sec, 1:?A or Sec,1:?B 16E For Sec,1:?BBG $"all "a-e e(ect an& any
$uc" %er$on $"all not .e entitle& to claim any com%en$ation 'or t"e lo$$ or
termination o' oLce+ not#it"$tan&ing anyt"ing containe& in any la# or in any
contract+ memoran&um o' article$ o' a$$ociation,G
11, Re/uirement a$ to minimum %ai&?u% ca%ital an& re$er-e$,? 012
Not#it"$tan&ing anyt"ing containe& in 17E FSec,149 o' t"e !om%anie$ Act+ 191*
01 o' 191*2G+ no .anking com%any in e8i$tence on t"e commencement o' t"i$ Act+
$"all a'ter t"e e8%iry o' t"ree year$ 'rom $uc" commencement or o' $uc" 'urt"er
%erio& not e8cee&ing one year a$ t"e Re$er-e Bank+ "a-ing regar& to t"e
intere$t$ o' t"e &e%o$itor$ o' t"e com%any may t"ing 9t in any %articular ca$e to
allo#+ to carry on .u$ine$$ 19E Fin In&iaG+ an& no ot"er .anking com%any $"all
a'ter t"e commencement o' t"i$ Act+ commence or carry on .u$ine$$ 19E Fin
In&iaG *:E Funle$$ it com%lie$ #it" $uc" o' t"e re/uirement$ o' t"i$ $ection a$ are
a%%lica.le to it,G
*1E F052 In t"e ca$e o' a .anking com%any incor%orate& out$i&e In&ia Q
0a2 t"e aggregate -alue o' it$ %ai&?u% ca%ital an& re$er-e$ $"all not .e le$$ t"an
9'teen lak"$ o' ru%ee$ an& i' it "a$ a %lace or %lace$ o' .u$ine$$ in city o'
Bom.ay or !alcutta or .ot"+ t#enty lak"$ o' ru%ee$I an&
*5E F0.2 t"e .anking com%any $"all &e%o$it an& kee% &e%o$ite& #it" t"e Re$er-e
Bank eit"er in ca$" or in t"e 'orm o' unencum.ere& a%%ro-e& $ecuritie$ or %artly
in ca$" an& %artly in t"e 'orm o' $uc" $ecuritie$ Q
0i2 an amount #"ic" $"all not .e le$$ t"an t"e minimum re/uirement .y !l,0a2I
an&
0ii2 a$ $oon a$ may .e a'ter e8%iration o' eac" *=FEEEG year+ an amount calculate&
at t#enty %er cent, o' it$ %ro9t 'or t"at year in re$%ect o' all .u$ine$$ tran$acte&
t"roug" it$ .ranc"e$ in In&ia+ a$ &i$clo$e& in t"e %ro9t an& lo$$ account %re%are&
#it" re'erence to t"at year un&er Sec, 59JG
4ro-i&e& t"at any $uc" .anking com%any may at time re%lace Q
0i2 any $ecuritie$ $o &e%o$ite& .y ca$" or .y any ot"er unencum.ere& a%%ro-e&
$ecuritie$ or %artly .y ca$" an& %artly .y ot"er $uc" $ecuritie$+ $o "o#e-er+ t"at
t"e total amount &e%o$ite& i$ not a(ecte&I
0ii2 any ca$" $o &e%o$ite& .y unencum.ere& a%%ro-e& $ecuritie$ o' an e/ual
-alue,G
*4E F05?A2 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 052+ t"e !entral
Go-ernment may+ on t"e recommen&ation o' t"e Re$er-e Bank+ an& "a-ing
regar& to t"e a&e/uacy o' t"e amount$ alrea&y &e%o$ite& an& ke%t &e%o$ite& .y
a .anking com%any un&er $u.?$ection 052+ in relation to it$ &e%o$it lia.ilitie$ in
In&ia+ &eclare .y or&er in #riting t"at t"e %ro-i$ion$ o' $u.?clau$e 0ii2 o' !l,0.2 o'
$u.?$ection 052 $"all not a%%ly to $uc" .anking com%any 'or $uc" %erio& a$ may
.e $%eci9e& in t"e or&er,G
0=2 In t"e ca$e o' any .anking com%any to #"ic" t"e %ro-i$ion$ o' $u.?$ection 052
&o not a%%ly+ t"e aggregate -alue o' it$ %ai&?u% ca%ital an& re$er-e$ $"all not .e
le$$ t"an ?
0i2 i' it "a$ %lace$ o' .u$ine$$ in more t"an one State+ 9-e lak"$ o' ru%ee$+ an& i'
any $uc" %lace or %lace$ o' .u$ine$$ i$ or are $ituate& in t"e city o' Bom.ay or
!alcutta or .ot"+ ten lak"$ o' ru%ee$I
0ii2 i' it "a$ all it$ %lace$ o' .u$ine$$ in one State none o' #"ic" i$ $ituate& in t"e
city o' Bom.ay or !alcutta+ one lak" o' ru%ee$ in re$%ect o' it$ %rinci%al %lace o'
.u$ine$$+ %lu$ ten t"ou$an& ru%ee$ in re$%ect o' eac" o' it$ ot"er %lace$ o'
.u$ine$$ $ituate& in t"e $ame &i$trict in #"ic" it "a$ it$ %rinci%al %lace o'
.u$ine$$+ %lu$ t#enty?9-e t"ou$an& ru%ee$ in re$%ect o' eac" %lace o' .u$ine$$
$ituate& el$e#"ere in t"e State ot"er#i$e t"an in t"e $ame &i$trict J
4ro-i&e& t"at no .anking com%any to #"ic" t"i$ clau$e a%%lie$ $"all .e re/uire&
to "a-e %ai&?u% ca%ital an& re$er-e$ e8cee&ing an aggregate -alue o' 9-e lak"$
o' ru%ee$ J
4ro-i&e& 'urt"er t"at no .anking com%any to #"ic" t"i$ clau$e a%%lie$ an& #"ic"
"a$ only one %lace o' .u$ine$$+ $"all .e re/uire& to "a-e %ai&?u% ca%ital an&
re$er-e$ e8cee&ing an aggregate -alue o' 9'ty t"ou$an& ru%ee$ J
*1E F4ro-i&e& 'urt"er t"at in t"e ca$e o' e-ery .anking com%any to #"ic" t"i$
clau$e a%%lie$ an& #"ic" commence$ .anking .u$ine$$ 'or t"e 9r$t time a'ter
commencement o' t"e Banking !om%anie$ 0Amen&ment2 Act+ 19*5 0=* o' 19*52+
t"e -alue o' it$ %ai&?u% ca%ital $"all not .e le$$ t"an 9-e lak"$ o' ru%ee$IG
0iii2 i' it "a$ all it$ %lace$ o' .u$ine$$ in one State+ one or more o' #"ic" i$ or are
$ituate& in t"e city o' Bom.ay or !alcutta+ 9-e lak"$ o' ru%ee$+ %lu$ t#enty?9-e
t"ou$an& ru%ee$ in re$%ect o' eac" %lace o' .u$ine$$ $ituate& out$i&e t"e city o'
Bom.ay or !alcutta + a$ t"e ca$e may .e J
4ro-i&e& t"at no .anking com%any to #"ic" t"i$ clau$e a%%lie$ $"all .e re/uire&
to "a-e %ai&?u% ca%ital an& re$er-e$ e8cee&ing in aggregate -alue o' ten lak"$ o'
ru%ee$,
E8%lanation,? Aor t"e %ur%o$e o' t"i$ $u.?$ection+ a %lace o' .u$ine$$ $ituate& **E
Fin a StateG ot"er t"an t"at in #"ic" t"e %rinci%al %lace o' .u$ine$$ o' t"e .anking
com%any i$ $ituate& $"all+ i' it i$ not more t"an t#enty?9-e mile$ &i$tant 'rom
$uc" %rinci%al %lace o' .u$ine$$+ .e &eeme& to .e $ituate& #it"in t"e $ame State
a$ $uc" %rinci%al %lace o' .u$ine$$,
042 Any amount &e%o$ite& an& ke%t &e%o$ite& #it" t"e Re$er-e Bank un&er
*6FEEEG $u.?$ection 052 .y any .anking com%any incor%orate& *7E Fout$i&e In&iaG
$"all+ in t"e e-ent o' t"e com%any cea$ing 'or any rea$on to carry on .anking
.u$ine$$ *9E Fin In&iaG+ .e an a$$et o' t"e com%any on #"ic" t"e claim$ o' all t"e
cre&itor$ o' t"e com%any *6Fin In&iaG+ $"all .e a 9r$t c"arge,
6:E F012 Aor t"e %ur%o$e$ o' t"i$ $ection+?
0a2 N%lace o' .u$ine$$O mean$ any oLce+ $u.?oLce+ $u.?%ay oLce an& any %lace
o' .u$ine$$ at #"ic" &e%o$it$ are recei-e&+ c"e/ue$ ca$"e& or money$ lentI
0.2 N-alueO mean$ t"e real or e8c"angea.le -alue+ an& not t"e nominal -alue
#"ic" may .e $"o#n in t"e .ook$ o' t"e .anking com%any concerne&,G
0*2 I' any &i$%ute ari$e$ in com%uting t"e aggregate -alue o' t"e %ai&?u% ca%ital
an& re$er-e$ o' any .anking com%any+ a &etermination t"ereo' .y t"e Re$er-e
Bank $"all .e 9nal 'or t"e %ur%o$e$ o' t"i$ $ection,
61E F15, Regulation o' %ai&?u% ca%ital+ $u.$cri.e& ca%ital an& aut"oriMe& ca%ital
an& -oting rig"t$ o' $"are"ol&er$,? 012 No .anking com%any $"all carry on
.u$ine$$ in In&ia+ unle$$ it $ati$9e$ t"e 'ollo#ing con&ition$+ namelyJ
0i2 t"at t"e $u.$cri.e& ca%ital i' t"e com%any i$ not le$$ t"an one?"al' o' t"e
aut"oriMe& ca%ital+ an& %ai&?u% ca%ital i$ not le$$ t"an one?"al' o' t"e $u.$cri.e&
ca%ital an& t"at+ i' t"e ca%ital increa$e&+ it com%lie$ #it" t"e con&ition$
%re$cri.e& in t"i$ clau$e #it"in $uc" %erio& not e8cee&ing t#o year$ a$ t"e
Re$er-e Bank may allo#I
0ii2 t"at t"e ca%ital o' t"e com%any con$i$t$ o' or&inary $"are$ only or o' or&inary
$"are$ or e/uity $"are$ an& $uc" %re'erential $"are$ a$ may "a-e .een i$$ue&
%rior to t"e 1$t &ay o' Suly+1944J
4ro-i&e& t"at not"ing containe& in t"i$ $u.?$ection $"all a%%ly to any .anking
com%any incor%orate& .e'ore t"e 11t" &ay o' Sanuary+ 19=6,
052 No %er$on "ol&ing $"are$ in a .anking com%any $"all+ in re$%ect o' any $"are$
"el& .y "im+ e8erci$e -oting rig"t 65E Fon 4ollG 6=E Fin e8ce$$ o' 64E Ften %er
cent,GG o' t"e total -oting rig"t$ o' all t"e $"are"ol&er$ o' t"e .anking com%any,
0=2 Not#it"$tan&ing anyt"ing containe& in any la# 'or t"e time .eing in 'orce or
in contract or in$trument no $uit or ot"er %rocee&ing $"all .e maintaine& again$t
any %er$on regi$tere& a$ t"e "ol&er o' a $"are in a .anking com%any on t"e
groun& t"at title to t"e $ai& $"are -e$t$ in a %er$on ot"er t"at t"e regi$tere&
"ol&er J
4ro-i&e& t"at not"ing containe& in t"i$ $u.?$ection $"all .ar a $uit o' ot"er
%rocee&ing Q
0a2 .y a tran$'eree o' t"e $"are on t"e groun& t"at "e "a$ o.taine& 'rom t"e
regi$tere& "ol&er a tran$'er o' t"e $"are in accor&ance #it" any la# relating to
$uc" tran$'erI or
0.2 on .e"al' o' a minor or a lunatic on t"e groun& t"at t"e regi$tere& "ol&er
"ol&$ t"e $"are on .e"al' o' t"e minor or lunatic,
042 E-ery !"airman+ )anaging 3irector or !"ie' E8ecuti-e Lcer .y #"ate-er
name calle& o' a .anking com%any $"all 'urni$" to t"e Re$er-e Bank t"roug" t"at
.anking com%any return$ containing 'ull %articular$ o' t"e e8tent an& -alue o' "i$
"ol&ing o' $"are$+ #"et"er &irectly or in&irectly+ in t"e .anking com%any an& o'
any c"ange in t"e e8tent o' $uc" "ol&ing or any -ariation in t"e rig"t$ attac"ing
t"ereto an& $uc" ot"er in'ormation relating to t"o$e $"are$ a$ t"e Re$er-e Bank
may+ .y or&er+ re/uire an& in $uc" 'orm an& at $uc" time a$ may .e $%eci9e& in
t"e or&er,G
!))ENTS
Ralua.le rig"t a-aila.le to t"e %etitioner,? T"e %etitioner a$ %er t"e rele-ant
in$truction$ an& regulation$ "a& namely a$%iration$, T"ey mu$t "a-e Poine& t"e
$er-ice o' t"e Bank "o%ing t"at t"ey #oul& .e %romote& in accor&ance #it" t"e
rele-ant in$truction$ an& t"e 4: %oint ro$ter, T"eir rig"t$ a$ $uc" coul& not .e
&e'eate& .y gi-ing %romotion$ to general category can&i&ate$ ignoring t"e
criteria o' normal c"annel 98e& a$ %er %aragra%" 1,5, T"e -alua.le rig"t #a$
a-aila.le to t"e %etitioner$ an& merely .ecau$e $ome ot"er general category
can&i&ate$ $u(ere&+ i$ no groun& to &e'eat t"e rule$ an& in$truction$ an& criteria
'or %romotion 98e& .y t"e Bank, To t"at e8tent+ t"e %etition a$ $uc" mu$t
$uccee&, Aor t"e$e rea$on$+ t"e %etition i$ allo#e& an& it i$ &irecte& t"at
%etitioner$ are entitle& to .e con$i&ere& 'or %romotion again$t t"e .ack?log o'
re$er-e& -acancie$ create& again$t 47 -acancie$ a$ %er t"e normal c"annel o'
%romotion un&er %aragra%" 1,5 o' %romotion %olicy 'rame& un&er Regulation 16
o' t"e 4unPa. ; Sin& Bank 0Lcer$2 Ser-ice Regulation$+ 1975, 61E
Tran$'er$ o' $"are$ an& regi$tration t"ereo',? It i$ clear t"at t"i$ Sec, FSec, 15 052G
&oe$ not in any #ay a(ect t"e tran$'er$ o' $"are$ an& regi$tration o' $uc"
tran$'er$, It only mean$ t"at a %er$on "ol&ing $"are$ #ill not get -oting rig"t in
e8ce$$ o' one %er cent, o' t"e total -oting rig"t$ o' t"e $"are"ol&er$ o' t"e
com%any, T"i$ "a$ no relation to any grou% an& e-en a$$uming t"at a grou% o'
$"are"ol&er$ may get more t"an one %er cent, o' t"e -oting rig"t$+ t"at i$ not
%ro"i.ite& .y Sec, 15052 o' t"e Banking Regulation Act, An a%%re"en$ion t"at t"e
tran$'er i$ an attem%t at cornering o' $"are$ #"en on 'act$ t"ere i$ no $co%e 'or
it+ i$ no rea$on to re'u$e regi$tration, In t"i$ ca$e+ on t"e 'act$ t"ere i$ no
%er$onal &i$/uali9cation to t"e tran$'er$, T"ey are not allege& to .e %er$on$ #"o
#ill not act in t"e intere$t$ o' t"e com%any, T"e num.er o' $"are$ in all t"e
%etition$ %ut toget"er #ill .e only roun& a.out 4 %er cent, o' t"e -oting rig"t o'
t"e total num.er o' $"are"ol&er$ o' t"e com%any, To un&er$tan& t"e$e
tran$action$ a$ an attem%t to corner t"e $"are$ i$+ to $ay t"e lea$t+ an a.u$e o'
t"e %o#er o' re'u$al to regi$ter, Section 15052 o' t"e Banking Regulation Act &oe$
not in any #ay re$trict t"e tran$'er o' $"are$ or t"eir regi$tration, T"e %olicy o'
t"e Re$er-e Bank i$ al$o not again$t t"e tran$'er o' t"e $"are$, T"e circular only
re/uire& in'ormation to .e 'urni$"e& to t"e Re$er-e Bank o' t"e tran$'er o'
$"are$+ #"ic" may amount to an attem%t to "a-e a controlling intere$t in t"e
.ank, To $ay t"at %olicy o' t"e Re$er-e Bank i$ to &i$courage tran$'er$ #"ic" may
amount to "a-e controlling intere$t in t"e .ank i$ one t"ing, But to make u$e o'
t"at %olicy a$ a cloak to re'u$e regi$tration in any ca$e #"ere on t"e 'act$ t"ere
i$ no $co%e 'or "a-ing any controlling intere$t i$ an a.u$e o' t"e %o#er, T"e
&irector$ "a-e acte& on a #rong %rinci%le or t"eir moti-e$ $eem to .e o.li/ue,
T"ere "a$ not .een a Pu$t an& legal con$i&eration o' t"e a%%lication 'or
regi$tration o' t"e $"are$, No %aramount intere$t o' t"e com%any or t"e general
intere$t$ o' t"e $"are"ol&er$ i$ $een a(ecte& .y t"e$e %ro%o$e& tran$'er$, T"at
.eing $o+ t"e re'u$al to regi$ter in all t"e$e ca$e$ $eem$ to .e an im%ro%er
e8erci$e o' t"e &i$cretion containe& in Art, 45 o' t"e Article$ o' A$$ociation o' t"e
!om%any,6*E
I' loan taken .y com%any remain$ un&i$c"arge& it &oe$ not &i$/uali'y an e8?
&irector 'orm .eing electe& a$ &irector o' t"e .ank,? )uc" argument$ #ere
a&-ance& t"at in t"e counter?aL&a-it 9le& .y t"e Bank+ t"ere #a$ not $tatement
t"at t"e loan gi-en to t"e $ai& lea$ing com%any "a& alrea&y &i$c"arge&, E-en
a$$uming t"at t"e loan remain$ un&i$c"arge&+ t"at &oe$ not a(ect t"e eligi.ility
o' T"iagaraPan to .e a &irector o' t"e Bank in -ie# o' t"e %o$ition in la# #"ic"
"a-e .een $tate& a.o-e,66E
67E F15?A, Election o' ne# &irector$,? 012 T"e Re$er-e Bank may+ .y or&er re/uire
any .anking com%any to call a general meeting o' t"e $"are"ol&er$ o' t"e
com%any #it"in $uc" time+ not le$$ t"an t#o mont"$ 'rom t"e &ate o' t"e or&er+
a$ may .e $%eci9e& in t"e or&er o' #it"in $uc" 'urt"er time a$ t"e Re$er-e Bank
may allo# in t"i$ .e"al'+ to elect in accor&ance #it" t"e -oting rig"t$ %ermi$$i.le
un&er t"i$ Act 're$" &irector$+ an& t"e .anking com%any $"all .e .oun& to
com%ly #it" t"e or&er,
052 E-ery &irector electe& un&er $u.?$ection 012 $"all "ol& oLce until t"e &ate
u%to #"ic" "i$ %re&ece$$or #oul& "a-e "el& oLce+ i' t"e election "a& not .een
"el&,
0=2 Any election &uly "el& un&er t"i$ $ection $"all not .e calle& in /ue$tion in any
!ourt,G
1=, Re$triction on commi$$ion+ .rokerage+ &i$count+ etc, on $ale o' $"are$,?
Not#it"$tan&ing anyt"ing to t"e contrary containe& in 69E FSec$, 6* an& 69 o'
t"e !om%anie$ Act+ 191* 01 o' 191*2G+ no .anking com%any $"all %ay out &irectly
or in&irectly .y #ay o' commi$$ion+ .rokerage+ &i$count o' remuneration in any
'orm in re$%ect o' any $"are$+ i$$ue& .y it+ any amount e8cee&ing in t"e
aggregate t#o an& one?"al' %er cent, o' t"e %ai&?u% -alue o' t"e $ai& $"are$,
14, 4ro"i.ition o' c"arge on un%ai& ca%ital,? No .anking com%any $"all create any
c"arge u%on any un%ai& ca%ital o' t"e com%any+ an& any $uc" c"arge $"all .e
in-ali&,
7:E F14?A, 4ro"i.ition o' >oating c"arge on a$$et$,? Not#it"$tan&ing anyt"ing
containe& in Sec,* no .anking com%any $"all create a >oating c"arge on t"e
un&ertaking or any %ro%erty o' t"e com%any or any %art t"ereo' unle$$ t"e
creation o' $uc" >oating c"arge i$ certi9e& in #riting .y t"e Re$er-e Bank a$ not
.eing &etrimental to t"e intere$t$ o' t"e &e%o$itor$ o' $uc" com%any,
052 Any $uc" c"arge create& #it"out o.taining t"e certi9cate o' t"e Re$er-e Bank
$"all .e in-ali&,
0=2 Any .anking com%any aggrie-e& .y t"e re'u$al o' a certi9cate un&er $u.?
$ection 012 may+ #it"in ninety &ay$ 'rom t"e &ate on #"ic" $uc" re'u$al i$
communicate& to it+ a%%eal to t"e !entral Go-ernment,
042 T"e &eci$ion o' t"e !entral Go-ernment #"ere an a%%eal "a$ .een %re'erre&
to it un&er $u.?$ection 0=2 or o' t"e Re$er-e Bank #"ere not $uc" a%%eal "a$
.een %re'erre& $"all .e 9nal,G
11, Re$triction$ a$ to %ayment o' &i-i&en&,? 71E F012 No .anking com%any $"all
%ay any &i-i&en& on it$ $"are$ until all it$ ca%itali$e& e8%en$e$ 0inclu&ing
%reliminary e8%en$e$+ organiMation e8%en$e$+ $"are?$elling commi$$ion+
.rokerage+ amount$ o' lo$$e$ incurre& an& any ot"er item o' e8%en&iture not
re%re$ente& .y tangi.le a$$et$2 "a-e .een com%letely #ritten o(,
75E F052 Not#it"$tan&ing anyt"ing to t"e contrary containe& in $u.?$ection 012 or
in t"e !om%anie$ Act+ 191* 01 o' 191*2+ a .anking com%any may %ay &i-i&en&$
on it$ $"are$ #it"out #riting o(?
0i2 t"e &e%reciation+ i' any+ in t"e -alue o' it$ in-e$tment$ in a%%ro-e& $ecuritie$
in any ca$e #"ere $uc" &e%reciation "a$ not actually .een ca%italiMe& or
ot"er#i$e accounte& 'or a$ a lo$$I
0ii2 t"e &e%reciation+ i' any+ in t"e -alue o' it$ in-e$tment$ in $"are$+ &e.enture or
.on&$ 0ot"er t"an a%%ro-e& $ecuritie$2 in any ca$e #"ere a&e/uate %ro-i$ion 'or
$uc" &e%reciation "a$ .een ma&e to t"e $ati$'action o' t"e au&itor o' t"e .anking
com%anyI
0iii2 t"e .a& &e.t$+ i' any+ in any ca$e #"ere a&e/uate %ro-i$ion 'or $uc" &e.t$
"a$ .een ma&e to t"e $ati$'action o' t"e au&itor o' t"e .anking com%any,G
7=E F1*, 4ro"i.ition o' common &irector$,? 74E F012 No .anking com%any
incor%orate& in In&ia $"all "a-e a$ a &irector in it$ Boar& o' 3irector$ any %er$on
#"o i$ a &irector o' any ot"er .anking com%any,
01?A2 No .anking com%any re'erre& to in $u.?$ection 012 $"all "a-e in it$ Boar& o'
3irector$+ more t"an t"ree &irector$ #"o are &irector$ o' com%anie$ #"ic" among
t"em$el-e$ are entitle& to e8erci$e -oting rig"t$ in e8ce$$ o' t#enty %er cent, o'
t"e total -oting rig"t$ o' all t"e $"are"ol&er$ o' t"at .anking com%any,G
052 I' imme&iately .e'ore t"e commencement o' t"e Banking !om%anie$
0Amen&ment2 Act+ 191* 011 o' 191*2+ any %er$on "ol&ing oLce a$ a &irector o' a
.anking com%any i$ al$o a &irector o' com%anie$ #"ic" among t"em$el-e$ are
entitle& to e8erci$e -oting rig"t$ in e8ce$$ o' t#enty %er cent, o' t"e total -oting
rig"t$ o' all t"e $"are"ol&er$ o' t"e .anking com%any+ "e $"all+ #it"in $uc"
%erio& 'rom $uc" commencement$ a$ t"e Re$er-e Bank may $%eci'y in t"i$
.e"al' ?
0a2 eit"er re$ign "i$ oLce a$ a &irector o' t"e .anking com%anyI or
0.2 c"oo$e $uc" num.er o' com%anie$ a$ among t"em$el-e$ are not entitle& to
e8erci$e -oting rig"t$ in e8ce$$ o' t#enty %er cent, o' t"e total -oting rig"t$ o' all
t"e $"are "ol&er$ o' t"e .anking com%any a$ com%anie$ in #"ic" "e #i$"e$ to
continue to "ol& t"e oLce o' a &irector an& re$ign "i$ oLce a$ &irector in t"e
ot"er com%anie$,G
71E F0=2 Not"ing in $u.?$ection 012 $"all a%%ly to+ or in relation to+ any &irector
a%%ointe& .y t"e Re$er-e Bank,G
7*E F16, Re$er-e Aun&,? 012 E-ery .anking com%any incor%orate& in In&ia $"all
create a re$er-e 'un& an& 76FEEEG $"all+ out o' t"e .alance o' %ro9t o' eac" year
a$ &i$clo$e& in t"e %ro9t an& lo$$ account %re%are& un&er Sec, 59 an& .e'ore any
&i-i&en& i$ &eclare&+ tran$'er to t"e re$er-e 'un& a $um e/ui-alent to not le$$
t"an t#enty %er cent, o' $uc" %ro9t,
77E F01?A2 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 012+ t"e !entral
Go-ernment may+ on t"e recommen&ation o' t"e Re$er-e Bank an& "a-ing
regar& to t"e a&e/uacy o' t"e %ai&?u% ca%ital an& re$er-e$ o' a .anking com%any
in relation to it$ &e%o$it lia.ilitie$+ &eclare& .y or&er in #riting t"at t"e %ro-i$ion$
o' $u.?$ection 012 $"all not a%%ly to t"e .anking com%any 'or $uc" %erio& a$ may
.e $%eci9e& in t"e or&erJ
4ro-i&e& t"at no $uc" or&er $"all .e ma&e unle$$+ at t"e time it i$ ma&e+ t"e
amount in t"e re$er-e 'un& un&er $u.?$ection 012+ toget"er #it" t"e amount in
t"e $"are %remium account i$ not le$$ t"an t"e %ai&?u% ca%ital o' t"e .anking
com%any,G
052 H"ere a .anking com%any a%%ro%riate$ any $um or $um$ 'rom t"e re$er-e
'un& o' t"e $"are %remium account+ it $"all+ #it"in t#enty?one &ay$ 'rom t"e &ate
o' $uc" a%%ro%riation+ re%ort t"e 'act to t"e Re$er-e Bank e8%laining t"e
circum$tance$ relating to $uc" a%%ro%riationJ
4ro-i&e& t"at t"e Re$er-e Bank may+ in any %articular ca$e+ e8ten& t"e $ai&
%erio& o' t#enty? one &ay$ .y $uc" %erio& a$ it t"ink$ 9t or con&one any &elay in
t"e making o' $uc" re%ort,
!))ENT
)an&ate o' Sec,16,? T"e man&ate o' Sec,16 i$ t"at e-ery .anking com%any #ill
"a-e to tran$'er to a re$er-e 'un& e-ery year+ a $um e/ui-alent to N not le$$ t"an
t#enty %er cent, o' $uc" %ro9t,O In ot"er #or&$+ at lea$t 5: %er cent, o' t"e %ro9t
a$ $"o#n in t"e %ro9t an& lo$$ account .e'ore &eclaration o' any &i-i&en& "a$ to
.e tran$'erre& to t"e re$er-e 'un&, T"i$ i$ t"e $tatutory re/uirement, I' a .anking
com%any tran$'er$ any amount in e8ce$$ o' 5: %er cent, o' it$ %ro9t o' any year
to t"i$ re$er-e 'un&+ t"e e8clu$ion in !l,08i2 0a2 #ill .e limite& to 5: %er cent, o'
t"e %ro9t #"ic" i$ t"e re/uirement o' Sec,16 012 o' t"e Banking Regulation$ Act,
79E
9:E F17, !a$" re$er-e,? 012 E-ery .anking com%any+ not .eing a $c"e&ule& .ank+
$"all maintain in In&ia .y #ay o' ca$" re$er-e #it" it$el' or .y #ay o' .alance in a
current account #it" t"e Re$er-e Bank or .y #ay o' net .alance in current
account$ or in one or more o' t"e a'ore$ai& #ay$+ a $um e/ui-alent+ to at lea$t
t"ree %er cent, o' t"e total o' it$ &eman& an& time lia.ilitie$ in In&ia a$ on t"e la$t
Ari&ay o' t"e $econ& %rece&ing 'ortnig"t an& $"all $u.mit to t"e Re$er-e Bank
.e'ore t"e t#entiet" &ay o' e-ery mont" a return $"o#ing t"e amount $o "el& on
alternate Ari&ay$ &uring a mont" #it" %articular$ o' it$ &eman& an& time
lia.ilitie$ in In&ia on $uc" Ari&ay$ or i' any $uc" Ari&ay i$ a %u.lic "oli&ay un&er
t"e Negotia.le In$trument$ Act+ 1771 05* o' 17712+ at t"e clo$e o' .u$ine$$ on
t"e %rece&ing #orking &ay,
E8%lanation,? In t"i$ $ection+ an& Sec,54+?
0a2 Nlia.ilitie$ in In&iaO $"all not inclu&e?
0i2 t"e %ai&?u% ca%ital or t"e re$er-e$ or any cre&it .alance in t"e %ro9t an& lo$$
account o' t"e .anking com%anyI
0ii2 any a&-ance taken 'rom t"e Re$er-e Bank or 'rom t"e 3e-elo%ment Bank or
'rom t"e E8im Bank 91E For 'rom t"e Recon$truction BankG 95E For 'rom t"e
National Cou$ing BankG or 'rom t"e National Bank 9=E F or 'rom t"e Small
In&u$trie$ BankG .y t"e .anking com%anyI
0iii2 in t"e ca$e o' a Regional Rural Bank+ al$o any loan taken .y $uc" .ank 'rom
it$ $%on$or BankI
0.2 N'ortnig"tO $"all mean t"e %erio& 'rom Satur&ay to t"e $econ& 'ollo#ing
Ari&ay+ .ot" &ay$ inclu$i-eI
0c2 Nnet .alance in current account$O $"all+ in relation to a .anking com%any+
mean t"e e8ce$$+ i' any+ o' t"e aggregate o' t"e cre&it .alance in current account
maintaine& .y t"at .anking com%any #it" t"e State Bank o' In&ia or a $u.$i&iary
.ank or a corre$%on&ing ne# .ank o-er t"e aggregate o' t"e cre&it .alance in
current account "el& .y t"e $ai& .ank$ #it" $uc" .anking com%anyI
0&2 'or t"e %ur%o$e$ o' com%utation o' lia.ilitie$+ t"e aggregate o' t"e lia.ilitie$ o'
a .anking com%any o' t"e State Bank o' In&ia+ a $u.$i&iary .ank+ a corre$%on&ing
ne# .ank+ a Regional Rural Bank+ anot"er .anking com%any+ a !o?o%erati-e Bank
or any ot"er 9nancial in$titution noti9e& .y t"e !entral Go-ernment in t"i$
.e"al'+ $"all .e re&uce& .y t"e aggregate o' t"e lia.ilitie$ o' all $uc" .ank$ an&
in$titution$ to t"e .anking com%anyI
0e2 t"e e8%re$$ion N!o?o%erati-e BankO $"all "a-e t"e meaning a$$igne& to it in
!l, 0cci2 o' Sec,1*,
052 T"e Re$er-e Bank may+ 'or t"e %ur%o$e$ o' t"i$ $ection an& Sec,54+ $%eci'y
'rom time to time+ #it" re'erence to any tran$action or cla$$ o' tran$action$+ t"at
$uc" tran$action or tran$action$ $"all .e regar&e& a$ lia.ility in In&ia o' a .anking
com%any an&+ i' any /ue$tion ari$e$ a$ to #"et"er any tran$action or cla$$ o'
tran$action$ $"all .e regar&e& 'or t"e %ur%o$e$ o' t"i$ $ection an& Sec,54 a$
lia.ility in In&ia o' a .anking com%any+ t"e &eci$ion o' t"e Re$er-e Bank t"ereon
$"all .e 9nal,G
19, Re$triction on nature o' $u.$i&iary com%anie$,? 94E F012 A .anking com%any
$"all not 'orm any $u.$i&iary com%any e8ce%t a $u.$i&iary com%any 'orme& 'or
one or more o' t"e 'ollo#ing %ur%o$e$+ namelyJ
0a2 t"e un&ertaking o' any .u$ine$$ #"ic"+ un&er !l$,0a2 to 0o2 o' $u.?$ection 012
o' Sec,*+ i$ %ermi$$i.le 'or a .anking com%any to un&ertake+ or
0.2 #it" t"e %re-iou$ %ermi$$ion in #riting o' t"e Re$er-e Bank+ t"e carrying on o'
t"e .u$ine$$ o' .anking e8clu$i-ely out$i&e In&ia+ or
0c2 t"e un&ertaking o' $uc" ot"er .u$ine$$+ #"ic" t"e Re$er-e Bank may+ #it" t"e
%rior a%%ro-al o' t"e !entral Go-ernment+ con$i&er to .e con&uci-e to t"e $%rea&
o' .anking in In&ia or to .e ot"er#i$e u$e'ul or nece$$ary in t"e %u.lic intere$t,
E8%lanation,? Aor t"e %ur%o$e$ o' Sec,7+ a .anking com%any $"all not .e &eeme&+
.y rea$on o' it$ 'orming or "a-ing a $u.$i&iary com%any+ to .e engage& in&irectly
in t"e .u$ine$$ carrie& on .y $uc" $u.$i&iary com%any,G
052 Sa-e a$ %ro-i&e& in $u.?$ection 012+ no .anking com%any $"all "ol& $"are$ in
any com%any+ #"et"er a$ %le&gee+ mortgagee or a.$olute o#ner+ o' an amount
e8cee&ing t"irty %er cent, o' t"e %ai&?u% $"are ca%ital o' t"at com%any or t"irty
%er cent, o' it$ o#n %ai&?u% $"are ca%ital an& re$er-e$+ #"ic"e-er i$ le$$J
4ro-i&e& t"at any .anking com%any #"ic" i$ on t"e &ate o' t"e commencement
o' t"i$ Act "ol&ing any $"are$ in contra-ention o' t"e %ro-i$ion$ o' t"i$ $u.?
$ection $"all not .e lia.le to any %enalty t"ere'ore i' it re%ort$ t"e matter #it"out
&elay to t"e Re$er-e Bank an& i' it .ring$ it$ "ol&ing o' $"are$ into con'ormity
#it" t"e $ai& %ro-i$ion$ #it"in $uc" %erio&+ not e8cee&ing t#o year$+ a$ t"e
Re$er-e Bank may t"ink 9t to allo#,
0=2 Sa-e a$ %ro-i&e& in $u.?$ection 012+ an& not#it"$tan&ing anyt"ing containe&
in $u.?$ection 052+ a .anking com%any $"all not+ a'ter t"e e8%iry o' one year 'rom
t"e &ate o' t"e commencement o' t"i$ Act+ "ol& $"are$+ #"et"er a$ %le&gee+
mortgagee or a.$olute o#ner+ in any com%any in t"e management o' #"ic" any
)anaging 3irector or manager o' t"e .anking com%any i$ in any manner
concerne& or intere$te&,
91E F5:, Re$triction$ on loan$ an& a&-ance$,? 012 Not#it"$tan&ing anyt"ing to t"e
contrary containe& in Sec,66 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ no .anking
com%any $"all+?
0a2 grant any loan$ or a&-ance$ on t"e $ecurity o' it$ o#n $"are$+ or
0.2 enter into any commitment 'or granting any loan or a&-ance or a&-ance to or
on .e"al' o' Q
0i2 any o' it$ &irector$+
0ii2 any 9rm in #"ic" any o' it$ &irector$ i$ intere$te& a$ %artner+ manager
em%loyee or guarantor+ or
0iii2 any com%any 0not .eing a $u.$i&iary o' t"e .anking com%any or a com%any
regi$tere& un&er Sec,51 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ or a
Go-ernment com%any2G o' #"ic" 9*E For t"e $u.$i&iary or t"e "ol&ing com%any
o' #"ic"G any o' t"e &irector$ o' t"e .anking com%any i$ a &irector+ managing
agent+ manager+ em%loyee or guarantor or in #"ic" "e "ol&$ $u.$tantial intere$t+
or
0i-2 any in&i-i&ual in re$%ect o' #"om any o' it$ &irector$ i$ a %artner or
guarantor,
052 H"ere any loan or a&-ance grante& .y a .anking com%any i$ $uc" t"at a
commitment 'or granting it coul& not "a-e .een ma&e i' !l,0.2 o' $u.?$ection 012
"a& .een in 'orce on t"e &ate on #"ic" t"e loan or a&-ance #a$ ma&e+ or i$
grante& .y a .anking com%any a'ter t"e commencement o' Sec,1 o' t"e Banking
La#$ 0Amen&ment2 Act+ 19*7 017 o' 19*72+ .ut in %ur$uance o' a commencement
o' Sec,1 o' t"e Banking La#$ 0Amen&ment2 Act+ 19*7 017 o' 19*72+ .ut in
%ur$uance o' a commitment entere& into .e'ore $uc" commencement+ $te%$
$"all .e taken to reco-er t"e amount$ &ue to t"e .anking com%any on account o'
t"e loan or a&-ance toget"er #it" intere$t+ i' any+ &ue t"ereon #it"in t"e %erio&
$ti%ulate& at t"e time o' t"e grant o' t"e loan or a&-ance+ or #"ere no $uc"
%erio& "a$ .een $ti%ulate&+ .e'ore t"e e8%iry o' one year 'rom t"e
commencement o' t"e $ai& Sec,1J
4ro-i&e& t"at t"e Re$er-e Bank may+ in any ca$e on an a%%lication in #riting
ma&e to it .y t"e .anking com%any in t"i$ .e"al'+ e8ten& t"e %erio& 'or t"e
reco-ery o' t"e loan or a&-ance until $uc" &ate+ not .eing a &ate .eyon& t"e
%erio& o' t"ree year$ 'rom t"e commencement o' t"e $ai& Sec, 1+ an& $u.Pect to
$uc" term$ an& con&ition$+ a$ t"e Re$er-e Bank may &eem 9tJ
4ro-i&e& 'urt"er t"at t"i$ $u.?$ection $"all not a%%ly i' an& #"en t"e &irector
concerne& -acate$ t"e oLce o' t"e &irector o' t"e .anking com%any+ #"et"er .y
&eat"+ retirement+ re$ignation or ot"er#i$e,
0=2 No loan or a&-ance+ re'erre& to in $u.?$ection 052+ or any %art t"ereo' $"all .e
remitte& #it"out t"e %re-iou$ a%%ro-al o' t"e Re$er-e Bank+ an& any remi$$ion
#it"out $uc" a%%ro-al $"all .e -oi& an& o' no e(ect,
042 H"ere any loan or a&-ance re'erre& to in $u.?$ection 052+ %aya.le .y any
%er$on+ "a$ not .een re%ai& to t"e .anking com%any #it"in t"e %erio& $%eci9e&
in t"at $u.?$ection+ t"en $uc" %er$on $"all+ i' "e i$ a &irect o' $uc" .anking
com%any on t"e &ate o' t"e e8%iry o' t"e $ai& %erio&+ .e &eeme& to "a-e
-acate& "i$ oLce a$ $uc" on t"e $ai& &ate,
E8%lanation,? In t"i$ $ection+?
0a2 Nloan$ or a&-anceO $"all not inclu&e any tran$action #"ic" t"e Re$er-e Bank
may+ "a-ing regar& to t"e nature o' t"e tran$action+ t"e %erio& #it"in #"ic"+ an&
t"e manner an& circum$tance$ in #"ic"+ any amount &ue on account o' t"e
tran$action i$ likely to .e realiMe&+ t"e intere$t o' t"e &e%o$itor$ an& ot"er
rele-ant con$i&eration$+ $%eci'y .y general or $%ecial or&er a$ not .eing a loan or
a&-ance 'or t"e %ur%o$e o' t"i$ $ectionI
0.2 N&irectorO inclu&e$ a mem.er o' any .oar& or committee in In&ia con$titute&
.y a .anking com%any 'or t"e %ur%o$e o' managing+ or 'or t"e %ur%o$e o'
a&-i$ing it in regar& to t"e management o'+ all or any o' it$ a(air$,
012 I' any /ue$tion ari$e$ #"et"er any tran$action i$ a loan or a&-ance 'or t"e
%ur%o$e$ o' t"i$ $ection+ it $"all .e re'erre& to t"e Re$er-e Bank+ #"o$e &eci$ion
t"ereon $"all .e 9nal,G
!))ENT
Re$triction "a$ .een im%o$e& on loan$ an& a&-ance$, S"are$+ &irector$ an& any
9rm in #"ic" &irector$ are intere$te& a$ a %artner $"all not get grant an& loan$
are a&-ance& .y .anking com%any,
!om%laint to .anking m.u&$man "a$ to .e in #riting,? T"e o.Pection taken .y
t"e .ank t"at .e'ore a com%laint can .e entertaine& t"e %etitioner i$ to %re'er a
re%re$entation mu$t .e $u$taine&, T"i$ i$ man&atory, In t"i$ ca$e+ no $uc"
re%re$entation "a$ 9le&, T"e re%re$entation 9le& in t"e year 199= cannot .e
looke& into .ecau$e t"i$ #a$ 9le& more t"an a year .e'ore t"e a%%lication #a$
%re'erre& .e'ore t"e .anking m.u&$man, Bar o' limitation in&icate& in !l, 1* 0=2
0.2 #oul& .e attracte&,96E
97E F5:?A, Re$triction on %o#er to remit &e.t$,? 012 Not#it"$tan&ing anyt"ing to
t"e contrary containe& in Sec,59= o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ a
.anking !om%any $"all not+ e8ce%t #it" t"e %rior a%%ro-al o' t"e Re$er-e Bank+
remit in #"ole or in %art any &e.t &ue to it .y Q
0a2 any o' it$ &irector$+ or
0.2 any 9rm or com%any in #"ic" any o' it$ &irector$ i$ intere$te& a$ &irector+
%artner+ managing agent or guarantor+ or
0c2 any in&i-i&ual i' any o' it$ &irector i$ "i$ %artner or guarantor,
052 Any remi$$ion ma&e in contra-ention o' t"e %ro-i$ion$ o' $u.? $ection 012 $"all
.e -oi& an& o' no e(ect,G
51, 4o#er o' Re$er-e Bank to control a&-ance$ .y .anking com%anie$,?012 H"ere
t"e Re$er-e Bank i$ $ati$9e& t"at it i$ nece$$ary or e8%e&ient in t"e %u.lic
intere$t 99E For in t"e intere$t$ o' &e%o$itor$G 1::E For .anking %olicyG $o to &o+ it
may &etermine t"e %olicy in relation to a&-ance$ to .e 'ollo#e& .y .anking
com%anie$ generally or .y any .anking com%anie$ or t"e .anking com%any
concerne&+ a$ t"e ca$e may .e+ $"all .e .oun& to 'ollo# t"e %olicy a$ $o
&etermine&,
052 Hit"out %rePu&ice to t"e generality o' t"e %o#er -e$te& in t"e Re$er-e Bank
un&er $u.?$ection 012+ t"e Re$er-e Bank may gi-e &irection$ to .anking
com%anie$+ eit"er generally or to any .anking com%any or grou% o' .anking
com%anie$ in %articular+ 1:1E Fa$ to ?
0a2 t"e %ur%o$e$ 'or #"ic" a&-ance may or may not .e ma&e+
0.2 t"e margin$ to .e maintaine& in re$%ect o' $ecure& a&-ance$+
0c2 t"e ma8imum amount o' a&-ance$ or ot"er 9nancial accommo&ation #"ic"+
"a-ing regar& to t"e %ai&?u% ca%ital+ re$er-e any &e%o$it$ o' a .anking com%any
an& rele-ant con$i&eration$+ may .e ma&e .y t"at .anking com%any+ to any one
com%any+ 9rm+ a$$ociation o' %er$on$ or in&i-i&ual+
0&2 t"e ma8imum amount u% to #"ic"+ "a-ing regar& to t"e con$i&eration$
re'erre& to in !l0c2+ guarantee$ may .e gi-en .y a .anking com%any on .e"al' o'
any one com%any+ 9rm+ a$$ociation o' %er$on$ or in&i-i&ual+ an&
0e2 t"e rate o' intere$t an& ot"er term$ an& con&ition$ on #"ic" a&-ance$ or
ot"er 9nancial accommo&ation may .e ma&e or guarantee$ may .e gi-en,G
1:5E F0=2 E-ery .anking com%any $"all .e .oun& to com%ly #it" any &irection$
gi-en to it un&er t"i$ $ection,G
!))ENTS
Banking com%any .oun& to com%ly #it" any &irection i$$ue& .y R,B,I,? Un&er
Sec,51 o' t"e Banking Regulation Act+ 1949+ t"e Re$er-e Bank "a$ got t"e %o#er
to control a&-ance$ to .e ma&e .y t"e Banking !om%anie$, H"en t"e Re$er-e
Bank i$ $ati$9e& t"at it i$ nece$$ary an& e8%e&ient in %u.lic intere$t or Banking
%olicy $o to &o+ it can &etermine t"e %olicy in relation to a&-ance$ to .e 'ollo#e&
.y t"e .anking com%anie$ generally or any .anking com%any in %articular, T"e
.anking com%anie$ are .oun& to 'ollo# t"e %olicy $o &etermine&, Re$er-e Bank
"a$ al$o t"e %o#er to gi-e &irection a$ to t"e rate o' intere$t an& ot"er term$ an&
con&ition$ on #"ic" a&-ance$ or ot"er 9nancial accommo&ation$ may .e ma&e
or guarantee gi-en, T"e circular i$$ue& .y t"e Re$er-e Bank o' In&ia regulating
rate o' intere$t c"argea.le on loan$ an& t"e manner o' c"arging intere$t are
$tatutory circular$ i$$ue& #it" lau&a.le %ur%o$e$ an& are .in&ing on t"e
.ank$,1:=E
!ourtU$ &i$cretion in granting rate o' intere$t,? T"e !ourt "a$ no &i$cretion to
grant a &i(erent rate o' intere$t t"an t"e contractual rate o' intere$t+ 'rom t"e
&ate it i$ &ue an& %aya.le to t"e &ate it i$ actually %ai&, In t"e ca$e o'
commercial loan$ o' t"e .ank$+ Sec,=4 o' t"e !o&e o' !i-il 4roce&ure+ 19:7 i$ to
.e a%%lie& in t"e conte8t o' circular$V&irection$ i$$ue& .y t"e Re$er-e Bank o'
In&ia un&er Sec,51 an& =1?A o' t"e Banking Regulation Act+ 1949, 1:4E
Banking %olicy an& t"e rate o' intere$t &etermine& .y t"e Re$er-e Bank o' In&ia
are .in&ing on t"e Banking com%anie$,? H"en t"e Re$er-e Bank i$ $ati$9e& t"at
it i$ nece$$ary or e8%e&ient in %u.lic intere$t+ o' .anking %olicy $o to &o+ it can
&etermine t"e %olicy in relation to a&-ance$ to .e 'ollo#e& .y t"e .anking
com%anie$ generally or any .anking com%anie$ in %articular, T"e .anking
com%anie$ are .oun& to 'ollo# t"e %olicy $o &etermine&, Re$er-e Bank "a$ al$o
t"e %o#er to gi-e &irection$ a$ to t"e rate o' intere$t an& ot"er term$ an&
con&ition$ on #"ic" a&-ance$ or ot"er 9nancial accommo&ation$ may .e ma&e
or guarantee gi-en, E-ery .anking com%any $"all .e .oun& to com%ly #it" any
&irection gi-en to it .y t"e Re$er-e Bank un&er Sec,51, T"e circular$ i$$ue& .y
t"e Re$er-e Bank o' In&ia regulating rate o' intere$t c"argea.le on loan$ an& t"e
manner o' c"arging intere$t are $tatutory circular$ i$$ue& #it" lau&a.le %ur%o$e$
an& are .in&ing on t"e .ank$, 1:1E
Total amount a&Pu&ge& to .e t"e %rinci%al amount,? At t"e time o' t"e %a$$ing o'
t"e &ecree+ t"e total amount #a$ a&Pu&ge& to .e t"e %rinci%al amount an&+
t"ere'ore t"e %lainti( Bank #a$ rig"tly gi-en intere$t t"ereon at t"e rate o' 1=1V5
%er cent, %er annum, )oreo-er+ t"e amount$ $oug"t to .e reali$e& .y t"e Bank
'rom t"e &e'en&ant$ are gi-en 'rom time to time in t"e notice$ i$$ue& .y it an&+
t"ere'ore+ t"e %rinci%al amount 'oun& &ue not only mean$ t"e %rinci%al amount
a$ $uc"+ .ut al$o t"e amount &ue on intere$t #"ic" "a$ .ecome %art o' t"e
%rinci%al amount a$ %er t"e calculation$ o' t"e Bank,1:*E
Wue$tion o' la# Q )aintaina.ility o' a%%eal, ? T"e /ue$tion #"et"er nationali$e&
.ank$+ o.lige& to c"arge intere$t at $%eci9e& rate in accor&ance #it" t"e
circular$ an& &irecti-e$ %erio&ically i$$ue& .y t"e Re$er-e Bank o' In&ia un&er t"e
%ro-i$ion$ o' t"e Banking Regulation$ Act+ can .e taken out o' t"e category o'
ca$e$ #"ere t"e %re$um%tion regar&ing e8ce$$i-e nature o' intere$t un&er t"e
%ro-i$ion o' t"e U$uriou$ Loan$ Act can .e rai$e&+ i$ a /ue$tion o' la# an& t"at
only t"at /ue$tion #a$ rai$e& an& &e.ate& .e'ore t"e Lo#er A%%ellate !ourt an&+
t"ere'ore+ t"e a%%eal &i& in-ol-e a /ue$tion o' la#, In t"e in$tant ca$e+ it i$ clear
'rom a %eru$al o' t"e memoran&um o' a%%eal 9le& .e'ore t"e !ourt .elo# an&
t"e Pu&gment t"erein &i$clo$e$ t"at t"e a%%eal #a$ 9le& an& argue& on a
/ue$tion o' la#+ -iM,+ t"e a%%lica.ility o' t"e %ro-i$ion$ o' t"e U$uriou$ Loan$ Act+
to nationali$e& .ank$ 'unctioning un&er t"e %ro-i$ion$ o' t"e Banking Regulation
Act an& t"e $co%e an& e(ect o' Sec,= an& t"e %ro-i$ion$ t"ereun&er, Be$i&e$+ t"i$
-ery /ue$tion #a$ argue& at great lengt" .e'ore t"e Cig" !ourt, No o.Pection
regar&ing t"e incom%etency o' t"e a%%eal on t"e $core t"at it in-ol-e& a /ue$tion
o' 'act+ #a$ e-er attem%te& to .e rai$e& .y t"e re$%on&ent$ in t"e !ourt .elo#,
T"u$ it i$ too late to urge t"at no /ue$tion o' la# aro$e in t"e a%%eal .e'ore t"e
!ourt .elo#, It coul& not .e $ai& t"at no /ue$tion o' la# aro$e an&+ t"ere'ore+ t"e
a%%eal #a$ not com%etent,1:6E
!"arging o' intere$t on agricultural loan,? In t"e ca$e o' agricultural loan$
com%oun&ing o' intere$t #it" /uarterly or "al'?yearly re$t$ i$ not %ermi$$i.le+ t"e
intere$t can .e 98e& #it" annual re$t$, But #"en t"e loan amount "a$ .ecome
o-er&ue or t"e in$talment "a$ .een o-er&ue+ it i$ o%en to t"e Bank$ to a&& t"e
amount o' intere$t #it" t"e %rinci%al $um t"at "a$ .ecome &ue calculate& at
yearly re$t$ t"at intere$t coul& .e a&&e& to#ar&$ t"e %rinci%al amount,
T"ere'ore+ t"e &ecree #"ic" "a$ .een %a$$e& in t"e in$tant ca$e 'or a $um o'
R$,5+95+74*+:6 calculating t"e intere$t at t"e rate o' 1*,1< %,a, #it" yearly re$t$
cannot .e $ai& to $u(er 'rom error o' la#,1:7E
Re$er-e Bank &irecti-e$ an& t"eir im%ortance,? T"e &i$cretion #a$ gi-en to .ank$
to c"arge intere$t a.o-e t"e minimum+ .ut t"at &oe$ not mean t"at .ank$ coul&
c"arge unrea$ona.le+ or e8ce$$i-e intere$t, Bank$ are %u.lic in$titution$ an& not
Pu$t money?len&er$, In t"e a.$ence o' Re$er-e Bank &irecti-e$+ t"ey are+
t"ere'ore+ re/uire& to 'ollo# t"e .anking %ractice generally acce%te& .y all
.ank$, It i$ clear t"at t"e or&inary %ractice or cu$tom o' .ank$ #a$ only to c"arge
intere$t #it" yearly or "al'?yearly re$t$ an& t"at too only on o-er&ra't amount$
an& un$ecure& loan$, T"e mont"ly+ or /uarterly re$t$+ t"ere'ore+ &oe$ not a%%ear
to .e t"e recogniMe& .anking %ractice, It may .e t"at $ome .ank$ a$ in t"e
%re$ent ca$e+ mig"t "a-e c"arge& intere$t #it" /uarterly re$t$ or mont"ly re$t$
on $ome tran$action$+ .ut to $tate t"at it #a$ a .anking %ractice generally
acce%te& or uni-er$ally 'ollo#e& .y all .ank$+ i$ 'ar 'rom true,1:9E
11:E F51?A, Rate$ o' intere$t c"arge& .y .anking com%anie$ not to .e $u.Pect to
$crutiny .y !ourt$,? Not#it"$tan&ing anyt"ing containe& in t"e U$uriou$ Loan$
Act+ 1917 01: o' 19172+ or any ot"er la# relating to in&e.te&ne$$ in 'orce in any
State+ a tran$action .et#een a .anking com%any an& it$ &e.tor $"all not .e
reo%ene& .y any !ourt on t"e groun& t"at t"e rate o' intere$t c"arge& .y t"e
.anking com%any in re$%ect o' $uc" tran$action i$ e8ce$$i-e,G
!))ENTS
Sco%e o' Sec,51?A,? In a ca$e t"e An&"ra 4ra&e$" Cig" !ourt "el& t"at Sec, 51?A
i$ inten&e& to %re-ent reo%ening t"e tran$action on t"e groun& t"at t"e rate o'
intere$t c"arge& .y t"e .anking com%any in re$%ect o' $uc" tran$action i$
e8ce$$i-e, T"e relie' un&er t"e State Act i$ not on t"e groun& t"at it i$ e8ce$$i-e
.ut it i$ on t"e groun& t"at t"e general in&e.te&ne$$ o' agriculturi$t$ $"all .e
relie-e& an& t"ey $"oul& not .e re/uire& to %ay more t"an t"e $tatutory an& al$o
to li/ui&ate certain &e.t$ in it$ $c"eme,111E
Section may .e rele-ant to t"e agree& rate o' intere$t .ut not to t"e rate o'
intere$t unilaterally 98e& .y t"e .anking com%any,115E
T"e %ro-i$ion$ o' Sec,51?A cannot .e "el& to "a-e inten&e& to o-erri&e a !entral
Legi$lation like t"e !o&e o' !i-il 4roce&ure or r&er DDDIR+ rule 11+ !,4,!,11=E
A%%lica.ility o' Sec, 51?A,? 012 Section 51?A o' t"e Banking Regulation Act+ 1949
a%%lie$ to all tran$action$ entere& into .et#een t"e .anking com%any an& it$
&e.tor #"et"er t"e tran$action #a$ entere& into %rior to it$ commencement or
a'ter,
052 Section 51?A o' t"e Banking Regulation Act+ 1949+ a%%lie$ to t"e $uit$ %en&ing
on t"e &ate o' coming into 'orce o' t"e $ai& $ection,
0=2 Section 51?A a%%lie$ to %en&ing a%%eal$ irre$%ecti-e o' t"e 'act #"et"er a
&ecree #a$ %a$$e& gi-ing relie' to t"e &e.tor or not,
042 Section 51?A make no &i$tinction .et#een an a&-ance ma&e 'or agricultural
%ur%o$e or 'or commercial %ur%o$e an& it e/ually a%%lie$ to .ot",114E
!on$titutional -ali&ity o' Sec, 51?A,? Section 51?A o' t"e Banking Regulation Act
e8%re$$ly o-erri&e$ t"e %ro-i$ion$ o' t"e U$uriou$ Loan$ Act inclu&ing any ot"er
la# relating to in&e.te&ne$$ in any State, Section 51?A o' t"e Banking Regulation
Act i$ only %ro$%ecti-e an& it i$ not retro$%ecti-e in o%eration, A 3i-i$ional .enc"
o' An&"ra 4ra&e$" Cig" !ourt con$i$ting o' Ramarao+ S, an& Ko&an&aramaia"+ S, in
A, S, No,=15 V 67 an& .atc" u%"el& t"e con$titutional -ali&ity o' Sec, 51?A o' t"e
Banking Regulation Act,111E
Co# 'ar re$traint on t"e %art o' !ourt,? T"oug" Sec, 51?A o' t"e Act i$ a re$traint
on t"e %o#er o' t"e !ourt+ $uc" re$traint #ill not %reclu&e t"e !ourt$ 'rom
reo%ening t"e tran$action .et#een t"e .ank an& it$ &e.tor i' it i$ e$ta.li$"e& t"at
t"e .ank "a$+ in -iolation o' t"e &irecti-e$ containe& in t"e rele-ant circular$ or
any ot"er %ro-i$ion$ o' la#+ c"arge& intere$t at a rate &i(erent 'rom t"at
$%eci9e& in t"e circular$ an& "a-e #"ile $ettling t"e account$ com%oun&e&
intere$t ot"er#i$e t"an yearly in t"e ca$e o' loan$ to #"ic" t"e circular$ a%%ly,
T"at .eing t"e %o$ition+ Sec,51?A cannot .e legally un&er$too& a$ a %ro-i$ion
re$training t"e !ourt$ 'rom e8erci$ing it$ %o#er$ to gi-e relie' to a %arty
#"ene-er any .anking claim$ i$ in -iolation o' t"e circular$ i$$ue& un&er Sec,51
o' t"e Act,11*E
Non?action on t"e %art o' .ank,? In t"e in$tant ca$e t"e &e'en&ant "a& &e9nitely
in'orme& t"e %lainti( t"at $"e #a$ al$o making arrangement 'or $ale o' t"e
$"are$ an& $"e "a& alrea&y entere& into an agreement #it" a t"ir& %arty
t"ere'ore, S"e #ante& t"e .ank not to take any &ra$tic action an& gi-e "er $ome
time, T"u$+ t"e &e'en&ant #a$ $to%%ing %lainti(?.ank 'rom taking any action, In
t"e$e circum$tance$+ $"e cannot %lea& t"at t"e .ank 'aile& to take action in time
an& t"ere.y cau$e& lo$$ to "er,116E
Section o-erri&e$ U$uriou$ Loan$ Act,? Section 51?A o' t"e Banking Regulation Act
e8%re$$ly o-erri&e$ t"e %ro-i$ion$ o' t"e U$uriou$ Loan$ Act inclu&ing any ot"er
la# relating to in&e.te&ne$$ in any State,117E
Co#e-er+ t"e intere$t in re$%ect o' agricultural tran$action "a$ to .e
com%oun&e& only on t"e .a$i$ o' yearly re$t$ an& not #it" /uarterly or "al'?
yearly re$t$I #"erea$ in re$%ect o' commercial tran$action$ c"arging o' intere$t
#it" /uarterly or any $uc" longer re$t$ i$ a&mi$$i.le,119E
Section 51?A cannot take a#ay t"e .ene9t alrea&y grante& .y !ourt$ .e'ore t"e
U$uriou$ Loan$ Act came into 'orce,15:E
Un&er Sec,51?A o' t"e Banking Regulation Act+ 1949+ a$ amen&e&+ t"e a%%lication
o' t"e U$uriou$ Loan$ Act i$ ma&e in e(ect im%ermi$$i.le 'rom 11t" Ae.ruary+
1974, It i$ only a 'e# &ay$ .e'ore t"at &ate t"at t"i$ $uit #a$ in$titute&, It #oul&
.e im%ermi$$i.le 'or a !ourt &ecreeing a $uit to $eek to reo%en a tran$action on
t"e .a$i$ o' Sec,= o' t"e U$uriou$ Loan$ Act unle$$ at t"e &ate o' %a$$ing o' t"e
&ecree+ t"e !ourt #ere 'ree to a%%ly t"e $ai& Act to t"e tran$action co-ere& .y
t"e $uit,151E
4ayment o' intere$t a$ %er agreement,? H"ere it #a$ $%eci9cally %lea&e& .y t"e
a%%ellant? .ank in t"e %laint t"at t"ere #a$ a contract 'or %ayment o' /uarterly
re$t$ intere$t an& in t"e relie' clau$e+ a %rayer #a$ ma&e 'or a &ecree o' intere$t
#it" /uarterly re$t$, An i$$ue #a$ al$o 'rame& an& e-i&ence on .e"al' o' t"e
.ank #a$ al$o recor&e& .y t"e trial !ourt+ .ut t"e re$%on&ent "a& not %ro&uce&
any e-i&ence in re.uttal, T"ere #a$+ t"ere'ore+ no Pu$ti9cation 'or t"e trial !ourt
'or not granting intere$t #it" /uarterly re$t$, No ca$e #a$ ma&e out .y t"e
re$%on&ent$ 'or e8erci$ing a &i$cretion 'or a#ar& o' le$$er rate o' intere$t or to
#ai-e t"e com%oun& intere$t,155E
Amen&e& $ection coming into 'orce &uring %en&ency o' a%%eal+ can .e taken
notice o' .y A%%ellate !ourt an& &ecree to .e mo&i9e&,? It i$ #ell e$ta.li$"e& t"at
an a%%eal i$ t"e continuation o' t"e $uit an&+ t"ere'ore+ Sec,51?A o' t"e Banking
Regulation Act+ 1949 #oul& a%%ly to 'act$ o' t"e ca$e #"en t"e learne& $ingle
Su&ge e8erci$e& "i$ a%%ellate %o#er un&er Sec,9* o' t"e !o&e o' !i-il 4roce&ure,
Section 1:6 052 o' t"e !o&e o' !i-il 4roce&ure gi-e$ %o#er to an A%%ellate !ourt
almo$t t"e $ame %o#er$ a$ t"at o' Trial !ourt, It "a$ al$o %o#er to notice t"e
$u.$e/uent e-ent$, T"ere'ore t"e learne& $ingle Su&ge $"oul& "a-e a%%lie&
Sec,51?A o' t"e Banking Regulation Act+ 1949 an& "el& t"at t"e Act o' 1917 #a$
not a%%lica.le to a tran$action .et#een t"e a%%ellant an& re$%on&ent$,
t"er#i$e+ t"e re$ult #oul& .e $tarting in ca$e t"e learne& $ingle Su&ge
reman&e& t"e ca$e+ t"e Trial !ourt #oul& .e com%elle& to take notice o' Sec,51?A
o' t"e Banking Regulation Act+ 1949+ an& %a$$ &ecree accor&ingly, T"e re$ult
#oul& .e incongruou$ an& -agariou$ i' it i$ not "el& t"at t"e !ourt #a$ .oun& to
take notice o' amen&ment in la# at t"e time o' %a$$ing &ecree at a%%ellate $tage
an& -ary t"e &ecree o' t"e Trial !ourt accor&ing to t"e la# o.taining a'ter t"e
amen&ment, T"ere'ore+ it #a$ "el& t"at amen&e& Sec, 51?A o' t"e Banking
Regulation Act+ 1949 #oul& .e a%%lica.le at t"e a%%ellate $tage too an& t"e
!ourt mu$t %a$$ a &ecree in accor&ance #it" t"e c"ange& la#,15=E
4en&ente lite an& 'uture intere$t,? A'ter t"e coming into 'orce o' Sec,51?A o' t"e
Banking Regulation Act+ 1949 #"ic" came into 'orce on 11t" Ae.ruary+ 1974+ t"e
!ourt "a$ no %o#er to re&uce t"e rate o' %en&ente lite an& 'uture intere$t
%aya.le .y Pu&gment &e.tor$ in $uit$ 9le& .y nationali$e& .ank$ 'or reco-ery o'
loan$, In t"e %re$ent ca$e t"e 3i$trict !ourt committe& an error in not allo#ing
intere$t at t"e co-enante& rate %en&ente lite, T"e !ourt i$ .oun& to a#ar&
intere$t at t"e co-enante& rate,154E
Section 51?A relate$ to %roce&ural la# an& i$ a%%lica.le to tran$action$ %rior to
t"e &ate o' in$ertion o' Sec,51?A? It o-erri&e$ Sec,41 o' t"e )a&ra$ La# Act, Q
Section 51?A o' t"e Banking Regulation Act+ relate$ to %roce&ural la# an& i$
a%%lica.le to t"e tran$action$ %rior to t"e &ate o' in$ertion o' Sec, 51?A o' t"e
Banking Regulation Act, T"e a%%ellant #a$+ t"ere'ore+ entitle& to intere$t at t"e
rate o' 1= %er cent, %er annum #it" $i8 mont"ly re$t$+ a$ agree& to .et#een t"e
%artie$ an& a$ mentione& in t"e initial loan &ocument,151E
Re$tro$%ecti-e o%eration o' t"e Act,? Section 51?A o' t"e Banking Regulation Act+
#"ic" came into 'orce 'rom 11t" Ae.ruary+ 1974+ i$ %ro$%ecti-e an& not
retro$%ecti-e,15*E
!ourt not em%o#ere& to reo%en t"e tran$action,? In t"e %re$ent ca$e+ t"ere i$ a
#ritten contract .et#een t"e %artie$ containe& in t"e "y%ot"ecation agreement
&ate& =1$t cto.er+ 196*+ t"at t"e .orro#er $"all %ay intere$t on t"e %rinci%al
amount or t"e .alance out$tan&ing o' t"e loan at any time at t"e rate o' 6,1 %er
cent, %er annum o-er an& a.o-e t"e Re$er-e Bank o' In&ia rate o' intere$t
$u.Pect+ "o#e-er+ to a minimum o' 1*,1 %er cent, %er annum an& $uc" intere$t i$
to .e %ai& e-ery mont" en&ing #it" t"e la$t #orking &ay o' calen&ar mont",
!lau$e 052 0c2 'urt"er %ro-i&e$ t"at+ in &e'ault o' %ayment o' any one in$talment
o' t"e %rinci%al amount on t"e &ue &ate+ t"e .orro#er $"all %ay on all $uc"
o-er&ue in$talment$ or $uc" %ortion t"ereo' a$ $"all t"en remain out$tan&ing+
intere$t at = %er cent, %er annum o-er an& a.o-e t"e agree& rate mentione& in
!l, 0.2 a.o-e, A$ lai& &o#n .y Sec,51?A+ t"e !ourt i$ not em%o#ere& no# to
reo%en t"i$ tran$action .et#een t"e %artie$ on t"e groun& t"at t"e rate o'
intere$t c"arge& .y t"e %lainti( .ank in re$%ect o' t"e tran$action i$ e8ce$$i-e, It
i$ t"e ca$e o' t"e %lainti(?.ank in %ara, 16 o' t"e %laint t"at t"e &e'en&ant$ 'aile&
to re%ay t"e $ecure& loan in 4: mont"ly in$talment$ o' R$,5+::: eac", T"e
&e'en&ant$ are al$o allege& to "a-e 'aile& to %ay t"e ca$" cre&it o-er&ra't loan o'
R$, 61+::: .e'ore cto.er =1+ 1966, In t"e$e circum$tance$+ t"e %lainti( .ank i$
'ully entitle& to claim %enal intere$t on o-er&ue in$talment$,156E
Rea$ona.le cla$$i9cation,? T"e $c"e&ule& .ank$ are c"arging intere$t in
accor&ance #it" t"e gui&eline$ o' t"e Re$er-e Bank o' In&ia an& uni'ormly 'rom
all agriculturi$t$ in t"e State #it"out any &i$crimination $o 'ar a$ agricultural &e.t
i$ concerne&, T"e rate o' intere$t i$ uni'orm an& i$ neit"er unrea$ona.le nor
ar.itrary or e8or.itant $o a$ to 'all #it"in t"e -ice o' &i$crimination, T"e
cla$$i9cation mu$t .e 'oun&e& on an intelligi.le &i(erentiation #"ic"
&i$tingui$"e$ %er$on$ or t"ing$ t"at are to .e %ut toget"er 'rom ot"er$ le't out o'
t"e grou% an& t"at t"e &i(erential mu$t "a-e rational relation$"i% to t"e o.Pect
$oug"t to .e ac"ie-e& .y t"e $tatute in /ue$tion+ "a-e .een 'oun& in t"i$ conte8t
o' t"e %ro-i$ion$ o' Sec,4 0c2 o' t"e Act a$ %ermi$$i.le cla$$i9cation,157E
Letter #ritten to a cre&itor #"et"er re/uire$ regi$tration,? T"e %o$ition o' la#
a%%ear$ to .e t"at t"e te$t to .e a%%lie& to conclu&e #"et"er a letter #ritten to a
cre&itor at t"e time o' t"e &e%o$it o' title &ee&$ o' $u.$e/uent to t"e title &ee&$
re/uire$ regi$tration or not &e%en&$ on t"e matter$ containe& in t"at letter an& i'
it recite$ t"at t"roug" t"i$ letter t"e mortgage #a$ create& t"en only it #oul&
re/uire regi$tration ot"er#i$e not,159E
!ontrol o' a&-ance$, ? Un&er Sec,51 o' t"e Banking Regulation Act+ 1949+ t"e
Re$er-e Bank "a$ got t"e %o#er to control a&-ance$ to .e ma&e .y .anking
com%anie$, H"en t"e Re$er-e Bank i$ $ati$9e& t"at it i$ nece$$ary or e8%e&ient
in %u.lic intere$t or .anking %olicy $o to &o+ it can &etermine t"e %olicy in relation
to a&-ance$ to .e 'ollo#e& .y .anking com%anie$ generally or .y any .anking
com%any in %articular, Banking com%anie$ are .oun& to 'ollo# t"e %olicy $o
&etermine&, T"e Re$er-e Bank "a$ al$o t"e %o#er to gi-e &irection$ a$ to t"e
rate o' intere$t an& ot"er term$ an& con&ition on #"ic" a&-ance$ or ot"er
9nancial accommo&ation$ may .e ma&e or guarantee$ gi-en, E-ery .anking
com%any $"all .e .oun& to com%ly #it" any &irection gi-en to it .y t"e Re$er-e
Bank un&er Sec,51, T"e circular$ i$$ue& .y t"e Re$er-e Bank o' In&ia regulating
t"e rate o' intere$t c"argea.le on loan$ an& t"e manner o' c"arging intere$t are
$tatutory circular$ i$$ue& #it" a lau&a.le %ur%o$e an& are .in&ing on t"e .ank$
Renkite$#ara Rice )ill -, Union Bank o' In&ia+ 1=:E an& T"am%an -,
3"analak$"mi Bank Lt&,+1=1E Section 51?A o' t"e Banking Regulation Act
%ro-i&e$ t"at t"e intere$t c"arge& .y .anking com%anie$+ accor&ingly+ $"all not
.e $u.Pecte& to $crutiny .y !ourt$,1=5E
55, Licen$ing o' .anking com%anie$,? 1==E 012 Sa-e a$ "ereina'ter %ro-i&e& no
com%any $"all carry on .anking .u$ine$$ in In&ia unle$$ it "ol&$ a licence i$$ue&
in t"at .e"al' .y t"e Re$er-e Bank an& any $uc" licence may .e i$$ue& $u.Pect to
$uc" con&ition$ a t"e Re$er-e Bank may t"ink 9t to im%o$e,G
052 E-ery .anking com%any in e8i$tence on t"e commencement o' t"i$ Act+
.e'ore t"e e8%iry o' $i8 mont"$ 'rom $uc" commencement+ an& e-ery ot"er
com%any .e'ore commencing .anking .u$ine$$ 1=4E Fin In&iaG+ $"all a%%ly in
#ritten to t"e Re$er-e Bank 'or a licence un&er t"i$ $ection J
4ro-i&e& t"at in t"e ca$e o' .anking com%any in e8i$tence on t"e
commencement o' t"i$ Act+ not"ing in $u.?$ection 012 $"all .e &eeme& to %ro"i.it
t"e com%any 'rom carrying on .anking .u$ine$$ until it i$ grante& licence in
%ur$uance o' 1=1E Ft"i$ $ectionG or i$ .y notice in #riting in'orme& .y t"e Re$er-e
Bank t"at a licence cannot .e grante& to it J
4ro-i&e& 'urt"er t"at t"e Re$er-e Bank $"all not gi-e a notice a$ a'ore$ai& to a
.anking com%any in e8i$tence on t"e commencement o' t"i$ Act .e'ore t"e
e8%iry o' t"e t"ree year$ re'erre& to in $u.?$ection 012 o' Sec, 11 or o' $uc"
'urt"er %erio& a$ t"e Re$er-e Bank may un&er t"at $u.?$ection t"ink 9t to allo#,
0=2 Be'ore granting any licence un&er t"i$ $ection t"e Re$er-e Bank may re/uire
to t"e $ati$9e& .y an in$%ection o' t"e .ook$ o' t"e com%any or ot"er#i$e t"at
1=*FEEEG t"e 'ollo#ing con&ition$ are 'ul9lle&+ namelyJ
1=6E F0a2 t"at t"e com%any i$ or #ill .e in %o$ition to %ay it$ %re$ent or 'uture
&e%o$itor$ in 'ull a$ t"eir claim$ accrueI
0.2 t"at t"e a(air$ o' t"e com%any are not .eing+ or are not likely to .e
con&ucte& in a manner &etrimental to t"e intere$t$ o' it$ %re$ent or 'uture
&e%o$itor$IG
1=7E F0c2 t"at t"e general c"aracter o' t"e %ro%o$e& management o' t"e
com%any #ill not .e %rePu&icial to t"e %u.lic intere$t o' it$ %re$ent or 'uture
&e%o$itor$I
0&2 t"e com%any "a$ a&e/uate ca%ital $tructure an& earning %ro$%ect$I
0e2 t"at t"e %u.lic intere$t #ill .e $er-e& .y t"e grant o' a licence to t"e
com%any to carry on .anking .u$ine$$ in In&iaI
0'2 t"at "a-ing regar& to t"e .anking 'acilitie$ a-aila.le in t"e %ro%o$e& %rinci%al
area o' o%eration$ o' t"e com%any+ t"e %otential $co%e 'or e8%an$ion o' .ank$
alrea&y in e8i$tence in t"e area an& ot"er rele-ant 'actor$ t"e grant o' t"e
licence #oul& not .e %rePu&icial to t"e o%eration an& con$oli&ation o' t"e .anking
$y$tem con$i$tent #it" monetary $ta.ility an& economic gro#t"I
0g2 any ot"er con&ition+ t"e 'ul9lment o' #"ic" #oul&+ in t"e o%inion o' t"e
Re$er-e Bank+ .e nece$$ary to en$ure t"at t"e carrying on t"e .anking .u$ine$$
in In&ia .y t"e com%any #ill not .e %rePu&icial to t"e %u.lic intere$t or t"e
intere$t$ o' t"e &e%o$itor$,G
1=9E F0=?A2 Be'ore granting any licence un&er t"i$ $ection to a com%any
incor%orate& out$i&e In&ia+ t"e Re$er-e Bank may re/uire to .e $ati$9e& .y an
in$%ection o' t"e .ook$ o' t"e com%any or ot"er#i$e t"at t"e con&ition$ $%eci9e&
in $u.?$ection 0=2 are 'ul9lle& an& t"at t"e carrying on o' .anking .u$ine$$ .y
$uc" com%any in In&ia #ill .e in t"e %u.lic intere$t an& t"at t"e Go-ernment or
la# o' t"e country in #"ic" it i$ incor%orate& &oe$ not &i$criminate in any #ay
again$t com%anie$ regi$tere& in In&ia an& t"at t"e com%any com%lie$ #it" all t"e
%ro-i$ion$ o' t"i$ Act a%%lica.le to .anking com%anie$ incor%orate& out$i&e
In&ia,G
14:E F042 T"e Re$er-e Bank may cancel a licence grante& to a .anking com%any
un&er t"i$ $ection Q
0i2 i' t"e com%any cea$e$ to carry on .anking .u$ine$$ in In&iaI or
0ii2 i' t"e com%any at any time 'ail$ to com%ly #it" any o' t"e con&ition$ im%o$e&
u%on it un&er $u.?$ection 012I or
0iii2 i' at any time+ any o' t"e con&ition$ re'erre& to in $u.?$ection 0=2 141E Fan&
$u.?$ection 0=?A2 i$ not 'ul9lle& J
4ro-i&e& t"at .e'ore cancelling a licence un&er !l, 0ii2 or !l,0iii2 o' t"i$ $u.?$ection
on t"e groun& t"at t"e .anking com%any "a$ 'aile& to com%ly #it" or "a$ 'aile&
to 'ul9l any o' t"e con&ition$ re'erre& to t"erein+ t"e Re$er-e Bank unle$$ it i$ o'
o%inion t"at t"e &elay #ill .e %rePu&icial to t"e intere$t$ o' t"e com%anyU$
&e%o$itor$ or t"e %u.lic+ $"all grant to t"e com%any on $uc" term$ a$ it may
$%eci'y+ an o%%ortunity o' taking t"e nece$$ary $te%$ 'or com%lying #it" or
'ul9lling $uc" con&ition$,
012 Any .anking com%any aggrie-e& .y t"e &eci$ion o' t"e Re$er-e Bank
cancelling a licence un&er t"i$ $ection may+ #it"in t"irty &ay$ 'rom t"e &ate on
#"ic" $uc" &eci$ion i$ communicate& to it+ a%%eal to t"e !entral Go-ernment,
0*2 T"e &eci$ion o' t"e !entral Go-ernment #"ere an a%%eal "a$ .een %re'erre&
to it un&er $u.?$ection 012 or o' t"e Re$er-e Bank #"ere no $uc" a%%eal "a$ .een
%re'erre& $"all .e 9nal,G
!))ENTS
Bank guarantee$ "a-e to .e "onoure&,? E-en a$$uming 'or t"e $ake o' argument
t"at Sec,55 o' t"e Sick In&u$trial !om%anie$ Act 1971 a$ amen&e& in 199=+ take$
#it"in it$ am.it e-en enca$"ment o' .ank guarantee$+ ina$muc" a$ t"e a%%ellant
in t"e in$tant ca$e #a$ a&mitte&ly &eclare& .y t"e B,I,A,R, to "a-e cea$e& to .e a
$ick in&u$trial com%any+ -i&e or&er &ate& 15t" Sanuary+ 1991+ t"e $ai& $ection i$
o' no a-ail to t"e a%%ellant, In t"i$ -ie# o' t"e matter+ it may not .e nece$$ary to
go into t"e /ue$tion rai$e& regar&ing t"e $co%e o' Sec,55, E-en ot"er#i$e+ t"e
%rinci%le$ regar&ing t"e grant o' an inPunction re$training t"e en'orcement o'
.ank guarantee$ are no longer in &ou.t a$ t"e $ame "a-e .een reiterate& time
an& again .y t"e A%e8 !ourt in a catena o' &eci$ion,145E
T"e rele-ant term$ o' t"e .ank guarantee 9r$tly make$ it clear t"at t"e .ank "a$
uncon&itionally an& irre-oca.ly un&ertaken to %ay to t"e a%%ellant+ on #ritten
&eman& an& #it"out &eman&+ t"e amount &eman&e& .y it + Secon&ly+ !l,II o' t"e
$ai& guarantee clari9e$ t"at t"e %ayment $"all .e ma&e #it"in &eman& an& on
t"e un&ertaking t"at t"e a%%ellant i$ to .e $ole Pu&ge #"et"er t"e $eller "a$
committe& any .reac", !on$e/uently t"e rig"t o' t"e a%%ellant to reco-er t"e
guarantee& amount i$ not to .e e(ecte& or $u$%en&e& .y rea$on o' any &i$%ute
#"ic" can .e rai$e& or %en&ing .e'ore t"e !ourt$ Tri.unal$ or ar.itrator, T"ir&ly
t"e guarantor "a& no rig"t to kno# t"e rea$on$ o' or to in-e$tigate t"e merit$ o'
t"e &eman& or to /ue$tion or to c"allenge t"e &eman& or to kno# any 'act$
a(ecting t"e &eman& an& la$tly it #a$ not o%en to t"e .ank to re/uire t"e %roo'
o' t"e lia.ility o' re$%on&ent No,1 to %ay t"e amount .e'ore %aying t"e a'ore$ai&
guarantee& amount to t"e a%%ellant, T"e letter o' in-ocation i$$ue& .y t"e
a%%ellant &eman&ing t"e %ayment o' R$,5*+11+:::V? #a$ in accor&ance #it" t"e
term$ o' .ank guarantee No,4:V11 an& t"e .ank #a$+ t"ere'ore+ un&er an
o.ligation to "onour it$ un&ertaking an& to make %ayment, It+ "o#e-er+ c"o$e not
to 'ul9l it$ o.ligation, I' t"e .ank coul& not in la# a-oi& t"e %ayment+ a$ t"e
&eman& "a& .een ma&e in term$ o' t"e .ank guarantee+ a$ "a$ .een &one in t"e
%re$ent ca$e+ t"en t"e !ourt oug"t not to "a-e i$$ue& an inPunction #"ic" "a&
t"e e(ect o' re$training t"e .ank 'rom 'ul9lling it$ contractual o.ligation in term$
o' t"e .ank guarantee, An inPunction o' t"e !ourt oug"t not to .e an in$trument
#"ic" i$ u$e& in nulli'ying t"e term$ o' a contract+ agreement or un&ertaking
#"ic" i$ la#'ully en'orcea.le,14=E
144F5=, Re$triction$ on o%ening o' ne#+ an& tran$'er o' e8i$ting %lace$ o'
.u$ine$$,? 012 Hit"out o.taining t"e %rior %ermi$$ion o' t"e Re$er-e Bank Q
0a2 no .anking com%any $"all o%en a ne# %lace o' .u$ine$$ in In&ia or c"ange
ot"er#i$e t"an #it"in t"e $ame city+ to#n or -illage+ t"e location o' an e8i$ting
%lace o' .u$ine$$ $ituate& in In&iaI an&
0.2 no .anking com%any incor%orate& in In&ia $"all o%en a ne# %lace o' .u$ine$$
out$i&e In&ia or c"ange+ ot"er#i$e t"an #it"in t"e $ame city+ to#n or -illage in
any country or area out$i&e In&ia+ t"e location o' an e8i$ting %lace o' .u$ine$$
$ituate& in t"at country or areaJ
4ro-i&e& t"at not"ing in t"i$ $u.?$ection $"all a%%ly to t"e o%ening 'or a %erio&
not e8cee&ing one mont" o' a tem%orary %lace o' .u$ine$$ #it"in a city+ to#n or
-illage or t"e en-iron$ t"ereo' #it"in #"ic" t"e .anking com%any alrea&y "a$ a
%lace o' .u$ine$$+ 'or t"e %ur%o$e o' a(or&ing .anking 'acilitie$ to t"e %u.lic on
t"e occa$ion o' an e8"i.ition+ a con'erence or mela or any ot"er like occa$$ion,
052 Be'ore granting any %ermi$$ion un&er t"i$ $ection+ t"e Re$er-e Bank may
re/uire to .e $ati$9e& .y an in$%ection un&er Sec,=1 or ot"er#i$e a$ to t"e
9nancial con&ition an& "i$tory o' t"e com%any+ t"e general c"aracter o' it$
management+ t"e a&e/uacy o' it$ ca%ital $tructure an& earning %ro$%ect$ an&
t"at %u.lic intere$t #ill .e $er-e& .y t"e o%ening or+ a$ t"e ca$e may .e+ c"ange
o' location+ o' t"e %lace o' .u$ine$$,
0=2 T"e Re$er-e Bank may grant %ermi$$ion un&er $u.?$ection 012 $u.Pect to $uc"
con&ition$ a$ it may t"ink 9t to im%o$e eit"er generally or #it" re'erence to any
%articular ca$e,
042 H"ere in t"e o%inion o' t"e Re$er-e Bank+ a .anking com%any "a$+ at any
time+ 'aile& to com%ly #it" any o' t"e con&ition$ im%o$e& on it un&er t"i$ $ection+
t"e Re$er-e Bank may+ .y or&er in #riting an& a'ter a(or&ing rea$ona.le
o%%ortunity to t"e .anking com%any 'or $"o#ing cau$e again$t t"e action
%ro%o$e& to .e taken again$t it+ re-oke any %ermi$$ion grante& un&er t"i$
$ection,
141E F04?A2 Any regional rural .anking re/uiring t"e %ermi$$ion o' t"e Re$er-e
Bank un&er t"i$ $ection $"all 'or#ar& it$ a%%lication to t"e Re$er-e Bank t"roug"
t"e National Bank #"ic" $"all gi-e it$ comment$ on t"e merit$ o' t"e a%%lication
an& $en& it to t"e Re$er-e BankJ
4ro-i&e& t"at t"e regional rural .ank $"all al$o $en& an a&-ance co%y o'
a%%lication &irectly to t"e Re$er-e Bank+
012 Aor t"e %ur%o$e$ o' t"i$ $ection N%lace o' .u$ine$$O inclu&e$ any $u.?oLce+
%ay oLce+ $u.?%ay oLce+ an& any %lace o' .u$ine$$ at #"ic" &e%o$it$ are
recei-e&+ c"e/ue$ ca$"e& or money$ lent,G
54, )aintenance o' a %ercentage o' a$$et$,? 012 A'ter t"e e8%iry o' t#o year$ 'rom
t"e commencement o' t"i$ Act+ e-ery .anking com%any $"all maintain 14*E Fin
In&iaG in ca$"+ gol& or unencum.ere& a%%ro-e& $ecuritie$+ -alue at a %rice not
e8cee&ing t"e current market %rice+ an amount #"ic" $"all not at t"e clo$e o'
.u$ine$$ on any &ay .e le$$ t"an 5: %er cent, o' t"e total o' it$ 146E F&eman&
an& time lia.ilitie$G 147E Fin In&iaG,
149E FE8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $ection+ Nunencum.ere& a%%ro-e&
$ecuritie$O o' .anking com%any $"all inclu&e it$ a%%ro-e& $ecuritie$ lo&ge& #it"
anot"er in$titution 'or an a&-ance or any ot"er cre&it arrangement to t"e e8tent
to #"ic" $uc" $ecuritie$ "a-e not .een &ra#n again$t or a-aile& o',G
11:E F052 In com%uting t"e amount 'or t"e %ur%o$e$ o' $u.?$ection 012 t"e
&e%o$it re/uire& un&er $u.?$ection 052 o' Sec,11 to .e ma&e #it" t"e Re$er-e
Bank .y a .anking com%any incor%orate& out$i&e In&ia an& any .alance
maintaine& in In&ia .y a .anking com%any in current account #it" t"e Re$er-e
Bank or t"e State Bank o' In&ia or #it" any ot"er .ank #"ic" may .e noti9e& in
t"i$ .e"al' .y t"e !entral Go-ernment+ inclu&ing in t"e ca$e o' a $c"e&ule& .ank
t"e .alance re/uire& un&er Sec, 45 o' t"e Re$er-e Bank o' In&ia Act+ 19=4 05 o'
19=42+ to .e $o maintaine&+ $"all .e &eeme& to .e ca$" maintaine& in In&ia,G
111E F05?A2 0a2 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 012 or in $u.?
$ection 052+ a'ter e8%iry o' t#o year$ 'rom t"e commencement o' t"e Banking
!om%anie$ 0Amen&ment2 Act+ 19*5 0=* o' 19*52+?
0i2 a $c"e&ule& .ank+ in a&&ition to t"e a-erage &aily .alance #"ic" it i$+ or may
.e+ re/uire& to maintain un&er Sec, 45 o' t"e Re$er-e Bank o' In&ia Act+ 19=4 05
o' 19=42+ an&
0ii2 e-ery ot"er .anking com%any+ in a&&ition to t"e ca$" re$er-e #"ic" it i$
re/uire& to maintain un&er Sec,17,
0A2 in ca$"+ or
0B2 in gol&+ -alue& at a %rice not e8cee&ing t"e current market %rice or in
unencum.ere& a%%ro-e& $ecuritie$ -alue& at a %rice &etermine& in accor&ance
#it" $uc" one or more o'+ or com.ination o'+ t"e 'ollo#ing met"o&$ o'
-aluation +namely+ -aluation #it" re'erence to co$t %rice+ market %rice+ .ook
-alue or 'ace -alue+ a$ may .e $%eci9e& .y t"e Re$er-e Bank 'rom time to time+
an amount #"ic" $"all not+ at t"e clo$e o' .u$ine$$ on any &ay+ .e le$$ t"an
t#enty?9-e %er cent, or $uc" ot"er %ercentage not e8cee&ing 'orty %er cent, a$
t"e Re$er-e Bank may+ 'rom time to time+ .y noti9cation in t"e Lcial GaMette+
$%eci'y+ o' t"e total o' it$ &eman& an& time lia.ilitie$ in In&ia+ a$ on t"e la$t
Ari&ay o' t"e $econ& %rece&ing 'ortnig"t,G
115EF0.2 in com%uting t"e amount 'or t"e %ur%o$e o' !l, 0a2 Q
0i2 t"e &e%o$it re/uire& un&er $u.?$ection 052 o' Sec, 11 to .e ma&e #it" t"e
Re$er-e Bank .y a .anking com%any incor%orate& out$i&e In&iaI
0ii2 any ca$" or .alance maintaine& in In&ia .y a .anking com%any ot"er t"an a
$c"e&ule& .ank #it" it$el' or #it" t"e Re$er-e Bank or .y #ay o' net .alance in
current account in e8ce$$ o' t"e aggregate o' t"e ca$" or .alance or net .alance
re/uire& to maintaine& un&er Sec,17I
0iii2 any .alance$ maintaine& .y a $c"e&ule& .ank #it" t"e Re$er-e Bank in
e8ce$$ o' t"e .alance re/uire& to .e maintaine& .y it un&er Sec,45 o' t"e
Re$er-e Bank o' In&ia Act+ 19=4 05 o' 19=42I
0i-2 t"e net .alance in current account$ maintaine& in In&ia .y a $c"e&ule& .ankI
0-2 any .alance$ maintaine& .y a Regional Rural Bank in call or 98e& &e%o$it #it"
it$ $%on$or .ankI
$"all .e &eeme& to .e ca$" maintaine& in In&ia,G
115E FE8%anation,? Aor t"e %ur%o$e o' !l,0a2 o' t"i$ $u.?$ection+ t"e market %rice
o' an a%%ro-e& $ecurity $"all .e t"e %rice a$ on t"e &ate o' t"e i$$ue o' t"e
noti9cation or a$ on any earlier or later &ate a$ may .e noti9e& 'rom time to time
.y t"e Re$er-e Bank in re$%ect o' any cla$$ or cla$$e$ or $ecuritie$,G
11=E F05?B2 T"e Re$er-e Bank may+ .y noti9cation in t"e Lcial GaMette+ -ary
t"e %ercentage re'erre& to in $u.?$ection 05?A2 in re$%ect o' a Regional Rural
Bank 114FEEEG,
111E F0=2 Aor t"e %ur%o$e o' en$uring com%liance #it" t"e %ro-i$ion$ o' t"i$
$ection+ e-ery .anking com%any+ $"all not later t"an t#enty &ay$ a'ter t"e en& o'
t"e mont" to #"ic" it relate$+ 'urni$" to t"e Re$er-e Bank in t"e %re$cri.e& 'orm
an& manner a mont"ly return $"o#ing %articular$ o' it$ a$$et$ maintaine& in
accor&ance #it" t"i$ $ection+ an& it$ &eman& an& time an& lia.ilitie$ in In&ia at
t"e clo$e o' .u$ine$$ on eac" alternate Ari&ay &uring t"e mont"+ or i' any $uc"
Ari&ay i$ a %u.lic "oli&ay+ at t"e clo$e o' .u$ine$$ on t"e %rece&ing #orking &ayJ
4ro-i&e& t"at e-ery regional rural .ank $"all al$o 'urni$" a co%y o' t"e $ai& return
to t"e National Bank,
042 0a2 I' on any alternate Ari&ay or+ i' $uc" Ari&ay i$ a %u.lic "oli&ay+ on t"e
%rece&ing #orking &ay+ t"e amount maintaine& .y a .anking com%any at t"e
clo$e o' .u$ine$$ on t"at &ay 'all$ .elo# t"e minimum %re$cri.e& .y or un&er !l,
0a2 o' $u.?$ection 05?A2+ $uc" .anking com%any $"all .e lia.le to %ay to t"e
Re$er-e Bank in re$%ect o' t"at &ayU$ &e'ault+ %enal intere$t 'or t"at &ay at t"e
rate o' t"ree %er cent, %er annum a.o-e t"e .ank rate on t"e amount .y #"ic"
t"e amount actually maintaine& 'all$ $"ort o' t"e %re$cri.e& minimum on t"at
&ayI an&
0.2 I' t"e &e'ault occur$ again on t"e ne8t $uccee&ing alternate Ari&ay+ or i' $uc"
Ari&ay i$ a %u.lic "oli&ay+ on t"e %rece&ing #orking &ay+ an& continue$ on
$uccee&ing alternate Ari&ay$ or %rece&ing #orking &ay$+ a$ t"e ca$e may .e+ t"e
rate o' %enal intere$t $"all .e increa$e& to a rate o' 9-e %er cent, %er annum
a.o-e+ t"e .ank rate on eac" $uc" $"ort'all in re$%ect o' t"at alternate Ari&ay an&
eac" $uccee&ing alternate Ari&ay or %rece&ing #orking &ay+ i' $uc" Ari&ay i$ a
%u.lic "oli&ay+ on #"ic" t"e &e'ault continue$,
012 0a2 Hit"out %rePu&ice to t"e %ro-i$ion$ o' $u.?$ection 0=2 t"e Re$er-e Bank
may re/uire a .anking com%any to 'urni$" to it return in t"e 'orm an& manner
$%eci9e& .y it $"o#ing %articular$ o' it$ a$$et$ maintaine& in accor&ance #it"
t"i$ $ection an& it$ &eman& an& time lia.ilitie$ in In&ia+ a$ at t"e clo$e o'
.u$ine$$ on eac" &ay o' a mont"I an&
0.2 #it"out %rePu&ice to t"e %ro-i$ion$ o' $u.?$ection 042 on t"e 'ailure o' a
.anking com%any to maintain a$ on any &ay+ t"e amount $o re/uire& to .e
maintaine& .y or un&er !l,0a2 o' $u.?$ection 05?A2 t"e Re$er-e Bank may+ in
re$%ect o' $uc" &e'ault+ re/uire t"e .anking com%any to %ay %enal intere$t 'or
t"at &ay a$ %ro-i&e& in !l,0a2 o' $u.?$ection 042 an& i' t"e &e'ault continue$ on
t"e ne8t $uccee&ing #orking &ay+ t"e %enal intere$t may .e increa$e& a$
%ro-i&e& in !l,0.2 o' $u.?$ection 042 'or t"e concerne& &ay$,
0*2 0a2 T"e %enalty %aya.le un&er $u.?$ection$ 042 an& 012 $"all .e %ai& #it"in a
%erio& o' 'ourteen &ay$ 'rom t"e &ate on #"ic" a notice i$$ue& .y t"e Re$er-e
Bank &eman&ing %ayment o' t"e $ame i$ $er-e& on t"e .anking com%any an& in
t"e e-ent o' 'ailure o' t"e .anking com%any to %ay t"e $ame #it"in $uc" %erio&+
t"e %enalty may .e le-ie& .y a &irection o' t"e %rinci%al !i-il !ourt "a-ing
Puri$&iction in t"e area #"ere an oLce o' t"e &e'aulting .anking com%any i$
$ituate&+ $uc" &irection to .e ma&e only u%on an a%%lication ma&e .y t"e
Re$er-e Bank in t"i$ .e"al' to t"e !ourtI an&
0.2 #"en t"e !ourt make$ a &irection un&er !l,0a2+ it $"all i$$ue a certi9cate
$%eci'ying t"e $um %aya.le .y t"e .anking com%any an& e-ery $uc" certi9cate
$"all .e en'orcea.le in t"e $ame manner a$ i' it #ere a &ecree ma&e .y t"e !ourt
in a $uit,
062 H"en un&er t"e %ro-i$ion$ o' !l,0.2 o' $u.?$ection 042 %enal intere$t at t"e
increa$e& rate o' 9-e %er cent, a.o-e t"e .ank rate "a$ .ecome %aya.le .y t"e
.anking com%any+ i' t"erea'ter t"e amount re/uire& to .e maintaine& on t"e ne8t
$uccee&ing alternate Ari&ay+ or i' $uc" Ari&ay i$ a %u.lic "oli&ay t"e ne8t
%rece&ing #orking &ay i$ $till .elo# t"e %re$cri.e& minimum+ e-ery &irector+ a
manager or $ecretary o' t"e .anking com%any+ #"o i$ kno#ingly an& #il'ully a
%arty to t"e &e'ault $"all .e %uni$"a.le #it" 9ne #"ic" may e8ten& to 9-e
"un&re& ru%ee$ an& #it" a 'urt"er 9ne #"ic" may e8ten& to 9-e "un&re& ru%ee$
'or eac" $u.$e/uent alternate Ari&ay or t"e %rece&ing #orking &ay+ a$ t"e ca$e
may .e+ on #"ic" t"e &e'ault continue$,
072 Not#it"$tan&ing anyt"ing containe& in t"i$ $ection+ i' t"e Re$er-e Bank i$
$ati$9e&+ on an a%%lication in #riting .y t"e &e'aulting .anking com%any+ t"at
t"e .anking com%any "a& $uLcient cau$e 'or it$ 'ailure to com%ly #it" t"e
%ro-i$ion$ o' !l,0a2 o' $u.?$ection 05?A2+ t"e Re$er-e Bank may not &eman& t"e
%ayment o' t"e %enal intere$t,
E8%lanation,? In t"i$ $ection+ t"e e8%re$$ion N%u.lic "oli&ayO+ mean$ a &ay #"ic"
i$ a %u.lic "oli&ay un&er t"e Negotia.le In$trument$ Act+ 1771 05* o' 17712,G
!))ENTS
Bank guarantee irre-oca.le,?It "a$ .een "el& t"at t"e %lea o' 'rau& in connection
#it" t"e .ank guarantee i$ to .e e8amine& in relation to t"e time 'actor &uring
#"ic" t"e un&erlying contract #a$ e8ecute&, In t"e %re$ent ca$e it i$ an a&mitte&
'act t"at no %lea o' 'rau& "a$ .een allege& in re$%ect o' e8ecution o' t"e .ank
guarantee relating to t"e time #"en t"e $ai& guarantee #a$ e8ecute&, In t"e
a.$ence o' %lea&ing$ o' commi$$ion o' any 'rau& at t"e time o' e8ecution o' t"e
.ank guarantee+ it i$ "el& t"at no 'rau& "a$ .een committe& .y t"e &e'en&ant
No,1 at t"e time o' e8ecution o' t"e .ank guarantee an&+ t"ere'ore+ t"e /ue$tion
o' t"e .ank guarantee .eing -itiate& on t"e 9r$t count "a$ no 'oun&ation at
all,11*E
Bank guarantee en'orcea.le,? T"e e/uitie$ o' t"e ca$e &eman& t"at t"e
&e'en&ant $"oul& "a-e %ai& at lea$t an amount o' R$,51,:5 lac$ #"ic" accor&ing
to t"em t"e %lainti( #a$ entitle& to com%en$ation an& li't t"eir .alance $tock o'
rice, T"e action o' t"e &e'en&ant in t"e circum$tance$ i$ clearly 'rau&ulent
mi$u$e o' t"eir %o$ition+ unPu$t an& ine/uita.le, n 15t" 3ecem.er+ 199* #"en
t"e argument$ #ere "ear&+ categorical $tatement #a$ ma&e on .e"al' o' t"e
%lainti( t"at t"ey "a& ne-er re'u$e& to allo# t"e remo-al o' t"e remaining $tock$
o' t"e goo&$ to t"e &e'en&ant .ut t"ere #a$ no o(er to %ay t"e a&mitte& amount
e-en on t"at &ate, It #a$ .ut Pu$t an& %ro%er on t"e %art o' t"e &e'en&ant to "a-e
remo-e& t"eir goo&$ an& in t"e meantime %ai& t"e amount o' R$,51,:5 lac$
#"ic" accor&ing to t"em i$ %aya.le to t"e %lainti( $u.Pect to t"e &i$%ute 'or t"e
.alance claim .eing &etermine& in %ro%er 'orum, T"e &e'en&ant 0ST!2 are tyring
to make ca%ital out o' t"eir o#n act$ o' omi$$ion an& commi$$ion i' not out o'
mi$con&uct on t"e %art o' $omeone 'rom t"eir $i&e,116E
51, A$$et$ in In&ia,? 117E F012 T"e a$$et$ in In&ia o' e-ery .anking com%any at
t"e clo$e o' .u$ine$$ on t"e la$t Ari&ay o' e-ery /uarter or+ i' t"at Ari&ay i$ a
%u.lic "oli&ay un&er Negotia.le In$trument$ Act+ 1771 05* o' 17712+ at t"e clo$e
o' t"e .u$ine$$ on t"e %rece&ing #orking &ay+ $"all not .e le$$ t"an $e-enty?9-e
%er cent, o' it$ &eman& an& time lia.ilitie$ in In&ia,
052 E-ery .anking com%any $"all+ #it"in one mont" 'rom t"e en& o' e-ery
/uarter+ $u.mit to t"e Re$er-e Bank a return in t"e %re$cri.e& 'rom an& manner
o' t"e a$$et$ an& lia.ilitie$ re'erre& to in $u.?$ection 012 a$ at t"e clo$e o'
.u$ine$$ on t"e la$t Ari&ay o' t"e %re-iou$ /uarter+ or i' t"at Ari&ay i$ a %u.lic
"oli&ay un&er t"e Negotia.le In$trument$ Act+ 1771 05* o'17712+ at t"e clo$e o'
.u$ine$$ on t"e %rece&ing #orking &ay,GJ
119E F4ro-i&e& t"at e-ery regional rural .ank $"all al$o 'urni$" a co%y o' t"e $ai&
return to t"e National Bank,G
0=2 Aor t"e %ur%o$e$ o' t"i$ $ection+?
1*:E F0a2 Na$$et$ in In&iaO $"all .e &eeme& to inclu&e e8%ort .ill$ &ra#n in+ an&
im%ort .ill$ &ra#n on an& %aya.le+ in In&ia an& e8%re$$e& in $uc" currencie$ a$
t"e Re$er-e Bank may 'rom time to time a%%ro-e in t"i$ .e"al'+ an& al$o $uc"
$ecuritie$ a$ t"e Re$er-e Bank may a%%ro-e in t"i$ .e"al' not#it"$tan&ing t"at
all or any o' t"e $ai& .ill$ or $ecuritie$ are "el& out$i&e In&iaIG
1*1E F0.2 Nlia.ilitie$ in In&iaO $"all not inclu&e t"e %ai&?u% ca%ital or t"e re$er-e$
or any cre&it .alance in t"e %ro9t an& lo$$ account o' t"e .anking com%anyIG
1*5E F0c2 N/uarterO mean$ t"e %erio& o' t"ree mont"$ en&ing on t"e la$t &ay o'
)arc"+ Sune+ Se%tem.er o' 3ecem.er,
5*, Return o' unclaime& &e%o$it$,? E-ery .anking com%any $"all+ #it"in t"irty
&ay$ a'ter t"e clo$e o' eac" calen&ar year+ $u.mit a return in t"e %re$cri.e& 'orm
an& manner to t"e Re$er-e Bank at t"e en& o' $uc" calen&ar year o' all account$
1*=E Fin In&iaG #"ic" "a-e not .een o%erate& u%on 'or ten year$ 1*4FEEEGJ
4ro-i&e& t"at in t"e ca$e o' money &e%o$ite& 'or a 98e& %erio& t"e $ame term o'
ten year$ $"all .e reckone& 'rom t"e &ate o' t"e e8%iry o' $uc" 98e& %erio&,
T"e account$ #"ic" "a-e not .een o%erate& 'or ten year$ $"all .e $u.mitte& a$ a
return in t"e %re$cri.e& 'orm to t"e Re$er-e Bank .y e-ery .anking com%any
#it"in t"irty &ay$ a'ter t"e clo$e o' eac" calen&ar year .ut t"e 98e& &e%o$it$ are
e8em%te& J
1*:E F4ro-i&e& 'urt"er t"at e-ery regional rural .ank $"all al$o 'urni$" a co%y o'
t"e $ai& return to t"e National Bank,G
56, )ont"ly return$ an& %o#er to call 'or ot"er return$ an& in'ormation,? 012
E-ery .anking com%any $"all+ .e'ore t"e clo$e o' t"e mont" $uccee&ing t"at to
#"ic" it relate$+ $u.mit to t"e Re$er-e Bank a return in t"e %re$cri.e& 'orm an&
manner $"o#ing it$ a$$et$ lia.ilitie$ 1*4E Fin In&iaG a$ t"e clo$e to .u$ine$$ on
t"e la$t Ari&ay o' e-ery mont" or i' t"at Ari&ay i$ a %u.lic "oli&ay un&er t"e
Negotia.le In$trument$ Act+ 1771 05* o' 17712+ at t"e clo$e o' .u$ine$$ on t"e
%rece&ing #orking &ay,
1*1E 052 T"e Re$er-e Bank may at any time &irect a .anking com%any to 'urni$"
it #it"in $uc" time a$ may .e $%eci9e& .y t"e Re$er-e Bank+ #it" $uc"
$tatement$ an& in'ormation relating to t"e .u$ine$$ or a(air$ o' t"e .anking
com%any 0inclu&ing any .u$ine$$ or a(air$ #it" #"ic" $uc" .anking com%any i$
concerne&2 a$ t"e Re$er-e Bank may con$i&er nece$$ary or e8%e&ient to o.tain
'or t"e %ur%o$e o' t"i$ Act+ an& #it"out %rePu&ice to t"e generality o' t"e
'oregoing %o#er may call 'or in'ormation e-ery "al'?year regar&ing 1**E Ft"e
in-e$tment$ o' a .anking com%any an& t"e cla$$i9cation o' it$ a&-ance$ in
re$%ect o' in&u$try commerce an& agriculture,G
1*6E F0=2 E-ery regional rural .ank $"all $u.mit a co%y o' t"e return #"ic" it
$u.mit$ to t"e Re$er-e Bank un&er $u.?$ection 012 al$o to t"e National Bank an&
t"e %o#er$ e8erci$a.le .y t"e Re$er-e Bank un&er $u.?$ection 052 may al$o .e
e8erci$e& .y National Bank in relation to regional rural .ank$,G
1*7E F57, 4o#er to %u.li$" in'ormation,? T"e Re$er-e Bank or t"e National Bank+
or .ot"+ i' t"ey con$i&er it in t"e %u.lic intere$t $o to &o+ may %u.li$" any
in'ormation o.taine& .y t"em un&er t"i$ Act in $uc" con$oli&ate& 'orm a$ t"ey
t"ink 9t,G
59, Account$ an& .alance?$"eet,? 012 At t"e e8%iration o' eac" calen&ar year 1*9E
F or at t"e e8%iration o' a %erio& o' t#el-e mont"$ en&ing #it" $uc" &ate a$ t"e
!entral Go-ernment may+ .y noti9cation in t"e Lcial GaMette+ $%eci'y in t"i$
.e"al'+G e-ery .anking com%any incor%orate& 16:E Fin In&iaG+ in re$%ect to all
.u$ine$$ tran$acte& .y it+ an& e-ery .anking com%any incor%orate& 161E
Fout$i&e In&iaG+ in re$%ect o' all .u$ine$$ tran$acte& t"roug" it$ .ranc"e$ 16:Fin
In&iaG+ $"all %re%are #it" re'erence to 165E Ft"at year or %erio& a$ t"e ca$e may
.e+G a .alance?$"eet an& %ro9t an& lo$$ account+ a$ on t"e la$t #orking &ay o'
16=E Ft"at year or t"e %erio&+ a$ t"e ca$e may .e+G in t"e 'orm$ $et out in t"e
T"ir& Sc"e&ule or a$ near t"ereto a$ circum$tance$ a&mitJ
164E F4ro-i&e& t"at #it" a -ie# to 'acilitating t"e tran$ition 'rom one %erio& o'
accounting to anot"er %erio& o' accounting un&er t"i$ $u.?$ection+ t"e !entral
Go-ernment may+ .y or&er %u.li$"e& in t"e Lcial GaMette+ make $uc"
%ro-i$ion$ a$ it con$i&er$ nece$$ary or e8%e&ient 'or t"e %re%aration o'+ or 'or
ot"er matter$ relating to+ t"e .alance?$"eet or %ro9t an& lo$$ account in re$%ect
o' t"e concerne& year or %erio&+ a$ t"e ca$e may .e,G
052 T"e .alance?$"eet an& %ro9t an& lo$$ account $"all .e $igne& Q
0a2 in t"e ca$e o' a .anking com%any incor%orate& 161E Fin In&iaG+ .y t"e
manager or t"e %rinci%al oLcer o' t"e com%any an& #"ere t"ere are more t"an
t"ree &irector$ o' t"e com%any+ .y at lea$t t"ree o' t"o$e &irector$+ or #"ere
t"ere are not more t"an t"ree &irector$ .y all t"e &irector$I an&
0.2 in t"e ca$e o' .anking com%any incor%orate& 16*E Fout$i&e In&iaG .y t"e
manager or agent o' t"e %rinci%al oLce o' t"e com%any 161E Fin In&iaG,
0=2 Not#it"$tan&ing t"at t"e .alance?$"eet o' a .anking com%any i$ un&er $u.?
$ection 012 re/uire& to .e %re%are& in a 'orm ot"er t"an t"e 'orm 166F$et out in
%art I o' Sc", RI to t"e !om%anie$ Act+ 191* 01 o' 191*2G t"e re/uirement$ o' t"at
Act relating to t"e .alance?$"eet an& %ro9t an& lo$$ account o' a com%any $"all+
in $o 'ar a$ t"ey are not incon$i$tent #it" t"i$ Act+ a%%ly to t"e .alance?$"eet or
%ro9t an& lo$$ account+ a$ t"e ca$e may .e+ o' .anking com%any,
167E F0=?A2 Not#it"$tan&ing anyt"ing to t"e contrary containe& in $u.?$ection 0=2
o' Sec,51: o' t"e !om%anie$ Act+ 191* 01 o' 191*2 t"e %erio& to #"ic" t"e %ro9t
an& lo$$ account relate$ $"all+ in t"e ca$e o' a .anking com%any+ .e t"e %erio&
en&ing #it" t"e la$t #orking &ay o' t"e year imme&iately %rece&ing t"e year in
#"ic" t"e annual general meeting i$ "el&,G
169E FE8%lanation,? In $u.?$ection 0=?A2+ N yearO mean$ t"e year or+ a$ t"e ca$e
may .e+ t"e %erio& %re'erre& to in $u.?$ection 012,G
042 T"e !entral Go-ernment+ a'ter gi-ing not le$$ t"an t"ree mont"$U notice o' it$
intention $o to &o .y a noti9cation in t"e Lcial GaMette+ may 'rom time to time
.y a like noti9cation amen& t"e 'orm$ $et out in t"e T"ir& Sc"e&ule,
=:, Au&it,? 17:E F012 T"e .alance?$"eet an& %ro9t an& lo$$ account %re%are& in
accor&ance #it" Sec,59 $"all .e au&ite& .y a %er$on &uly /uali9e& un&er any la#
'or t"e time .eing in 'orce to .e an au&itor o' com%anie$,G
171E F01?A2 Not#it"$tan&ing anyt"ing containe& in any la# 'or t"e time .eing in
'orce or in any contract to t"e contrary+ e-ery .anking com%any $"all+ .e'ore
a%%ointing+ re?a%%ointing or remo-ing any au&itor+ or au&itor$+ o.tain t"e
%re-iou$ a%%ro-al o' t"e Re$er-e Bank,
01?B2 Hit"out %rePu&ice to anyt"ing containe& in t"e !om%anie$ Act+ 191* 01 o'
191*2+ or any ot"er la# 'or t"e time .eing in 'orce+ #"ere t"e Re$er-e Bank i$ o'
o%inion t"at it i$ nece$$ary in t"e %u.lic intere$t or in t"e intere$t o' t"e .anking
com%any or it$ &e%o$itor$ $o to &o 175E Fit may at any time .y or&er &irect t"at a
$%ecial au&it o' t"e .anking com%anyU$ account$+ 'or any $uc" tran$action or
cla$$ o' tran$action$ or 'or $uc" %erio& or %erio&$ a$ may .e $%eci9e& in t"e
or&er+ $"all .e con&ucte& an& may .y t"e $ame or a &i(erent or&er eit"er
a%%oint a %er$on &uly /uali9e& un&er any la# 'or t"e time .eing in 'orce to .e an
au&itor o' com%anie$ or &irect t"e au&it o' t"e .anking com%any "im$el' to
con&uct $uc" $%ecial au&itG+ an& t"e au&itor $"all com%ly #it" $uc" &irection$
an& make a re%ort o' $uc" au&it to t"e Re$er-e Bank an& 'or#ar& a co%y t"ereo'
to t"e com%any,
01?!2 T"e e8%en$e$ o'+ or inci&ental to+ 17=E Ft"e $%ecial au&itG $%eci9e& in t"e
or&er ma&e .y t"e Re$er-e Bank o' In&ia $"all .e .orne .y t"e .anking
com%anyG,
052 T"e au&itor $"all "a-e t"e %o#er$ o'+ e8erci$e t"e 'unction$ -e$te& in+ an&
&i$c"arge t"e &utie$ an& .e $u.Pect to t"e lia.ilitie$ an& %enaltie$ im%o$e& on+
au&itor$ o' com%anie$ .y 174E FSec,556 o' t"e !om%anie$ Act+ 191* 01 o' 191*2G
171E Fan& au&itor$+ i' any+ a%%ointe& .y t"e la# e$ta.li$"ing+ con$tituting or
'orming t"e .anking com%any concerne&,G
0=2 In a&&ition to t"e matter$ #"ic" un&er t"e a'ore$ai& Act t"e au&itor i$
re/uire& to $tate in "i$ re%ort+ "e $"all+ in ca$e o' a .anking com%any
incor%orate& 17*E Fin In&iaG+ $tate in "i$ re%ort ?
0a2 #"et"er or not t"e in'ormation an& e8%lanation re/uire& .y "im "a-e 'oun& to
.e $ati$'actoryI
0.2 #"et"er or not t"e tran$action$ o' t"e com%any #"ic" came to "i$ notice
"a-e .een #it" t"e %o#er$ o' t"e com%anyI
0c2 #"et"er or not t"e return$ recei-e& 'rom .ranc" oLce$ o' t"e com%any "a-e
.een 'oun& a&e/uate 'or t"e %ur%o$e$ o' "i$ au&itI
0&2 #"et"er t"e %ro9t an& lo$$ account $"o#$ a true .alance 176E For %ro9t or
lo$$G 'or t"e %erio& co-ere& .y $uc" accountI
0e2 any ot"er matter #"ic" "e con$i&er$ $"oul& .e .roug"t to t"e notice o' t"e
$"are"ol&er$ o' t"e com%any,
!))ENT
Amen&ment,? An amen&ment o' $u.$tanti-e la# i$ not retro$%ecti-e unle$$
e8%re$$ly lai& &o#n or .y nece$$ary im%lication in'erre&,177E
=1, Su.mi$$ion o' return$,? T"e account$ an& .alance?$"eet re'erre& to in Sec,59
toget"er #it" au&itorU$ re%ort $"all .e %u.li$"e& in t"e %re$cri.e& manner an&
t"ree co%ie$ t"ereo' $"all .e 'urni$"e& a$ return$ to t"e Re$er-e Bank #it"in
t"ree mont"$ 'rom t"e en& o' %erio& to #"ic" t"ey re'erJ
4ro-i&e& t"at t"e Re$er-e Bank may in any ca$e e8ten& t"e $ai& %erio& o' t"ree
mont"$ 'or t"e 'urni$"ing o' $uc" return$ .y a 'urt"er %erio& not e8cee&ing t"ree
mont"$ J
179E F4ro-i&e& 'urt"er t"at a regional rural .ank $"all 'urni$" $uc" return al$o to
t"e National Bank,G
!))ENT
4ro-i$o,? In A.&ul Sa.ar Butt -, State o' Sammu an& Ka$"mir+ 19:E it #a$ "el& t"at
a %ro-i$o mu$t .e con$i&ere& #it" relation to t"e %rinci%al matter to #"ic" it
$tan&$ a$ a %ro-i$o,191
=5, !o%ie$ o' .alance?$"eet$ an& account$ to .e $ent to Regi$trar,? 195E F012
H"ere a .anking com%any in any year 'urni$"e$ it$ account$ an& .alance?$"eet
in accor&ance #it" t"e %ro-i$ion$ o' Sec,=1+ it $"all at t"e $ame time $en& to t"e
Regi$trar t"ree co%ie$ o' $uc" account$ an& .alance?$"eet an& o' t"e au&itorU$
re%ort an& #"ere $uc" co%ie$ are $o $ent+ it $"all not .e nece$$ary to 9le #it" t"e
Regi$trar+ in t"e ca$e o' a %u.lic com%any co%ie$ o' t"e account$ an& .alance?
$"eet an& o' t"e au&itorU$ re%ort+ an& in t"e ca$e o' a %ri-ate com%any+ co%ie$ o'
t"e .alance?$"eet an& o' t"e au&itorU$ re%ort a$ re/uire& .y $u.?$ection 012 o'
Sec, 55: o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ an& t"e co%ie$ $o $ent $"all .e
c"argea.le #it" t"e $ame 'ee an& $"all .e &ealt #it" in all re$%ect$ a$ i' t"ey
#ere 9le& in accor&ance #it" t"at $ection,G
052 H"en in %ur$uance o' $u.?$ection 052 o' Sec,56+ t"e Re$er-e Bank re/uire$
any a&&itional $tatement o' in'ormation in connection #it" t"e .alance?$"eet an&
account 'urni$"e& un&er Sec,=1+ t"e .anking com%any $"all+ #"en $u%%ly $uc"
$tatement or in'ormation+ $en& a co%y t"ereo' to t"e Regi$trar,
==, 3i$%lay o' au&ite& .alance?$"eet .y com%anie$ incor%orate& out$i&e In&ia,?
E-ery .anking com%any incor%orate& 19=E Fout$i&e In&iaG $"all not later t"an t"e
9r$t )on&ay in Augu$t o' any year in #"ic" it carrie$ on .u$ine$$ &i$%lay in a
con$%icuou$ %lace in it$ %rinci%al oLce an& in e-ery .ranc" oLce 194E Fin In&iaG
a co%y o' it$ au&ite& .alance?$"eet an& %ro9t an& lo$$ account %re%are& un&er
Sec,59+ an& $"all kee% t"e co%y $o &i$%laye& until re%lace& .y a co%y o' t"e
$u.$e/uent .alance?$"eet an& %ro9t an& lo$$ account $o %re%are&+ an& e-ery
$uc" .anking com%any $"all &i$%lay in like manner co%ie$ o' it$ com%lete au&ite&
.alance?$"eet an& %ro9t an& lo$$ account relating to it$ .anking .u$ine$$ a$ $oon
a$ t"ey are a-aila.le+ an& $"all kee% t"e co%ie$ $o &i$%laye& until co%ie$ o' $uc"
$u.$e/uent account$ are a-aila.le,
=4, Accounting %ro-i$ion$ o' t"i$ Act not retro$%ecti-e,? Not"ing in t"i$ Act $"all
a%%ly to t"e %re%aration o' account$ .y a .anking com%any an& t"e au&itor an&
$u.mi$$ion t"ereo' in re$%ect o' any accounting year #"ic" "a$ e8%ire& %rior to
t"e commencement o' t"i$ Act+ an& not#it"$tan&ing t"e ot"er %ro-i$ion$ o' t"i$
Act+ $uc" account$ $"all .e %re%are&+ au&ite& an& $u.mitte& in accor&ance #it"
t"e la# in 'orce imme&iately .e'ore t"e commencement o' t"i$ Act,
191E F=4?A, 4ro&uction o' &ocument$ o' con9&ential nature,? 012 Not#it"$tan&ing
anyt"ing containe& in Sec,11 o' t"e In&u$trial 3i$%ute$ Act+ 1946 014 o' 19462+ or
any ot"er la# 'or t"e time .eing in 'orce+ no .anking com%any $"all+ in any
%rocee&ing un&er t"e $ai& Act or in any a%%eal or ot"er %rocee&ing ari$ing
t"ere'rom or connecte& t"ere#it"+ .e com%elle& .y any aut"ority .e'ore #"ic"
$uc" %rocee&ing i$ %en&ing to %ro&uce+ or gi-e in$%ection o'+ any o' it$ .ook$ o'
account or ot"er &ocument or 'urni$" or &i$clo$e any $tatement or in'ormation+
#"en t"e .anking com%any claim$ t"at $uc" &ocument+ $tatement or in'ormation
i$ o' a con9&ential nature an& t"at t"e %ro&uction or in$%ection o' $uc" &ocument
or t"e 'urni$"ing or &i$clo$ure o' $uc" $tatement or in'ormation #oul& in-ol-e
&i$clo$ure o' in'ormation relating to Q
0a2 any re$er-e$ not $"o#n a$ $uc" in it$ %u.li$"e& .alance?$"eetI or
0.2 any %articular$ not $"o#n t"erein in re$%ect o' %ro-i$ion$ ma&e 'or .a& an&
&ou.t'ul &e.t$ an& ot"er u$ual or nece$$ary %ro-i$ion$,
052 I'+ in any $uc" %rocee&ing in relation to any .anking com%any ot"er t"an t"e
Re$er-e Bank o' In&ia+ any /ue$tion ari$e$ a$ to #"et"er any amount out o' t"e
re$er-e$ or %ro-i$ion$ re'erre& to in $u.?$ection 012 $"oul& .e taken into account
.y t"e aut"ority .e'ore #"ic" $uc" %rocee&ing i$ %en&ing+ t"e aut"ority may+ i' it
$o t"ink$ 9t+ re'er t"e /ue$tion to t"e Re$er-e Bank an& t"e Re$er-e Bank $"all+
a'ter taking into account %rinci%le$ o' $oun& .anking an& all rele-ant
circum$tance$ concerning t"e .anking com%any+ 'urni$" to t"e aut"ority a
certi9cate $tating t"at t"e aut"ority+ $"all not take into account any amount a$
$uc" re$er-e$ an& %ro-i$ion$ o' t"e .anking com%any or may take t"em into
account only to t"e e8tent o' t"e amount $%eci9e& .y it in t"e certi9cate+ an& t"e
certi9cate o' t"e Re$er-e Bank on $uc" /ue$tion $"all .e 9nal an& $"all not .e
calle& in /ue$tion in any $uc" %rocee&ing,
19*E F0=2 Aor t"e %ur%o$e$ o' t"i$ $ection N.anking com%anyO inclu&e$ t"e
Re$er-e Bank+ t"e 3e-elo%ment Bank+ t"e E8im Bank+ 196E Ft"e Recon$truction
BankG+ 197E Ft"e National Cou$ing Bank+G t"e National Bank+ 199E Ft"e Small
In&u$trie$ BankG+ t"e State Bank o' In&ia+ a corre$%on&ing ne# .ank+ a regional
rural .ank an& a $u.$i&iary .ank,G
!))ENTS
Section "a$ a $tatutory recognition,? Section =4?A o' t"e Banking Regulation Act
"a$ gi-en $tatutory recognition to t"e maintenance o' $ecret account$ .y
.anking com%anie$, H"ile Pu&icially recogni$ing t"e %ractice o' .anking
com%anie$ "a-ing $ecret account$ #"ic" are not re>ecte& in t"eir %u.li$"e&
.alance?$"eet+ t"e o.Pect o' t"i$ enactment #a$ $umme& u% .y t"eir Lor&$"i%$ o'
t"e Su%reme !ourt in t"e ca$e o' All In&ia Bank Em%loyee$U A$$ociation -
National In&u$trie$ Tri.unal,5::E
H"et"er Sec,6=?BB o' t"e )a"ara$"tra !o?o%erati-e Societie$ Act i$ in con>ict
#it" t"e Banking Regulation Act,? Section 6=?BB o' t"e )a"ara$"tra !o?o%erati-e
Societie$ Act+ 19*1+ in $o 'ar a$ it relate$ to !o?o%erati-e Bank$ &oe$ not con>ict
#it" Banking Regulation Act+ 1949,5:1E
=1, In$%ection,? 012 Not#it"$tan&ing anyt"ing to t"e contrary containe& in 5:5E
FSec,5=1 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ t"e Re$er-e Bank at any time
may+ an& on .eing &irecte& $o to &o .y t"e !entral Go-ernment $"all cau$e an
in$%ection to .e ma&e .y one or more o' it$ oLcer$ o' any .anking com%any an&
it$ .ook$ an& account$I an& t"e Re$er-e Bank $"all $u%%ly to t"e .anking
com%any a co%y o' it$ re%ort on $uc" in$%ection,
5:=E F01?A2 0a2 Not#it"$tan&ing anyt"ing to t"e contrary containe& in any la# 'or
t"e time .eing in 'orce an& #it"out %rePu&ice to t"e %ro-i$ion$ o' $u.?$ection 012+
t"e Re$er-e Bank + at any time+ may al$o cau$e a $crutiny to .e ma&e .y any one
or more o' it$ oLcer$ o' any .anking com%any an& it$ .ook$ an& account$I an&
0.2 a co%y o' t"e re%ort o' t"e $crutiny $"all .e 'urni$"e& to t"e .anking com%any
i' t"e .anking com%any make$ a re/ue$t 'or t"e $ame or i' any a&-er$e action i$
contem%late& again$t t"e .anking com%any on t"e .a$i$ o' t"e $crutiny,G
052 It $"all .e t"e &uty o' e-ery &irector or ot"er oLcer 5:4E For em%loyeeG o' t"e
.anking com%any to %ro&uce to any oLcer making an in$%ection un&er $u.?
$ection 012 5:1E F or a $crutiny un&er $u.?$ection 01?A2G all $uc" .ook$+ account$
an& ot"er &ocument$ in "i$ cu$to&y or %o#er an& to 'urni$" "im #it" any
$tatement$ an& in'ormation relating to t"e a(air$ o' t"e .anking com%any a$ t"e
$ai& oLcer may re/uire o' "im #it"in $uc" time a$ t"e $ai& oLcer may $%eci'y,
0=2 Any %er$on making an in$%ection un&er $u.?$ection 012 5:*E For a $crutiny
un&er $u.?$ection 01?A2G may e8amine on oat" any &irector or ot"er oLcer 5:*E
For em%loyeeG o' t"e .anking com%any in relation to it$ .u$ine$$+ an& may
a&mini$ter an oat" accor&ingly,
042 T"e Re$er-e Bank $"all+ i' it "a$ .een &irecte& .y t"e !entral Go-ernment to
cau$e an in$%ection to .e ma&e+ an& may in any ot"er ca$e+ re%ort to t"e !entral
Go-ernment on any in$%ection 5:*E For $crutinyG ma&e un&er t"i$ $ection+ an&
t"e !entral Go-ernment+ i' it i$ o' o%inion a'ter con$i&ering t"e re%ort t"at t"e
a(air$ o' t"e .anking com%any are .eing con&ucte& to t"e &etriment o' t"e
intere$t$ o' it$ &e%o$itor$+ may a'ter gi-ing $uc" o%%ortunity to t"e .anking
com%any to make a re%re$entation in connection #it" t"e re%ort a$+ in t"e
o%inion o' t"e !entral Go-ernment+ $eem$ rea$ona.ly .y or&er in #riting ?
0a2 %ro"i.it t"e .anking com%any 'rom recei-ing 're$" &e%o$it$I
0.2 &irect t"e Re$er-e Bank to a%%ly un&er Sec,=7 'or t"e #in&ing u% o' t"e
.anking com%anyJ
4ro-i&e& t"at t"e !entral Go-ernment may &e'er+ 'or $uc" %erio& a$ it may t"ink
9t+ t"e %a$$ing o' an or&er un&er t"i$ $u.?$ection+ or cancel or mo&i'y any $uc"
or&er+ u%on $uc" term$ an& con&ition$ a$ it may t"ink 9t to im%o$e,
012 T"e !entral Go-ernment may+ a'ter gi-ing rea$ona.le notice to t"e .anking
com%any+ %u.li$" t"e re%ort $u.mitte& .y t"e Re$er-e Bank or $uc" %ortion
t"ereo' a$ may a%%ear nece$$ary,
4E F0*2 T"e %o#er$ e8erci$a.le .y t"e Re$er-e Bank un&er t"i$ $ection in relation
to regional rural .ank$ may 0#it"out %rePu&ice to t"e e8erci$e o' $uc" %o#er$ .y
t"e Re$er-e Bank may in relation to any regional rural .ank #"ene-er it
con$i&er$ nece$$ary $o to &o2 .e e8erci$e& .y t"e National Bank in relation to t"e
regional rural .ank$+ an& accor&ingly+ $u.?$ection$ 012 to 012 $"all a%%ly in
relation to regional rural .ank$ a$ i' e-ery re'erence t"erein to t"e Re$er-e Bank
inclu&e& al$o a re'erence to t"e National Bank,G
5:6E FE8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $ection+ t"e e8%re$$ion N.anking
com%anyO $"all inclu&e Q
0i2 in t"e ca$e o' a .anking com%any incor%orate& out$i&e In&ia+ all it$ .ranc"e$
in In&iaI an&
0ii2 in t"e ca$e o' a .anking com%any incor%orate& in In&ia Q
0a2 all it$ $u.$i&iarie$ 'orme& 'or t"e %ur%o$e o' carrying on t"e .u$ine$$ o'
.anking e8clu$i-ely out$i&e In&iaI
0.2 all it$ .ranc"e$ #"et"er $ituate& in In&ia or out$i&e In&ia,G
5:7E F=1?A, 4o#er o' t"e Re$er-e Bank to gi-e &irection$,? 012 H"ere t"e Re$er-e
Bank i$ $ati$9e& t"at ?
0a2 in t"e 5:9E F%u.lic intere$tGI or
51:E F0aa2 in t"e intere$t o' .anking %olicyI or
0.2 to %re-ent t"e a(air$ o' any .anking com%any .eing con&ucte& in a manner
&etrimental to t"e intere$t$ o' t"e &e%o$itor$ or in a manner %rePu&icial to t"e
intere$t$ o' t"e .anking com%anyI or
0c2 to $ecure t"e %ro%er management o' any .anking com%any generallyI
it i$ nece$$ary to i$$ue &irection$ to .anking com%anie$ generally or to any
.anking com%any in %articular+ i' may+ 'rom time to time+ i$$ue $uc" &irection$ a$
it &eem$ 9t+ an& t"e .anking com%anie$ or t"e .anking com%any+ a$ t"e ca$e
may .e+ $"all .e .oun& to com%ly #it" $uc" &irection$,
052 T"e Re$er-e Bank may+ on re%re$entation ma&e to it or on it$ o#n motion+
mo&i'y or cancel any &irection$ i$$ue& un&er $u.?$ection 012 an& in $o mo&i'ying
or cancelling any &irection may im%o$e $uc" con&ition$ a$ it t"ink$ 9t+ $u.Pect to
#"ic" t"e mo&i9cation or cancellation $"all "a-e e(ect,G
!))ENTS
4o#er$ o' Re$er-e Bank o' In&ia,? T"e T.anking %olicyU an& T.ankingU are not
in&e%en&ent .ut co?or&inating $u.Pect$ an& .ot" are co-ere& #it"in t"e
$u%er-i$ory %o#er$ o' t"e Re$er-e Bank o' In&ia #it"in t"e meaning o' Sec,=1?A
o' t"e Banking Regulation Act, E-en ot"er#i$e+ t"e &irection$ i$$ue& .y t"e
Re$er-e Bank o' In&ia .eing a .o&y o' e8%ert$ in .anking+ t"e &irection$ gi-en .y
it $"oul& not .e lig"tly .ru$"e& a$i&e,511E
Un&er t"i$ $ection+ t"e Re$er-e Bank o' In&ia "a$ .een gi-en t"e %o#er to i$$ue
$%eci9c &irection$ in t"e intere$t o' .anking %olicy in %u.lic intere$t+ to %re-ent
t"e a(air$ o' any .anking com%any .eing con&ucte& in a manner &etermine& to
t"e intere$t$ o' t"e &e%o$itor$ or in a manner %rePu&icial to t"e intere$t$ o' t"e
.anking com%any,515E
Tran$action$ not in-ali& 'or .reac" o' R,B,I, in$truction$,? Hit" regar& to t"e
9n&ing o' t"e S%ecial !ourt t"at t"e tran$action$ in /ue$tion #ere illegal+ a$ t"ey
#ere in contra-ention o' t"e circular$ #"ic" #ere i$$ue& .y t"e Re$er-e Bank o'
In&ia un&er t"e %ro-i$ion o' t"e Act+ it #a$ conten&e& .y )r, !oo%er+ learne&
coun$el+ t"at t"e circular$ i$$ue& #ere no more t"an gui&eline$ #"ic" #ere
re/uire& to .e 'ollo#e& .y t"e .ank an& t"ey #ere not man&atory in nature,
Ela.orating t"i$ contention+ )r, !oo%er $u.mitte& t"at t"e Banking Regulation
Act contain$ %ro-i$ion$ #"ic" ena.le t"e Re$er-e Bank o' In&ia to i$$ue &irection$
#"ic" #ere man&atory an& al$o to gi-e a&-ice to t"e .ank$,51=E
Su%er-i$ory &uty an& %o#er$ o' t"e Re$er-e Bank o' In&ia o-er t"e a(air$ o' t"e
in$ure& !o?o%erati-e Bank$ Q Sco%e o' t"e %ro-i$ion o' t"e $ection,? It i$ t"e &uty
an& t"e .u$ine$$ o' t"e Re$er-e Bank o' In&ia to $u%er-i$e t"e a(air$ o' t"e
in$ure& !o?o%erati-e Bank$, Section =1?A o' t"e Banking Regulation Act
aut"ori$e$ t"e Re$er-e Bank to gi-e nece$$ary &irection$ to $ecure t"e %ro%er
management o' any .anking com%any, It i$ not in &i$%ute t"at t"i$ %ro-i$ion
a%%lie$ to an in$ure& !o?o%erati-e Bank al$o,514E
Su%er-i$ory %o#er$ o' Q Re$er-e Bank #it"in t"e meaning o' t"e $ection Q
3irection$ o' t"e Re$er-e Bank $"oul& not .e lig"tly .ru$"e& a$i&e,? NBanking
%olicyO an& N.ankingO are not in&e%en&ent .ut co?or&inating $u.Pect$ an& .ot"
are co-ere& #it"in t"e $u%er-i$ory %o#er$ o' t"e Re$er-e Bank o' In&ia #it"in t"e
meaning o' Sec, =1?A o' t"e Banking Regulation Act, E-en ot"er#i$e it i$ 'elt t"at
t"e &irection$ i$$ue& .y t"e Re$er-e Bank o' In&ia are in t"e larger intere$t o' t"e
%u.lic an& t"e Re$er-e Bank o' In&ia .eing a .o&y o' e8%ert$ in .anking t"e
&irection$ gi-en .y it $"oul& not .e lig"tly .ru$"e& a$i&e,511E
=1?B Amen&ment$ o' %ro-i$ion$ relating to a%%ointment$ o' managing &irector$+
etc, to .e $u.Pect to %re-iou$ a%%ro-al o' t"e Re$er-e Bank,? 012 In t"e ca$e o'
.anking com%any Q
0a2 no amen&ment o' any %ro-i$ion relating to 51*E Ft"e ma8imum %ermi$$i.le
num.er o' &irector$ orG t"e 516E Fa%%ointment or re?a%%ointment or termination
o' a%%ointment or remuneration o' a c"airman+G 517E Fa managing &irector or any
ot"er &irector+ #"ole?time or ot"er#i$eG or o' a manager or a c"ie' e8ecuti-e
oLcer .y #"ate-er name calle&+ #"et"er t"at %ro-i$ion .e containe& in t"e
com%anyU$ memoran&um or article$ o' a$$ociation+ or in agreement entere& into
.y it+ or in any re$olution %a$$e& .y t"e com%any in general meeting or .y it$
Boar& o' 3irector$ $"all "a-e e(ect unle$$ a%%ro-e& .y t"e Re$er-e BankI
519E 0.2 no a%%ointment or re?a%%ointment or termination o' a%%ointment o' a
c"airman+ a managing or #"ole?time &irector+ manager or c"ie' e8ecuti-e oLcer
.y #"ate-er name calle&+ $"all "a-e e(ect unle$$ $uc" a%%ointment+ re?
a%%ointment+ or termination o' a%%ointment i$ ma&e #it" t"e %re-iou$ a%%ro-al
o' t"e Re$er-e BankIG
55:E FE8%lanation,? Aor t"e %ur%o$e$ o' t"i$ $u.?$ection any %ro-i$ion con'erring
any .ene9t o' %ro-i&ing any amenity or %er/ui$ite+ in #"ate-er 'orm+ #"et"er
&uring or a'ter t"e termination o' t"e term o' oLce 551E Fo' t"e c"airman or t"e
managerG or t"e c"ie' e8ecuti-e oLcer .y #"ate-er name calle& or t"e
managing &irector+ or any ot"er &irector+ #"ole time or ot"er#i$e+ $"all .e
&eeme& to .e a %ro-i$ion relating to "i$ remuneration,G
052 Not"ing containe& in Sec$, 555E F5*7 an& 5*9+ t"e %ro-i$o to $u.?$ection 0=2
o' Sec,=:9+ Sec$, =1: an& =11+t"e %ro-i$o to Sec,=76+ an& Sec,=77G 0in $o 'ar a$
Sec,=77 make$ t"e 55=E F%ro-i$ion$ o' Sec,5*9+ =1:G an& =11 a%%ly in relation to
t"e manager o' a com%anyG o' t"e !om%anie$ Act+ 191* 01 o' 191*2 $"all 554E
Fa%%ly to any matter in re$%ect o' #"ic" t"e a%%ro-al o' t"e Re$er-e Bank "a$ to
.e o.taine& un&er $u.?$ection 012G,
55:E F05?A2 Not"ing containe& in Sec,197 o' t"e !om%anie$ Act+ 191* 01 o' 191*2
$"all a%%ly to a .anking com%any an& t"e %ro-i$ion$ o' $u.?$ection 012 o' Sec,=:9
an& o' Sec,=76 o' t"at Act $"all+ in $o 'ar a$ t"ey are a%%lica.le to a .anking
com%any+ "a-e e(ect a$ i' no re'erence "a$ .een ma&e in t"e $ai& %ro-i$ion$ to
Sec,197 o' t"at Act,G
0=2 No act &one .y a %er$on 551E Fa$ c"airman or a managing or #"ole?time
&irector or a &irector not lia.le to retire .y rotation or manager or c"ie' e8ecuti-e
oLcer .y #"ate-er name calle&+ $"all .e &eeme& to .e in-ali& on t"e groun&
t"at it i$ $u.$e/uently &i$co-ere& t"at "i$ 55*E Fa%%ointment or re?a%%ointmentG
"a& not taken e(ect .y rea$on o' any o' t"e %ro-i$ion$ o' t"i$ ActI .ut not"ing in
t"i$ $u.?$ection $"all .e con$true& a$ ren&ering -ali& any act &one .y $uc"
%er$on a'ter "i$ 556E Fa%%ointment or re?a%%ointmentG "a$ .een $"o#n to t"e
.anking com%any not to "a-e "a& e(ect,G
=*, Aurt"er %o#er$ an& 'unction$ o' Re$er-e Bank,? 012 T"e Re$er-e Bank may ?
0a2 caution or %ro"i.it .anking com%anie$ generally or any .anking com%any in
%articular again$t entering into any %articular tran$action or cla$$ o' tran$action$+
an& generally gi-e a&-ice to any .anking com%anyI
0.2 on a re/ue$t .y t"e com%anie$ concerne& an& $u.Pect to t"e %ro-i$ion$ o'
Sec, 557E F44?AG+ a$$i$t a$ interme&iary or ot"er#i$e in %ro%o$al$ 'or t"e
amalgamation o' $uc" .anking com%anie$I
0c2 gi-e a$$i$tance to any .anking com%any mean$ o' t"e grant o' a loan or
a&-ance to it un&er !l,0=2 o' $u.?$ection 012 o' Sec,17 o' t"e Re$er-e Bank o'
In&ia Act+ 19=4 05 o' 19=42I
559E F0&2 5=:E Fat any time i' it i$ $ati$9e& t"at in t"e %u.lic intere$t or in t"e
intere$t o' .anking %olicy or 'or %re-enting t"e a(air$ o' t"e .anking com%any
.eing con&ucte& in a manner &etrimental to t"e intere$t$ o' t"e .anking
com%any or it$ &e%o$itor$ it i$ nece$$ary $o to &oG .y or&er in #riting an& on
$uc" term$ an& con&ition$ a$ may .e $%eci9e& t"erein?
0i2 re/uire t"e .anking com%any to call a meeting o' it$ &irector$ 'or t"e %ur%o$e
o' con$i&ering any matter relating to or ari$ing out o' t"e a(air$ o' t"e .anking
com%any+ or re/uire an oLcer o' t"e .anking com%any to &i$cu$$ any $uc"
matter #it" an oLcer o' t"e Re$er-e Bank I
0ii2 &e%ute one or more o' it$ oLcer$ to #atc" t"e %rocee&ing$ at any meeting o'
t"e Boar& o' 3irector$ o' t"e .anking com%any or o' any committee or o' any
ot"er .o&y con$titute& .y itI re/uire t"e .anking com%any to gi-e an o%%ortunity
to t"e oLcer$ $o &e%ute& to .e "ear& at $uc" meeting$ an& al$o re/uire $uc"
oLcer$ to $en& a re%ort o' $uc" %rocee&ing$ to Re$er-e BankI
0iii2 re/uire t"e Boar& o' 3irector$ o' t"e .anking com%any or any committee or
any ot"er .o&y con$titute& .y it to gi-e in #riting to any oLcer $%eci9e& .y t"e
Re$er-e Bank in t"i$ .e"al' at "i$ u$ual a&&re$$ all notice$ o'+ an& ot"er
communication$ relating to any meeting o' t"e Boar&+ committee or ot"er .o&y
con$titute& .y itI
0i-2 a%%oint one or more o' it$ oLcer$ to o.$er-e t"e manner in #"ic" t"e a(air$
o' t"e .anking com%any or o' it$ oLcer$ or .ranc"e$ are .eing con&ucte& an&
make a re%ort t"ereonI
0-2 re/uire t"e .anking com%any to make+ #it"in $uc" time a$ may .e $%eci9e&
in t"e or&er+ $uc" c"ange$ in t"e management a$ t"e Re$er-e Bank may
con$i&er nece$$ary 5=1FEEEG,
052 T"e Re$er-e Bank $"all make an annual re%ort to t"e !entral Go-ernment on
t"e tren& an& %rogre$$ o' .anking in t"e country+ #it" %articular re'erence to it$
acti-itie$ un&er !l,052 o Sec,16 o' t"e Re$er-e Bank o' In&ia Act+19=4 05 o' 19=42+
inclu&ing in $uc" re%ort it$ $ugge$tion$+ i' any+ 'or t"e $trengt"ening o' .anking
.u$ine$$ t"roug"out t"e country,
0=2 T"e Re$er-e Bank may a%%oint $uc" $ta( at $uc" %lace$ a$ it con$i&er$
nece$$ary 'or t"e $crutiny o' t"e return$+ $tatement$ an& in'ormation 'urni$"e&
.y .anking com%anie$ un&er t"i$ Act+ an& generally to en$ure t"e eLcient
%er'ormance o' it$ 'unction$ un&er t"i$ Act,
!))ENTS
Rali&ity o' circular$ i$$ue& .y R,B,I,? T"e circular$ i$$ue& .y R,B,I, #ere
con9&ential &ocument$ an& re/uire& t"e .anking com%anie$ to tran$act t"eir
.u$ine$$ in a %articular manner+ namely+ t"ey $"oul& not enter into any .uy?.ack
contract$ #"ic" #ere not accor&ing to t"e term$ o' t"e circular$, T"e Act it$el'
&oe$ not %ro-i&e t"at #"ere t"e &irection$ i$$ue& .y t"e con9&ential circular$ are
-iolate& .y t"e .ank t"e contract$ entere& into #it" t"e t"ir& %artie$ #oul& in
any #ay .e in-ali&ate&, T"e $ai& circular$ al$o+ &i& not $ay t"at t"e con$e/uence
o' t"e &irection$ containe& t"erein not .eing 'ollo#e& .y t"e .anking com%anie$
#ill re$ult in $uc" tran$action$ .eing regar&e& a$ -oi&, In&ee& no $uc" $ti%ulation
coul& .e ma&e #"ic" #oul& a&-er$ely a(ect t"ir& %artie$ to #"om no &irection$
"a-e .een or coul& .e i$$ue& an& #"o #ere not a#are o' $uc" &irection i$$ue& to
t"e .ank$,5=5
Im%lication o' t"e #or&$ Ncaution or %ro"i.itO, ? Section =* 012 0a2 em%o#er$ t"e
Re$er-e Bank to Ncaution or %ro"i.itO t"e .anking com%anie$ 'rom entering into
any %articular ty%e o' tran$action or generally to gi-e a&-ice to t"e $ai& .anking
com%anie$, T"e u$e o' #or&$ Ncaution or %ro"i.itO in Sec,=*012 0a2 clearly im%lie$
t"at #"en t"e Re$er-e Bank o' In&ia %ro"i.it$ t"e .anking com%anie$ 'rom
entering into any %articular tran$action t"en $uc" a &irection #"ic" i$ i$$ue&
#oul& .e .in&ing on t"e .ank$ an& "a$ to .e com%lie& #it",5==E
5=4E F=*?A, !ertain %ro-i$ion$ o' t"e Act not to a%%ly to certain .anking
com%anie$,? 012 T"e %ro-i$ion$ o' Sec,11+ $u.?$ection 012 o' Sec,15+ an& Sec$,16+
17+ 54 an& 51 $"all not a%%ly to a .anking com%any Q
0a2 #"ic"+ #"et"er .e'ore or a'ter t"e commencement o' t"e Banking !om%anie$
0Amen&ment2 Act+ 1919 0== o' 19192+ "a$ .een re'u$e& a licence un&er Sec,55 or
%ro"i.ite& 'rom acce%ting 're$" &e%o$it$ .y a com%romi$e+ arrangement or
$c"eme $anctione& .y a !ourt or .y any or&er ma&e in any %rocee&ing relating
to $uc" com%romi$e+ or arrangement or $c"eme+ or %ro"i.ite& 'rom acce%ting
're$" &e%o$it$ .y -irtue o' any alteration ma&e in it$ memoran&umI or
0.2 #"o$e licence "a$ .een cancelle& un&er Sec,55+ #"et"er .e'ore or a'ter t"e
commencement o' t"e Banking !om%anie$ 0Amen&ment2 Act+ 1919 0== o' 19192,
052 H"ere t"e Re$er-e Bank i$ $ati$9e& t"at any $uc" .anking com%any a$ i$
re'erre& to in $u.?$ection 012 "a$ re%ai&+ or "a$ ma&e a&e/uate %ro-i$ion 'or
re%aying all &e%o$it$ acce%te& .y t"e .anking com%any+ eit"er in 'ull or to t"e
ma8imum e8tent %o$$i.le+ t"e Re$er-e Bank may+ .y notice %u.li$"e& in t"e
Lcial GaMette+ noti'y t"at t"e .anking com%any "a$ cea$e& to .e a .anking
com%any #it"in t"e meaning o' t"i$ Act+ an& t"ereu%on all t"e %ro-i$ion$ o' t"i$
Act a%%lica.le to $uc" .anking com%any $"all cea$e to a%%ly to it+ e8ce%t a$
re$%ect$ t"ing$ &one or omitte& to .e &one .e'ore $uc" notice,G
!))ENT
Rea&y Aor#ar& Tran$action$ Q Illegal an& -oi&, ? Un&er t"e circum$tance$+ it #ill
"a-e to .e "el& t"at Rea&y Aor#ar& Tran$action$ are illegal an& -oi& an& t"e no
rig"t$ can .e create& in 'a-our o' any t"ir& %arty un&er $uc" contract$, It #ill
"a-e to .e "el& t"at e-en t"oug" un&er $uc" an agreement+ %ro%ertie$ are in t"e
"an&$ o' t"ir& %er$on$+ t"e rig"t+ title an& intere$t in t"o$e %ro%ertie$ remain in
t"e Noti9e& 4arty an& t"o$e %ro%ertie$ $tan& attac"e& un&er t"e %ro-i$ion$ o'
t"e S%ecial !ourt Act,5=1E
Aoot?note
1 Su.$, .y Act,== o' 1919+ Sec,4+ 'or Nmanaging agentO 0#,e,',1$t cto.er+ 19192,
5 Raramani 3a-i&+ !, -, Bank o' )a&urai Lt&,+ A,I,R, 197= )a&, 11 at %,1*,
= Rimal !"an&ra Gro-er -, Bank o' In&ia+ 05:::2 1 S,!,!, 155 at %%,1=1+ 1=5 J
A,I,R, 5::: J S,!, 5171 J 5::: 012 S,T, 0S,!,2 576 J 5::: 042 S,L,T, 5:5 0S,!,2 J 5:::
042 !,L,T, 5*4 0S,!,2,
4 Bi$"o% o' Kottayam -, Union o' In&ia+ A,I,R, 197* Ker, 15* at %, 159,
1 Sri Sogen&ra Nama -, Union o' In&ia+ A,I,R, 1979 Gau, *:I State Bank o' In&ia -,
APit Sain 019912 75 !om%, !a$, =17 0S,!,2,
* AuPla !om%any 4-t, Lt&,+ -, Kaluram )a"a&eo 4ra$a&+ A,I,R, 197= !al, 1:* at
%%,114+ 111+ 11*+ 117I Bank o' Baro&a -, Sitaram+ 019912 75 !om%, !a$,4=1
0),4,2I La8mi )arketing !or%oration -, Kar, S,E,3, !or%oration+ 019912 75 !om%,
!a$, 446 0Knt,2,
6 3el"i Lotterie$ -, RaPe$" Aggar#al+ A,I,R, 1997 3el"i ==5 at %, ==9I 3SS )o.ile
!ommunication$ Limite& -, Union o' In&ia+ 66 019992 3,L,T, 96 at %,1:1,
7 Bi$"o% o' Kottayam -, Union o' In&ia+ A,I,R, 197* Ker, 15* at %, 159, 1=:,
9 4ure#al ; A$$ociate$ -, 4unPa. National Bank+ A,I,R, 199= S,!,914 at %,911I
Aoo& !or%oration o' In&ia - Aro$an Enter%ri$e$ Lt&,+ A,I,R, 199* 3el"i 15*,
1: 4ure#al ; A$$ociate$ -, 4unPa. National Bank+ 199= 012 Bank !,L,R,41= at
%,411 0S,!,2,
11 In&ian !"arge !"rome Lt&,+ -, A$ea Stal A,B,+ 199= 012 Bank L,S, =94 at %,=99
0ri$$a2,
15 B#arike$" Sugar In&u$trie$ -, 4rem Cea-y Engineering+ 1996 052 S,!,!,R, 19*
at %,5:1,
1= Su.$,.y Act 11 o' 19*=+ Sec,6+ 'or t"e 'ormer Sec,6 0#,e,', 1$t Ae.ruary+ 19*42,
14 In$, .y Act 1 o' 1974+ Sec, 14+ 0#,e,', 11t" Ae.ruary+ 19742,
11 ), ), )a/lik -, 4rem Kumar Gayal+ 1991 052 Bank !,L,R, 49* at %,1:: 04,C,2,
1* Tra&er$ Bank Lt&, -, S, Kalyan Sing"+ A,I,R, 191= 4unP, 194 at %,191I 4rat"ana
Bank -, RiPai Kumar Goel+ 0199:2 *6 !om, !a$,61 at %, 66 0S,!,2,
16 Santo$" Kumar -, King+ A,I,R, 1915 !al, 19= at %, 194I S,A, Kini -, Union o'
In&ia+ A,I,R, 1971 S,!, 799 at %%, 791+ 79*I Rinay Engineering -, Nay-ele Lignite
!or%oration Lt&,+ A,I,R, 1971 )a&,51= at %, 519,
17 Su.$, .y Act 1 o' 1974+ Sec, 11+ 0#,e,', 11t" Ae.ruary+ 19742,
19 Sri Ri$alam !"it Aun& Lt&, -, Union o' In&ia+ A,I,R, 1979 Knit, 151 at %, 149,
5: )o"amma& )a".oo. K"an -, State Tran$%ort A%%ellate Tri.unal+ U,4,+ 1975
A,L,S, =:: at =:1I State o' C,4, -, Su&ar$"an Kumar+ 199: 01:2 E,A,R, 11 at %, 17
0C,4,2I Agya Ram -, State o' U,4, 199: 0562 A,!,!, 59 at %,=1I B"arat Cari
Sing"ania -, H,T, !ommi$$ioner+ 1994 Ta8 L,R, 416 0S,!,2I )V$ nkarmal
Nanakram -, !ommi$$ioner o' Sale$?ta8+ 1999 012 ri$$a L,R, 1 at %,1,
51 Su.$, .y Act 91 o' 191*+ Sec,5+ 'or Sec,1: 0#,e,', 14t" Sanuary+ 19162,
55 Su.$, .y Act == o' 1919+ Sec,*+ 'or t"e %ro-i$o 0#,e,', 1$t cto.er+ 19192,
5= Su.$, .y Act == o' 1919+ 'or $u.?clau$e 0i2 0#,e,', 1$t cto.er+ 19192,
54 Su.$, .y Act 11 o' 19*=+ Sec,7+ 'or certain #or&$ 0#,e,', 1$t Ae.ruary+ 19*42,
51 Su.$, .y i.i&I 'or t"e 9r$t %ro-i$o 0#,e,', 1$t Ae.ruary+ 19*42
5* Su.$, .y Act == o' 1919+ Sec,*+ 'or $u.?$ection 0=2 0#,e,', 1$t cto.er+ 19192,
56 Su.?$ection$ 0=2+ 042+ an& 012 omitte& .y Act 11 o' 19*=+ Sec,7 0#,e,', 1$t
Ae.ruary+ 19*42,
57 S"iam Kumar )o&ugil -, State Bank o' In&ia+ 199: La., I,!, 14*9 at %, 146=
04,; C,2,
59 Su&ar$an 3a$ -, State o' He$t Bengal+ 1991 052 !,L,R, 591 at %,595 0!al,2,
=: G, )o"an -, A$$tt, !ollector o' !u$tom$+ )a&ra$+ 199: Bank S, 45= at %%,454+
451 0)a&,2,
=1 Bank o' )a"ara$"tra -, m 4raka$" )al-iya+ 1996 La., I,!, 19=5 at %, 19=1+
19=* 03el"i2,
=5 S"iam Kumar )o&ugil -, State Bank o' In&ia+ 199: La., I,!, 14*9 at %%, 1461+
146* 04,; C,2,
== Giree$an -, In&ian -er$ea$ Bank+ Kerala+ 1994 012 B,L,S, 4:1 at %%, 4:1+ 4:5+
4:1,
=4 In&ian Bank$ A$$ociation -, Horkmen o' Syn&icate Bank+ 5::1 Bank S, 4== at
%, 441,
=1 In&ian Bank$ A$$ociation -, Horkmen o' Syn&icate Bank+ 1996 0=2 L,L,N, 111
at %,117,
=* T,3, 3igam.ar -, !entral Bank o' In&ia+ 1995 0II2 )a&, L,S, 76 at %%, 91+ 95
0)a&,2,
=6 Union o' In&ia+ -, Bak$"i+ A,I,R, 199: S,!, 976 J 0199:2 La., I,!,7:*I !entral
Bank o' In&ia+ !"an&igar" -, Bal#ant Rai Nayyar+ 199* La.,I,!, 5459 at %, 54=5
04,; C,2,
=7 )anagement o' In&ian Bank -, 4re$i&ing Lcer+ In&u$trial Tri.unal 0c2 0)a&,2+
199: 012 !,L,R, 179 at %, 196 0)a&,2,
=9 K, Gana%at"y Sa$try -, 3e%uty General )anager+ 0Sta(2 An&"ra Bank+ 199*
052 Bank, L,S,=11 at %%,=14+ =11 0A,4,2,
4: Bonal )anager ; 3i$ci%linary Aut"ority In&ian Bank -, 4aru%ure&&y
Sayanarayana+ 199: 052 !rime$ 61 at %%, 6*+ 66 0A,4,2,
41 Section$ 1:?A to 1:?3+ in$, .y Act 17 o' 19*7+ Sec,= 0#,e,',1$t Ae.ruary+ 19*92
45 In$, .y Act No,1 o' 1974+ Sec,1* 0#,e,', 11t" Ae.ruary+ 19742,
4= T,S, Arumugam -, R, La8mi Rila$ Bank Lt&,+ 1995 052 L,L,S, 51: at %,517 0)a&,2 J
199= Bank S, 4=1 at %, 441 0)a&,2,
44 T,S, Arumugam -, R, La8mi Rila$ Bank Lt&,+ 199= Bank S,4=1 at %%,444+ 441
0)a&,2 J 1995 052 L,L,S, 51: at %,517 0)a&,2,
41 Su.$, .y Act 5: o' 1994+ Sec,5 0#,e,',=1$t Sanuary+ 19942,
4* Su.$, .y Act 5: o' 1994+ Sec,5 0#,e,',=1$t Sanuary+ 19942,
46 I.i&,
47 T"e #or&$ N.ut $"all continue in oLce until "i$ $ucce$$or$ a$$ume$ oLceO
omitte& .y Act No,1 o' 1974+ Sec,16 0#,e,', 11t" Ae.ruary+ 19742,
49 In$, .y i.i&,
1: Su.$, .y Act 5: o' 1994+ Sec,5 0#,e,',=1$t Sanuary+ 19942,
11 In$, .y Act No,1 o' 1974+ Sec,17 0#,e,', 11t" Ae.ruary+ 19742,
15 Su.$, .y Act 5: o' 1994+ Sec,= 0#,e,',=1$t Sanuary+ 19942,
1= Su.$, .y Act 5: o' 1994+ Sec,= 0#,e,',=1$t Sanuary+ 19942,
14 Su.$, .y Act No,1 o' 1974+ Sec,19 0#,e,', 11t" Ae.ruary+ 19742,
11 Su.$, .y Act 5: o' 1994+ Sec,4,
1* Su.$, .y i.i&,+ Sec,1,
16 In$, .y Act No,1 o' 1974+ Sec,5: 0#,e,', 11t" Ae.ruary+ 19742,
17 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec 1:= o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t" Sanuary+ 19162,
19 Su.$, .y 5: o' 191: Sec,=+ 'or Nin any $tateO,
*: Su.$, .y Act == o' 1919+ Sec,6+ 'or certain #or&$ 0#,e,',1$t cto.er+ 19192,
*1 Su.$, .y i.i&,+ 'or $u.?$ection 052 0#,e,', 1$t cto.er+ 19192,
*5 Su.$, .y Act =* o' 19*5+ Sec,5+ 'or certain #or&$,
*= T"e #or& Ncalen&arO omitte& .y Act ** o' 1977+ Sec,6 0#,e,', =:t" 3ecem.er+
19772,
*4 In$, .y Act =* o' 19*5+ Sec,5 0ii2,
*1 In$, .y Sec,5 Act =* o' 19*5,
** Su.$, .y Act *5 o' 191*+ Sec,5 an& Sc"e&ule+ 'or Nin In&iaO,
*6 T"e #or&$ Nt"e %ro-i$o toO omitte& .y Act == o' 1919+ Sec,6 0#,e,', 1$t
cto.er+ 19192,
*7 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nel$e#"ere t"an in a StateO,
*9 Su.$, .y Sec,=+ i.i&,+ 'or Nin t"e StateO,
6: Su.$, .y Act == o' 1919+ Sec,6+ 'or $u.?$ection 012 0#,e,', 1$t cto.er+ 19192,
61 Su.$, .y Act 91 o' 191*+ Sec,=+ 'or $ec,15 0#,e,', 14t" Sanuary+ 19162,
65 In$, .y Act == o' 1919+ Sec,7 0#,e,', 1$t cto.er+ 19192,
6= Su.$, .y Act 11 o' 19*=+ Sec,9+ 'or Nin e8ce$$ o' 9-e %ercentO, 0#,e,', 1$t
Ae.ruary+19*42,
64 Su.$, .y Act 5: o' 1994+ Sec,* 0#,e,', =1$t Sanuary+ 19942,
61 Na$i. Sing" -, Union o' In&ia+ 199* 012 Bank, L,S, 19 at %,*1 04,;C,2,
6* So$e%" )ic"ael -, Sout" In&ian Bank Lt&,+ 1967 Ta8, L,R, 1616 at %%,1651+
165=,
66 T,R, Sreiram -, K,), 3urai Bu.u+ 1994 01=2 !om%, La# A,3,S, 111 at %, 156,
67 Su.$, .y Act 91 o' 191* Sec,4 0#,e,',14t" Sanuary+ 19162,
69 Su.$, .y Act 91 o' 191* Sec,14 an& Sc"e&ule+ 'or NSec$,1:1 an& 1:1?A o' t"e
In&ian !om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t" Sanuary+19162,
7: In$, .y Act == o' 1919+ Sec,9 0#,e,', 1$t cto.er+ 19192,
71 Re?num.ere& a$ $u.?$ection 012 o' Sec, 11 .y Act == o' 1919+ Sec,1: 0#,e,',
1$t cto.er 19192,
75 In$, .y Act == o' 1919+ Sec,11 0#,e,', 1$t cto.er+ 19192,
7= Su.$, .y Act 91 o' 191*+ Sec,1+ 'or Sec,1* 0#,e,',14t" Sanuary+ 19162,
74 Su.$, .y Act 5: o' 1994+ Sec,6 0#,e,', =1$t Sanuary+ 19942,
71 In$, .y Act 17 o' 19*7+ Sec,4 0#,e,' 1$t Ae.ruary+ 19*92,
7* Su.$, .y Act == o' 1919+ Sec,11+ 'or Sec$,16 an& 17 0#,e,',1$t cto.er+ 19192,
76 !ertain #or&$ omitte& .y Act =* o' 19*5+ Sec,=,
77 In$, .y Act == o' 19*5+ Sec,=,
79 An&"ra Bank Lt&, -, !ommi$$ioner o' Income?ta8+ 1991 051*2 I,T,R,**7 at
%,*61 0S,!,2 J 1991 052 A,I, Bank L,S,9,
9: Su.$, .y Act No,1 o' 1974+ Sec,51 #,e,', 59t" )arc"+ 1971,
91 In$, .y Act *5 o' 1974+ Sec,61+ Sc",III 0#,e,', 5:t" )arc"+ 19712,
95 In$, .y Act 1= o' 1976+ Sec,1* an& Sc",II 0#,e,',9t" Suly+ 19772,
9= In$, .y Act =9 o' 1979+ Sec,1= an& Sc",II+ 4t,III 0#,e,',6t" )arc"+ 199:2,
94 Su.$, .y Act No,1 o' 1974+ Sec,55 0#,e,', 11t" Ae.ruary+ 19742,
91 Su.$, .y Act 17 o' 19*7+ Sec,1+ 'or Sec, 5: 0#,e,', 1$t Ae.ruary+ 19*92,
9* In$,.y Act No,1 o' 1974+ Sec,5= 0#,e,', 11t" Ae.ruary+ 19742,
96 Kamal !"an& Sain -, Banking m.u&$man+ A,I,R, 199* ),4, 17: at %,171 J
199* 0=2 Bank S, =7= at %, =74 0),4,2,
97 In$, .y Act 11 o' 19*=+ Sec,15 0#,e,', 1$t Ae.ruary+ 19*42,
99 In$, .y i.i&,+ Sec,1= 0#,e,', 1$t Ae.ruary+ 19*42,
1:: In$, .y Act 17 o' 19*7+ Sec,* 0#,e,', 1$t Ae.ruary+ 19*92
1:1 Su.$, .y Act 11 o' 19*=+ Sec 1=+ 'or certain #or&$ 0#,e,',1$t Ae.ruary+ 19*42,
1:5 In$, .y Act 11 o' 19*= Sec,1=+ 'or certain #or&$ 0#,e,',1$t Ae.ruary+ 19*42,
1:= Renkite$#ara Rice )ill -, Union Bank o' In&ia+ 019772 *= !om%, !a$,47= J
T"am%an -, 3"anMlak$"mi Bank Lt&,+ 1979 052 K,L,T, 74: JK,+ Sameeta Bee-el -,
State Bank o' Tra-ancore+ 1991012 Bank !,L,R, *66 at %%, *69 0Ker,2I 3e.a$i$ 4al
!"ou&"ari -, Alla"a.a& Bank+ 1991 012 !al, L,T, 1: at %,54,
1:4 4unPa. National Bank -, Ri&ya Catc"ery 0C,4,2I 1999 0972 !om%, !a$,4:9 at
%,41= 0C,4,2,
1:1 Sameela Bee-i -, State Bank o' Tra-ancore+ 1991 Bank S, 456 at %,459 0Ker,2,
1:* Sag&am.a Rice )ill$ -, riental Bank o' !ommerce+ Karnal+ A,I,R, 199: 4, ; C,
*: at %,*5,
1:6 In&ian Bank+ Tiru-annamalai -, R,A, Bala$u.ramania Gurukal+ A,I,R, 1975
)a&,59* at %,=:: J 019752 5 ),L,S, 5=7,
1:7 !anara Bank+ Bangalore -, B,E, NanPun&aia"+ 5::1 0=2 Knt, L,S, 5: at %, 56
0Knt,2,
1:9 Go#&a+ 3,S, -, !or%oration Bank+ 019752 5 Knt, L,S, 49: at %%, 499+ 1:1I
Re$er-e Bank o' In&ia -, State Bank o' In&ia+ 0199*2 71 !om%, !a$e$ 114 at %,1*6
0Bom,2I !anara Bank -, 4,R,N, U%a&"yaya+ 019972 * S,!,!, 15* at %%, 1=:+ 1=1,
11: In$, .y Act 1 o' 1974+ Sec,54 0#,e,',11t" Ae.ruary+ 19742,
111 )e&ikon&a Satyanarayana -, An&"ra Bank Lt&,+ Eluru+ A,I,R, 1971 A,4, 66 at
%, 69I C,4, Kri$"na Re&&y -, !anara Bank+ Bangalore+ A,I,R, 1971 Knt, 557 at
%,5=1I Bank o' )a"ara$"tra -, Unite& !on$truction !o,+ A,I,R, 1971 Bom,4=5 at
%%,4==I Bank o' )a&ura -, B"arat Tra&ing !o, Lt&,+ 199= Bank S, 7 at %,19 0!al,2I
Gula. !"an& -, !entral Bank o' In&ia+ 199= 012 Bank !,I,R,175 0Bom,2I Bank o'
Baro&a -, )V$ 4erc"em In&u$trie$+ 1995 052 Bank !,L,R, =11 0Bom,2I K, A%%a Rao
-, State Bank o' Cy&era.a&+ 199= Bank S, 56* 0)a&,2I RiPaya Bank -, Art Tren&
!or%n, A,I,R, 1995 !al, 15 at %,51I Ro$y George -, State Bank o' In&ia+ A,I,R, 199=
Ker, 174I State Bank Cy&era.a& -, A&-ot" Sakru+ A,I,R, 1994 A,4, 16: at %%,174?
171,
115 Syn&icate Bank+ 4ollac"i Branc" -, 3, )at"ean+ 199: Bank S,=14 at %%, =17+
=19 0)a&,2,
11= N,), Reera%%a -, !anara Bank+ A,I,R, 1997 S,!, 11:1 at %, 11:*J 1997 052
),4,L,S,74 at %,94,
114 State Bank o' Cy&era.a& -, A&-at" Sakru+ 199= 012 A,L,T, *:7 at %,*=7 J 199=
012 An,H,R,=7: at %,41: 0A,4,2I Syn&icate Bank -, Kaila$" !"an&ra+ 199= 06*2
!om%, !a$, =95 at %%, =96+ =97 0Bom,2 An&"ra Bank -, ), Butc"ayya !"ou&"ary+
1996 012 An&", L,3, 1=4 at %%,1=6+ 1=7+ 1=9?41,
111 !entral Bank o' In&ia -, Sarangaia"+ 1991 012 An&", L,T, 411 at %%,417+ 419+
4*1I Kogen&ranat" RaP -, State Bank o' In&ia+ 1976 012 An&", L,T, =1* 03,B,2,
11* State Bank o' In&ia -, Gir&"ari Lal+ 1991 012 Bank !,L,R, 14= at %, 144 0),4,2 J
1995 Bank S,191 at %, 195,
116 N, Sa-it"ri -, Unite& !ommercial Bank+ 0199*2 7* !om, !a$,=4 at %%,41?45
0)a&,2,
117 Ri&e Kogen&ranat" RaP -, State Bank o' In&ia+ 1976 012 An&", L,T, =1* 03,B,2I
!entral Bank o' In&ia -, 4o%uri Sarangaia"+ 1991 012 An&", L,T, 411 at %, 417,
119 !anara Bank o' In&ia -, Nalaku&iti Bullaia"+ 05::12 1:1 !om%, !a$,=74 at
%%,=74?=71 0A,4,2I Union Bank o' In&ia -, Ko&uri Reera Rag"a-ayya+ 05:::2 1:1
!om%, !a$, ==7 at %, =4= 0A,4,2,
15: !entral Bank o' In&ia -, 4o%uri Sarangaia"+ 1991 012 An&", L,T,411 at %, 419+
Union Bank o' In&ia -, Sogi )o"an Rao+ 019912 65 !om%, !a$,=51 at %%, =57+ =59
0A,4,2,
151 In&ian Bank -, Te8tile Inlan& Agencie$ 019912 74 !om%, !a$e 699 at %%, 7:=+
7:4 0!al,2,
155 State Bank o' In&ore -, Ne# Aoun&ry an& !a$ting 4-t, Lt&,+ 05::12 1:* !om%,
!a$,1:4 at %, 1:7 0),4,2,
15= 4unPa. National Bank -, Ki$"anlal Soni+ A,I,R, 1996 ),4, 56 at %%, =1+=5,
154 riental Bank o' !ommerce -, 3,4, Rerma+ 019992 91 !om%, !a$,49: at %,
491 0),4,2,
151 4unPa. National Bank -, )ullu Sing"+ 1995 Bank S,69 at %%, 69+ 7: J 1991
Bank !,L,R, 157 0),4,2 J 199= ),4,L,S, 195 at %,19=,
15* Kamla 4ra$a& Sai$#al -, 4unPa. National Bank+ 1991 Banker$ S, 116 at %,117
0),4,2I Bank o' )a&ura Lt&, -, )a&&i Uenkak Su.ra"manyam+ 1995 06=2 !om%,
!a$,141 at %,144 0A,4,2,
156 RiPaya Bank -, San$u In&u$trie$ 03el"i2+ 199= 06*2 !om%, !a$, *15 at %,*19 J
1995 !,!,!, 515 at %%, 51*+ 516,
157 B"an#arlal -, Bank o' Baro&a+ 1995 0=2 H,L,!, 45 at %%, 4*+46,
159 R, Su..a Rao -, In&ian Bank+ 1996 042 An&", L,T, 115 at %,11*,
1=: 019772 *= !om%,!a$,47= 0A,4,2,
1=1 0197925 K,L,T, 74: J 019952 6= !om%, !a$,*:: 0Ker,2,
1=5 Sameela Bee-i -, State Bank o' Tra-ancore+ 1995 0642 !om%,!a$,6=* at %,6=9
J 1995 052 K,L,T, 7*7 at %, 76:,
1== Su.$, .y Act == o' 1919+ Sec,1=+ 'or $u.?$ection 012 0#,e,', 1$t cto.er+
19192,
1=4 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or N in any StateO,
1=1 Su.$, .y Act == o' 1919+ Sec,1=+ 'or N$u.?$ection 052O 0#,e,' 1$t cto.er+
19192,
1=* T"e #or&$ Nall or any o' N omitte& .y Act 1 o' 1974+ Sec, 51 0#,e,', 11t"
Ae.ruary+ 19742,
1=6 Su.$, .y Act == o' 1919+ Sec,1=+ 'or !l$, 0a2 an& 0.2 0#,e,', 1$t cto.er+
19192,
1=7 Su.$, .y Act 1 o' 1974+ Sec,51 0#,e,' 11t" Ae.ruary+ 19742,
1=9 In$, .y i.i&,+ 0#,e,', 11t" Ae.ruary+ 19742,
14: Su.$, .y Act == o' 1919+ Sec,1=+ 'or $u.?$ection$ 042 an& 012 0#,e,', 1$t
cto.er+ 19192,
141 In$, .y Act 1 o' 1974+ Sec,51 0#,e,', 11t" Ae.ruary+ 19742,
145 Binni Lt&, -, NiMam Sugar$ Lt&,+ 1996 012 !,L,T,1: at %%, 15+1= 0A,4,2,
14= 3#arike$" Sugar In&u$trie$ -, 4rem Cea-y Engineering 4-t, Lt&,+ 1996 052
S,!,!,R,19* at %%,5:=+ 5:4,
144 Su.$, .y Act == o' 1919+ Sec,5= 0#,e,', 1$t cto.er+ 19192,
141 In$, .y Act *1 o' 1971+ t"e Secon& Sc"e&ule+ 4t, II 0#,e,', 1$t )ay+ 19752,
14* In$, .y Act == o' 1919+ Sec, 11 0#,e,',1$t cto.er+ 19192,
146 Su.$, .y Act 1 o' 1974+ Sec,5* 0#,e,', 59t" )arc"+ 19712,
147 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or N in t"e State$O,
149 Su.$, .y Act == o' 1919+ Sec, 11+ 'or e8%lanation 0#,e,',1$t cto.er+ 19192,
11: Su.$, .y i.i&,+ 'or $u.?$ection 052 0#,e,' 1$t cto.er+ 19192,
111 In$, .y Act =* o' 19*5+ Sec,*,
115 In$, .y Act 1 o' 1974+ Sec,5* 0#,e,' 59t" )arc"+ 19712,
11= In$, .y Act 51 o' 196*+ Sec,== 0#,e,',5*t" Se%tem.er+ 19612,
114 T"e #or&$ Ne$ta.li$"e& un&er Sec,= o' t"e Regional Rural Bank Act+ 196* 051
o' 196*2O omitte& .y Act 1 o' 1974+ Sec,5* 0#,e,', 59t" )arc"+ 19712,
111 Su.$, .y i.i&,
11* Kiri A$$ociate$ 4, Lt&, -, !o%aro )aruti Lt&, 1996 0*12 3,L,T,*1: at %, *14
03el"i2,
116 K"u$"i Ram Bi"ari Lal -, State Tra&ing !or%oration+ 1996 0*12 3,L,T,45: at
%,456 03el"i2,
117 Su.$, .y Act == o' 1919+ Sec,1*+ 'or $u.?$ection 012 an& 052 0#,e,' 1$t
cto.er+ 19192,
119 In$, .y Act *1 o' 1971+ Sec,*1+ t"e Secon& Sc"e&ule+ 4t, II 0#,e,', 1$t )ay+
19752,
1*: Su.$, .y Act 5: o' 191:+ Sec,6+ 'or !l, 0a2,
1*1 In$, .y Act == o' 1919+ Sec,1* 0#,e,', 1$t cto.er+ 19192,
1*5 !lau$e 0.2 re?lettere& a$ !l,0c2 .y i.i&,+ 0#,e,', 1$t cto.er+ 19192,
1*= Su.$, Act 5: o' 191:+ Sec,=+ 'or Nin t"e State$O,
1*4 !ertain #or&$ omitte& .y Act 11 o' 19*=+ Sec,14 0#,e,', 1$t Ae.ruary+ 19*42,
1*1 Su.$, .y Act 91 o' 191*+ Sec,*+ 'or $u.?$ection 052 0#,e,', 14t" Sanuary+
19162,
1** Su.$, .y Act == o' 1919+ Sec,16 0#,e,', 1$t cto.er+ 19192,
1*6 In$, .y Act *1 o' 1971+ Sec,*1+ Secon& Sc"e&ule+ 4t,II 0#,e,', 1$t )ay+ 19752,
1*7 Su.$, .y i.i&,
1*9 In$, .y Act ** o' 1977+ Sec,7 0a2 0i2 0A2 0#,e,', =:t" 3ecem.er+ 19772,
16: Su.$, .y Act 5: o' 191:+ Sec,=+ 'or N in t"e State$O,
161 Su.$, .y i.i&,+ 'or Nout$i&e t"e StateO,
165 Su.$, .y Act ** o' 1977+ Sec,70a2 0i2+ 0B2+ 'or t"e #or&$ Nt"at yearO 0#,e,',
=:t" 3ecem.er+ 19772,
16= Su.$, .y i.i&,+ Sec,7 0a2 0i2 0!2+ 'or t"e #or&$ Nt"e yearO 0#,e,', =:t"
3ecem.er+ 19772,
164 Su.$, .y i.i&,+ Sec,7 0a2 0ii2 0#,e,', =:t" 3ecem.er+ 19772+ 'or t"e %ro-i$o a$
amen&e& .y Act 5: o' 191:+ Sec,=,
161 Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nin t"e State$O,
16* Su.$, .y i.i&,+ 'or Nout$i&e t"e StateO,
166 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule 'or Nmarke& A in t"e T"ir&
Sc"e&ule to t"e In&ian !om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t"Sanuary+
19162,
167 In$, .y Act 1 o' 1974+ Sec,56 0#,e,', 11t" Ae.ruary+ 19742,
169 In$, .y Act ** o' 1977+ Sec,7 0.2 0#,e,' =:t" 3ecem.er+ 19772,
17: Su.$, .y Act 17 o' 19*7+ Sec,7+ 'or $u.?$ection 012 0#,e,', 1$t Ae.ruary+
19*92,
171 In$, .y i.i&,+ 0#,e,', 1$t Ae.ruary+ 19*92,
175 Su.$, .y Act ** o' 1977+ Sec,9 0a2+ 'or t"e #or&$ Nit may &irect to au&itor o'
t"e .anking com%any to au&it t"e account$ o' t"e .anking com%any in relation to
any tran$action or cla$$ o' tran$action+ $%eci9e& in t"e or&erO 0#,e,',=:t"
3ecem.er+ 19772,
17= Su.$, .y Act ** o' 1977+ Sec,9 0.2+ 'or t"e #or&$ Nt"e au&it o' t"e tran$action
or cla$$ o' tran$actionO 0#,e,', =:t" 3ecem.er+ 19772,
174 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec,141 o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2 N 0 #,e,', 14t" Sanuary+ 19162,
171 In$, .y Act ** o' 1977+ Sec,9 0c2 0#,e,', =:t" 3ecem.er+ 19772,
17* Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nin a StateO,
176 Su.$, .y Act 11 o' 19*=+ Sec,11+ 'or No' %ro9t an& lo$$O 0#,e,',1$t
Ae.ruary+19*42,
177 K, Arul Na&ar -, Aut"oriMe& Lcer+ Lan& Re'orm$+ A,I,R, 199: )a&, == at %,
=1 0A,B,2I B,G, Ganga&"ara%%a -, S, !"an&ra$"ekar+ 019952 19* I,T,R,566 at %,576
0Knt,2I Gula.rai Canuman.u8 -, !ommr, H,T,+ 019952 197 I,T,R, 1=1 at %, 1=6
0Gau,2,
179 In$, .y Act *1 o' 1971+ t"e Secon& Sc"e&ule+ 4t, II 0#,e,', 1$t )ay+ 19752,
19: 1916 S,!,R,11,
191 State o' 4unPa. -, Kaila$" Nat"+ 1979 012 !,L,R, *: at %, *4 0S,!,2I I,A, Lt&,+ -,
!,I, o' Aactorie$ an& Boiler$+ 199= 0**2 A,L,R, 161 at %%,166+ 167 0ri,2I I,T,
!ommi$$ioner -, CI! 4ro&uct$ 4, Lt&,+ 1994 Ta8 L,R, 519 0Bom2I State o'
Karnataka -, Kri$"na%%a+ 05:::2 4 S,!,!,61 at %%,71+ 75 J A,I,R, 5::: S,!, 146: J
5::: 0=2 S,T, 11* J5::: 0=2 S,L,T, 557 0S,!,2 J 5::: !r, L,S, 169= J 5::: 052 !rime$
1: 0S,!,2 J 5::: S,!,!, 0!r,2 611,
195 Su.$, .y Act == o' 1919+ Sec,19+ 'or $u.?$ection 012 0#,e,', 1$t cto.er+
19192,
19= Su.$, .y Act 5: o' 191:+ Sec,=+ 'or Nout$i&e t"e StateO,
194 Su.$, .y i.i&,+ 'or t"e #or&$ Nin t"e State$O,
191 In$, .y Act 5= o' 19*:+ Sec,5,
19* Su.$, Act 1 o' 1974+ Sec,57 0#,e,',11t" Ae.ruary+ 19742,
196 In$, .y Act *5 o' 1974+ Sec,61+ Sc",III 0#,e,', 5:t" )arc"+ 19712,
197 In$, .y Act 1= o' 1976+ Sec,1* an& Sc",II 0#,e,', 9t" Suly+ 19772,
199 In$, .y Act =9 o' 1979+ Sc",II+ 4t, III 0#,e,', 6t" )arc"+199:2,
5:: 19*5 0=52 !om%, !a$, 414I !,I,T, -, State Bank o' 4atiala+ 0199=2 5:=
I,T,R,11: at %,116,
5:1 Sara$#at !o?o%erati-e Bank Limite& -, 4,G, Koranne+ A,I,R, 197= Bom, =16 at
%,=41,
5:5 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec,1=7 o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t" Sanuary+ 19162,
5:= In$, .y Act 1 o' 1974+ Sec,59 0#,e,', 11t" Ae.ruary+ 19742,
5:4 In$, .y Act 11 o' 19*=+ Sec,16 0#,e,', 1$t Ae.ruary+ 19*42,
5:1 In$, .y Act 1 'or 1974+ Sec,59 0#,e,',11t" Ae.ruary+ 19742,
5:* In$, .y Act *1 o' 1971+ t"e Secon& Sc"e&ule+ 4t,II 0#,e,', 1$t )ay+ 19752,
5:6 In$, .y Act 11 o' 19*=+ Sec,16 0#,e,', 1$t Ae.ruary+ 19*42,
5:7 In$, .y Act 91 o' 191*+ Sec,6 0#,e,', 14t" Sanuary+ 19162,
5:9 Su.$, .y Act 6 o' 19*1+ Sec,5+ 'or Nnational intere$tO,
51: In$, .y Act,17 o' 19*7+ Sec,1: 0#,e,',1$t Ae.ruary+ 19*92,
511 Santa Sa"kari Bank Lt&, -, State o' )a"ara$"tra+ A,I,R, 199= Bom, 515 at %,
511 J 019912 75 !om%, !a$e$ 6:6 0Bom,2I T,S, Arumug"am -, Lak$"mi Rila$ Bank+
019942 7: !om%, !a$, 714 0)a&,2I Cemangni Ainance an& Lea$ing 042 Lt&, -,
Tamilna& )ercantile Bank Lt&,+ 0199*2 = !om%, L,S, 5=7 0!,L,B,2I Re$er-e Bank o'
In&ia -, State Bank o' In&ia+ 0199*2 71 !om%, !a$e$ 114 0Bom,2,
515 B"arat !o?o%erati-e Bank Lt&, -, Bank o' Baro&a+ 05::12 1:1 !om%, !a$,76:
at %,769 0GuP,2,
51= B,,I, Ainance Lt&, -, !u$to&ian+ 1996 052 !or%, L,A, 111 at %%, 111 at %%,
151+ 155 0S,!,2I A,I,R, 1996 S,!, 1915 at %,19*:,
514 Re$er-e Bank o' In&ia -, Cari$i&" !o?o%, Bank Lt&,+ 1977 Bank, L,S, =1 at %,
=9 0GuP,2 0A,B,2,
511 Santa Sa"akari Bank Lt&, -, State o' )a"ara$"tra+ A,I,R, 199= Bom, 515 at
%,511I !anara Bank -, 4,R,N, U%a&"yaya+ 019972 * S,!,!, 15* at %%, 1=:+ 1=1,
51* In$, .y Act 1 o' 1974+ Sec,=: 0#,e,', 11t" Ae.ruary+ 19742,
516 Su.$, .y Act 17 o' 19*7+ Sec,11+ 'or certain #or&$ 0#,e,', 1$t Ae.ruary+ 19*92,
517 Su.$, .y Act == o' 1919+ Sec,51+ 'or Nmanaging or #"ole?time &irector or a
&irector not lia.le to retire .y rotationO 0#,e,', 1$t cto.er+ 19192,
519 Su.$, .y Act 17 o' 19*7+ Sec,11+ 'or !l,0.2 0#,e,', 1$t Ae.ruary+ 19*92,
55: In$, .y Act == o' 1919+ Sec,51 0#,e,', 1$t cto.er+ 19192,
551 Su.$, .y Act 17 o' 19*7+ Sec,11+ 'or No' t"e managerO 0#,e,',1$t Ae.ruary+
19*92,
555 Su.$, .y Act =* o' 19*5+ Sec,6 'or N5*7+ 5*9+ =1:+ =11 an& =77O
55= Su.$, .y Act 1 o' 1974+ Sec,=: 0#,e,', 11t" Ae.ruary+ 19742,
554 Su.$, .y Act == o' 1919+ Sec,51+ 'or certain #or&$ 0#,e,',1$t cto.er+ 19192,
551 Su.$, .y Act 17 o' 19*7+ Sc",II 'or Na$ a managing or #"ole?time &irectorO
0#,e,', 1$t Ae.ruary+ 19*92,
55* Su.$, .y Act 17 o' 19*7+ Sc", I+ 'or Na%%ointmentO 0#,e,', 1$t Ae.ruary+ 19*92,
556 Su.$, .y Act 17 o' 19*7+ Sc", I+ 'or Na%%ointmentO 0#,e,', 1$t Ae.ruary+ 19*92,
557 Su.$, .y Act == o' 1919+ Sec, 55+ 'or N41O 0#,e,',1$t cto.er+ 19192,
559 Su.$, .y Act 91 o' 191*+ Sec,7+ 'or !l, 0&2 0#,e,', 14t" Sanuary+ 19162,
5=: Su.$, .y Act 17 o' 19*7+ Sec,15+ 'or certain #or&$ 0#,e,', 1$t Ae.ruary+ 19*92,
5=1 !ertain #or&$ omitte& .y Act 17 o' 19*7+ Sec, 15 0#,e,' 1$t Ae.ruary+ 19*92,
5=5 B,,I, Ainance Lt&, -, T"e !u$to&ian+ A,I,R, 1996 S,!, 1915 at %,19*: J 1996
052 !or%, L,A, 111 at %, 155 0S,!,2,
5== I.i&, At %%, 1919+ 19*:,
5=4 In$, .y Act == o' 1919+ Sec, 5= 0#,e,',1$t cto.er+ 19192,
5=1 A,K, )enon -, Aairgro#t" Ainancial Ser-ice$ Lt&,+ 1994 Bank,S, **5 at %,*95
0S%l, !ourt Q Bom,2,
Banking Regulation Act 1949 > Bare Act > 4art :5B > 4ro"i.ition o' !ertain
Acti-itie$ in Relation to Banking !om%anie$
BRA :5B )arc" 1:+ 1949
1E 4ART II?B

4RCIBITIN A !ERTAIN A!TIRITIES IN RELATIN
T BANKING !)4ANIES

=*?A3, 4uni$"ment 'or certain acti-itie$ in relation to .anking com%anie$ , Q 012
No %er$on $"all Q

0a2 o.$truct any %er$on 'rom la#'ully entering or lea-ing any oLce or %lace o'
.u$ine$$ o' a .anking com%any or 'rom carrying on any .u$ine$$ t"ereto+ or
0.2 "ol&+ #it"in t"e oLce or %lace o' .u$ine$$ o' any .anking com%any+ any
&emon$tration #"ic" i$ -iolent or #"ic" %re-ent$+ or i$ calculate& to %re-ent+ t"e
tran$action o' normal .u$ine$$ .y t"e .anking com%any+ or
0c2 act in any manner calculate& to un&ermine t"e con9&ence o' t"e &e%o$itor$
in t"e .anking com%any,

052 H"oe-er contra-ene$ any %ro-i$ion o' $u.?$ection 012 #it"out any rea$ona.le
e8cu$e $"all .e %uni$"a.le #it" im%ri$onment 'or a term #"ic" may e8ten& to
$i8 mont"$+ or #it" 9ne #"ic" may e8ten& to one t"ou$an& ru%ee$+ or #it" .ot",

5E F0=2 Aor t"e %ur%o$e o' t"i$ $ection N.anking com%anyO inclu&e$ t"e Re$er-e
Bank+ t"e 3e-elo%ment Bank+ t"e E8im .ank =E Ft"e Recon$truction BankG+ 4E
Ft"e National Cou$ing BankG t"e National Bank+ 1E Ft"e Small In&u$trie$ Bank$G+
t"e State Bank o' In&ia+ a corre$%on&ing ne# .ank+ a regional rural .ank an& a
$u.$i&iary .ank,

!))ENT

.Pect o' , Q T"e o.Pect o' Sec, =*A3 i$ to %ro-i&e %uni$"ment 'or certain
acti-itie$ #"ic" are %ro"i.ite&, T"e %ro"i.ition i$ #it" re'erence to all %er$on$ in
general Q not #it" re'erence to any %articular $ection or category o' %er$on$,
Su.?$ection 012 t"u$ enumerate$ t"e -ariou$ %ro"i.ite& act$, I' any %er$on &oe$
any act t"at i$ $%eci9e& in $u.?$ection 012 o' Sec, =*?A3 o' t"e Act+ "e #ill "a-e
to 'ace %ro$ecution un&er $u.?$ection 052 o' =*?A3 o' t"e Act 'or t"e
contra-ention o' t"e %ro-i$ion$ o' $u.?$ection 012 o' t"at $ection, T"u$ no
%o$iti-e rig"t i$ con'erre& on t"e .anking com%any #"ic" can .e en'orce& .y a
#rit o' man&amu$, T"e Statute it$el' %ro"i.it$ t"e act$ $%eci9e& in $u.?$ection
012 o' Sec, =*?A3 an& $u.?$ection 052 o' t"at $ection al$o im%o$e$ %uni$"ment 'or
-iolation, T"ere i$ no /ue$tion o' i$$uing a 'urt"er &irecti-e .y #ay o' #rit o'
man&amu$ &irecting t"e re$%on&ent$ not to -iolate t"e %ro-i$ion$ o' $u.?$ection
012 o' Sec, =*?A3, T"e ca$e o' Sec, 51?A o' t"e In&u$trial 3i$%ute$ Act+ 1946 i$
altoget"er &i(erent, T"at $ection %ro-i&e$ 'or t"e con&ition$ %rece&ent to .e
'ul9lle& 'or e(ecting retrenc"ment in a -ali& manner non?o.$er-ance o' t"o$e
in-ali&ate$ t"e retrenc"ment+ in #"ic" ca$e t"e em%loyee i$ entitle& to .e
continue& in $er-ice #"ic" relie' "e may $eek .y #ay o' #rit o' man&amu$ in
a%%ro%riate ca$e$, *E


ATNTESJ
1 4art II?B an& II?! 0$ec$,=* Q A3 to =* Q AS2 in$, .y Act, 17 o' 19*7 Sec,11 0#,e,',
1$t Ae.ruary 19*92,
5 Su.$, .y Act o' 1974+ Sec, =5+ 'or $u.?$ection 0=2 0#,e,', 11t" Ae.ruary 19742,
= In$, .y Act *5o' 1974 Sec, 61+ Sc", III 0#,e,', 5:t" )arc"+ 19712,
4 In$, .y Act 1= o' 1976+ Sec, 1* an& Sc", II 0#,e,', 9t" Suly+ 19772,
1 In$, .y Act =9 o' 1979+ Sc", II, 4t, III 0#,e,', 6t" )arc"+ 199:2,
* Union Bank o' In&ia -, A,4, Union Bank Em%loyee$+ A$$ociation+ 1994 052 S,L,R,
196 at %,199,


Banking Regulation Act 1949 > Bare Act > 4art :5! > Ac/ui$ition o' t"e
Un&ertaking$ o' Banking !om%anie$ in !ertain !a$e$
BRA :5! )arc" 1:+ 1949
4ART II?!

A!WUISITIN A TCE UN3ERTAKINGS A BANKING !)4ANIES IN !ERTAIN !ASES

=*AE, 4o#er o' !entral Go-ernment to ac/uire un&ertaking$ o' .anking
com%anie$ in certain ca$e$ , Q 012 I'+ u%on recei%t+ o' a re%ort 'rom t"e Re$er-e
Bank+ t"e !entral Go-ernment i$ $ati$9e& t"at a .anking com%any Q

0a2 "a$+ on more t"an one occa$ion+ 'aile& to com%ly #it" t"e &irection$ gi-en to
it in #riting un&er Sec, 51 or Sec, =1?A+ in $o 'ar a$ $uc" &irection$ relate to
.anking %olicy+ or
0.2 i$ .eing manage& in a manner &etrimental to t"e intere$t o' it$ &e%o$itor$+?

an& t"at Q
0i2 in t"e intere$t$ o' t"e &e%o$itor$ o' $uc" .anking com%any+ or
0ii2 in t"e intere$t o' .anking %olicy+ or
0iii2 'or t"e .etter %ro-i$ion o' cre&it+ generally or o' cre&it to any %articular
$ection o' t"e community or in any %articular areaI

it i$ nece$$ary to ac/uire t"e un&ertaking o' $uc" .anking com%any+ t"e !entral
Go-ernment may+ a'ter $uc" con$ultation #it" t"e Re$er-e Bank a$ it t"ink$ 9t+
.y noti9e& or&er+ ac/uire t"e un&ertaking o' $uc" com%any 0"ereina'ter re'erre&
to a$ t"e ac/uire& .ank2 #it" e(ect 'rom $uc" &ate a$ may .e $%eci9e& in t"i$
.e"al' .y t"e !entral Go-ernment 0"ereina'ter re'erre& to a$ t"e a%%ointe& &ay J

4ro-i&e& t"at no un&ertaking o' any .anking com%any $"all .e $o ac/uire&
unle$$ $uc" .anking com%any "a$ .een gi-en a rea$ona.le o%%ortunity o'
$"o#ing cau$e again$t t"e %ro%o$e& action,

E8%lanation, Q In t"i$ 4art Q

0a2 Nnoti9e& or&erO mean$ an or&er %u.li$"e& in t"e Lcial GaMette I
0.2 Nun&ertakingO+ in relation to a .anking com%any incor%orate& out$i&e In&ia+
mean$ t"e un&ertaking o' t"e com%any in In&ia,

052 Su.Pect to t"e ot"er %ro-i$ion$ containe& in t"i$ 4art+ on t"e a%%ointe& &ay+
t"e un&ertaking o' t"e ac/uire& .ank an& all t"e a$$et$ an& lia.ilitie$ o' t"e
ac/uire& .ank $"all $tan& tran$'erre& to an& -e$t in+ t"e !entral Go-ernment,

0=2 T"e un&ertaking o' t"e ac/uire& .ank an& it$ a$$et$ an& lia.ilitie$ $"all .e
&eeme& to inclu&e all rig"t$+ %o#er$+ aut"oritie$ an& %ri-ilege$ an& all %ro%erty
#"et"er mo-a.le or immo-a.le+ inclu&ing+ a %articular+ ca$" .alance$+ re$er-e
'un&$+ in-e$tment$ &e%o$it$ an& all ot"er intere$t$ an& rig"t$ in+ or ari$ing out o'
$uc" %ro%erty a$ may .e in t"e %o$$e$$ion o'+ or "el& .y+ t"e ac/uire& .ank
imme&iately .e'ore t"e a%%ointe& &ay an& all .ook$+ account$ an& &ocument$
relating t"ereto+ an& $"all al$o .e &eeme& to inclu&e all &e.t$+ lia.ilitie$ an&
o.ligation$ o' #"ate-er kin&+ t"en e8i$ting o' t"e ac/uire& .ank,

042 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 052+ t"e !entral
Go-ernment may+ i' it i$ $ati$9e& t"at t"e un&ertaking o' t"e ac/uire& .ank an&
it$ a$$et$ an& lia.ilitie$ $"oul&+ in$tea& o' -e$ting in t"e !entral Go-ernment+ or
continuing to $o -e$t+ -e$t in a com%any e$ta.li$"e& un&er any $c"eme ma&e
un&er t"i$ 4art or in any cor%oration 0"ereina'ter in t"i$ 4art an& in t"e Ai't"?
Sc"e&ule re'erre& to a$ t"e tran$'eree .ank2 t"at Go-ernment may+ .y or&er
&irect t"at t"e $ai& un&ertaking+ inclu&ing t"e a$$et$ an& lia.ilitie$ t"ereo'+ $"all
-e$t in t"e tran$'eree .ank eit"er on t"e %u.lication o' t"e noti9e& or&er or on
$uc" ot"er &ate a$ may .e $%eci9e& in t"i$ .e"al' .y t"e !entral Go-ernment,

012 H"ere t"e un&ertaking o' t"e ac/uire& .ank an& t"e a$$et$ an& lia.ilitie$
t"ereo' -e$t in t"e tran$'eree .ank un&er $u.?$ection 042+ t"e tran$'eree .ank
$"all+ on an& 'rom t"e &ate o' $uc" -e$ting .e &eeme& to "a-e .ecome t"e
tran$'eree o' t"e ac/uire& .ank an& all t"e rig"t$ an& lia.ilitie$ in relation to t"e
ac/uire& .ank$ $"all+ on an 'rom t"e &ate o' $uc" -e$ting+ .e &eeme& to "a-e
.een t"e rig"t$ an& lia.ilitie$ o' t"e tran$'eree .ank,

0*2 Unle$$ ot"er#i$e e8%re$$ly %ro-i&e& .y or un&er t"i$ 4art+ all contract$+
&ee&$+ .on&$+ agreement$+ %o#er$?o'?attorney+ grant$ o' legal re%re$entation
an& ot"er in$trument$ o' #"ate-er nature $u.$i$ting or "a-ing e(ect
imme&iately .e'ore t"e a%%ointe& &ay an& to #"ic" t"e ac/uire& .ank i$ a %arty
or #"ic" are in 'a-our o' t"e ac/uire& .ank $"all .e o' a$ 'ull 'orce an& e(ect
again$t or in 'a-our o' t"e !entral Go-ernment+ or a$ "e ca$e may .e+ o' t"e
tran$'eree .ank+ an& may .e en'orce& or acte& u%on a$ 'ully an& e(ectually a$ i'
in t"e %lace o' t"e ac/uire& .ank t"e !entral Go-ernment or t"e tran$'eree .ank
"a& .een a %arty t"ereto or a$ i' t"ey "a& .een i$$ue& in 'a-our o' t"e !entral
Go-ernment or t"e tran$'eree .ank+ a$ t"e ca$e may .e,

062 I'+ on t"e a%%ointe& &ay+ any $uit+ a%%eal or ot"er %rocee&ing$ o' #"ate-er
nature i$ %en&ing .y or again$t t"e ac/uire& .ank+ t"e $ame $"all not a.ate+ .e
&i$continue& or .e+ in any #ay+ %rePu&icially a(ecte& .y rea$on o' t"e tran$'er o'
t"e un&ertaking o' t"e ac/uire& .ank or o' anyt"ing containe& in t"i$ 4art+ .ut
t"e $uit+ a%%eal or ot"er %rocee&ing may .e continue&+ %ro$ecute& an& en'orce&
.y or again$t t"e !entral Go-ernment or t"e tran$'eree .ank+ a$ t"e ca$e may
.e,

=*?AA, 4o#er o' t"e !entral Go-ernment to make $c"eme, ? 012 T"e !entral
Go-ernment may+ a'ter con$ultation #it" t"e Re$er-e Bank+ make a $c"eme 'or
carrying out t"e %ur%o$e$ o' t"i$ 4art in relation to any ac/uire& .ank,

052 In %articular+ an& #it"out %rePu&ice to t"e generality o' t"e 'oregoing %o#er+
t"e $ai& $c"eme may %ro-i&e 'or all or any o' t"e 'ollo#ing matter$+ namely J

0a2 t"e cor%oration+ or t"e com%any incor%orate& 'or t"e %ur%o$e+ to #"ic" t"e
un&ertaking inclu&ing t"e %ro%erty+ a$$et$ an& lia.ilitie$ o' t"e ac/uire& .ank
may .e tran$'erre&+ an& t"e ca%ital+ con$titution+ name an& oLce t"ereo'I
0.2 t"e con$titution o' t"e 9r$t Boar& o' management 0.y #"ate-er name calle&2
o' t"e tran$'eree .ank+ an& all $uc" matter$ in connection t"ere#it" or inci&ental
t"ereto a$ t"e !entral Go-ernment may con$i&er to .e nece$$ary or e8%e&ientI
0c2 t"e continuance o' t"e $er-ice$ o' all t"e em%loyee$ o' t"e ac/uire& .ank
0e8ce%ting $uc" o' t"em a$+ not .eing #orkmen #it"in t"e meaning o' t"e
In&u$trial 3i$%ute$ Act+ 1946 014 o' 19462+ are $%eci9cally mentione& in t"e
$c"eme2 in t"e !entral Go-ernment or in t"e tran$'eree .ank+ a$ t"e ca$e may
.e+ on t"e $ame term$ an& con&ition$+ $o 'ar a$ may .e+ a$ are $%eci9e& in !l$,0i2
an& 0P2 o' $u.?$ection 012 o' Sec, 41
0&2 t"e continuance o' t"e rig"t o' any %er$on #"o+ on t"e a%%ointe& &ay+ i$
entitle& to or i$ in recei%t o'+ a %en$ion or ot"er $u%erannuation or
com%a$$ionate allo#ance or .ene9t+ 'rom t"e ac/uire& .ank or any %ro-i&ent+
%en$ion or ot"er 'un& or any aut"ority a&mini$tering $uc" 'un&+ to .e %ai& .y+
an& to recei-e 'rom+ t"e !entral Go-ernment or t"e tran$'eree .ank+ a$ t"e ca$e
may .e+ or any %ro-i&ent+ %en$ion or ot"er 'un&+ or any aut"ority a&mini$tering
$uc" 'un&+ t"e $ame %en$ion+ allo#ance or .ene9t $o long a$ "e o.$er-e$ t"at
t"e con&ition$ on #"ic" t"e %en$ion+ allo#ance or .ene9t #a$ grante&+ an& i'
any /ue$tion ari$e$ #"et"er "e "a$ $o o.$er-e& $uc" con&ition$+ t"e /ue$tion
$"all .e &etermine& .y t"e !entral Go-ernment an& t"e &eci$ion o' t"e !entral
Go-ernment t"ereon $"all .e 9nalI
0e2 t"e manner o' %ayment o' t"e com%en$ation %aya.le in accor&ance #it" t"e
%ro-i$ion$ o' t"i$ %art to $"are"ol&er$ o' t"e ac/uire& .ank+ or #"ere t"e
ac/uire& .ank i$ a .anking com%any incor%orate& out$i&e In&ia+ to t"e ac/uire&
.ank in 'ull $ati$'action o' t"eir+ or a$ t"e ca$e may .e+ it$ claim$I
0'2 t"e %ro-i$ion+ i' any+ 'or com%leting t"e e(ectual tran$'er to t"e !entral
Go-ernment or t"e tran$'er$ .ank o' any a$$et or any lia.ility #"ic" 'orm$ %art o'
t"e un&ertaking o' t"e ac/uire& .ank in any country out$i&e In&iaI
0g2 $uc" inci&ental+ con$e/uential an& $u%%lemental matter$ a$ may .e
nece$$ary to $ecure t"at tran$'er o' t"e .u$ine$$+ %ro%erty+ a$$et$ an& lia.ilitie$
o' t"e ac/uire& .ank to t"e !entral Go-ernment or tran$'eree .ank+ a$ t"e ca$e
may .e+ i' e(ectual+ an& com%lete,

0=2 T"e !entral Go-ernment may+ a'ter con$ultation #it" t"e Re$er-e Bank+ .y
noti9cation in t"e Lcial GaMette+ a&& to+ amen& or -ary any $c"eme ma&e
un&er t"i$ $ection,

042 E-ery $c"eme ma&e un&er t"i$ $ection $"all .e %u.li$"e& in t"e Lcial
GaMette,

012 !o%ie$ o' e-ery $c"eme ma&e un&er t"i$ $ection $"all .e lai& .e'ore eac"
Cou$e o' 4arliament a$ $oon a$ may .e a'ter it i$ ma&e,

0*2 T"e %ro-i$ion$ o' t"i$ %art an& o' any $c"eme ma&e t"ereun&er $"all "a-e
e(ect not#it"$tan&ing anyt"ing to t"e contrary containe& in any ot"er %ro-i$ion$
o' t"i$ Act or in any ot"er la# or any agreement+ a#ar& or ot"er in$trument 'or
t"e time .eing in 'orce,

062 E-ery $c"eme ma&e un&er t"i$ $ection $"all .e .in&ing on t"e !entral
Go-ernment or+ a$ t"e ca$e may .e+ on t"e tran$'eree .ank an& al$o on all
mem.er$+ cre&itor$+ &e%o$itor$ an& em%loyee$ o' t"e ac/uire& .ank an& o' t"e
tran$'eree .ank an& on any ot"er %er$on "a-ing any rig"t+ lia.ility+ %o#er or
'unction in relation to or in connection #it" t"e ac/uire& .ank or t"e tran$'eree
.ank+ a$ t"e ca$e may .e,

=*?AG, !om%en$ation to .e gi-en to $"are"ol&er$ o' t"e ac/uire& .ank, Q 012
E-ery %er$on #"o+ imme&iately .e'ore t"e a%%ointe& &ay+ i$ regi$tere& a$ a
"ol&er o' $"are$ in t"e ac/uire& .ank or+ #"ere t"e ac/uire& .ank i$ a .anking
com%any incor%orate& out$i&e In&ia+ t"e ac/uire& .ank+ $"all .e gi-en .y t"e
!entral Go-ernment+ or t"e tran$'eree .ank+ a$ t"e ca$e may .e+ $uc"
com%en$ation in re$%ect o' tran$'er o' t"e un&ertaking o' t"e ac/uire& .ank a$ it
&etermine& in accor&ance #it" t"e %rinci%le$ containe& in t"e Ai't" Sc"e&ule,

052 Not"ing containe& in $u.?$ection 012 $"all a(ect t"e rig"t$ inter $e .et#een
t"e "ol&er o' any $"are in t"e ac/uire& .ank an& any ot"er %er$on #"o may
"a-e any intere$t in $uc" $"are$ an& $uc" ot"er %er$on $"all .e entitle& to
en'orce "i$ intere$t again$t t"e com%en$ation a#ar&e& to t"e "ol&er o' $uc"
$"are+ .ut not again$t t"e !entral Go-ernment+ or t"e tran$'eree .ank,

0=2 T"e amount o' com%en$ation to .e gi-en in accor&ance #it" t"e %rinci%le$
containe& in t"e Ai't" Sc"e&ule $"all .e &etermine& in t"e 9r$t in$tance .y t"e
!entral Go-ernment+ or t"e tran$'eree .ank+ a$ t"e ca$e may .e+ in con$ultation
#it" t"e Re$er-e Bank+ an& $"all .e o(ere& .y it to all t"o$e to #"om
com%en$ation i$ %aya.le un&er $u.?$ection 012 in 'ull $ati$'action t"ereo',

042 I' t"e amount o' com%en$ation o(ere& in term$ o' $u.?$ection 0=2 i$ not
acce%ta.le to any %er$on to #"om t"e com%en$ation i$ %aya.le+ $uc" %er$on
may+ .e'ore $uc" &ate a$ may .e noti9e& .y t"e !entral Go-ernment in t"e
Lcial GaMette+ re/ue$t t"e !entral Go-ernment in #riting to "a-e t"e matter
re'erre& to t"e Tri.unal con$titute& un&er Sec, =*?AC,

012 I'+ .e'ore t"e &ate noti9e& un&er $u.?$ection 042+ t"e !entral Go-ernment
recei-e$ re/ue$t$+ in term$ o' t"at $u.?$ection+ 'rom not le$$ t"an one?'ourt" in
num.er o' t"e $"are"ol&er$ "ol&ing not le$$ t"an one?'ourt" in -alue o' t"e %ai&?
u% $"are ca%ital o' t"e ac/uire& .ank+ or #"ere t"e ac/uire& .ank i$ a .anking
com%any incor%orate& out$i&e In&ia+ 'rom t"e ac/uire& .ank+ t"e !entral
Go-ernment $"all "a-e t"e matter re'erre& to t"e Tri.unal 'or &eci$ion,

0*2 I'+ .e'ore t"e &ate noti9e& un&er $u.?$ection 042+ t"e !entral Go-ernment
&oe$ not recei-e re/ue$t$ a$ %ro-i&e& in t"at $u.?$ection+ t"e amount o'
com%en$ation o(ere& un&er $u.?$ection 0=2+ an& #"ere a re'erence "a$ .een
ma&e to t"e Tri.unal+ t"e amount &etermine& .y it+ $"all .e t"e com%en$ation
%aya.le un&er $u.?$ection 012 an& $"all .e 9nal an& .in&ing on all %artie$
concerne&,

=*?AC, !on$titution o' t"e Tri.unal ,? 012 T"e !entral Go-ernment may+ 'or t"e
%ur%o$e o' t"i$ %art+ con$titute a Tri.unal #"ic" $"all con$i$t o' a !"airman an&
t#o ot"er mem.er$,

052 T"e !"airman $"all .e a %er$on #"o i$+ or "a$ .een+ a Su&ge o' a Cig" !ourt
or o' t"e Su%reme !ourt+ an&+ o' t"e t#o ot"er mem.er$ one $"all .e a %er$on+
#"o+ in t"e o%inion o' t"e !entral Go-ernment+ "a$ "a& e8%erience o'
commercial .anking an& t"e ot"er $"all .e a %er$on #"o i$ a c"artere&
accountant #it"in t"e meaning o' !"artere& Accountant+ Act+ 1949 0=7 o' 19492,

0=2 I'+ 'or any rea$on+ a -acancy occur$ in t"e oLce o' t"e !"airman or any ot"er
mem.er o' t"e Tri.unal+ t"e !entral Go-ernment may 9ll t"e -acancy .y
a%%ointing anot"er %er$on t"ereto in accor&ance #it" t"e %ro-i$ion$ o' $u.?
$ection 052+ an& any %rocee&ing may .e continue& .e'ore t"e Tri.unal+ $o
con$titute&+ 'rom t"e $tage at #"ic" t"e -acancy occurre&,

042 T"e Tri.unal may+ 'or t"e %ur%o$e o' &etermining any com%en$ation %aya.le
un&er t"i$ %art+ c"oo$e one or more %er$on$ "a-ing $%ecial kno#le&ge or
e8%erience o' any rele-ant matter to a$$i$t it in t"e &etermination o' $uc"
com%en$ation,

=*?AI, Tri.unal to "a-e %o#er$ o' a !i-il !ourt, ?? 012 T"e Tri.unal $"all "a-e t"e
%o#er$ o' a !i-il !ourt+ #"ile trying a $uit+ un&er t"e !o&e o' !i-il 4roce&ure+
19:7 01 o' 19:72+ in re$%ect o' t"e 'ollo#ing matter$+ namely J

0a2 $ummoning an& en'orcing t"e atten&ance o' any %er$on an& e8amining "im
on oat"I
0.2 re/uiring t"e &i$co-ery an& %ro&uction o' &ocument$I
0c2 recei-ing e-i&ence on aL&a-it$I
0&2 i$$uing commi$$ion$ 'or t"e e8amination o' #itne$$ or &ocument$,

052 Not#it"$tan&ing anyt"ing containe& in $u.?$ection 012+ or in any ot"er la# 'or
t"e time .eing in 'orce+ t"e Tri.unal $"all not com%el t"e !entral Go-ernment+ or
t"e Re$er-e Bank+ ?

0a2 to %ro&uce any .ook$ o' account$ or ot"er &ocument$ #"ic" t"e !entral
Go-ernment+ or t"e Re$er-e Bank+ claim$ to .e o' con9&ential natureI,
0.2 to make any $uc" .ook$ or &ocument$ %art o' t"e recor& o' t"e %rocee&ing$
.e'ore t"e Tri.unalI or
0c2 to gi-e in$%ection o' any $uc" .ook$ or &ocument$ to any %arty .e'ore it or to
any ot"er %er$on,

=*?AS 4roce&ure o' t"e Tri.unal, Q 012 T"e Tri.unal $"all "a-e %o#er to regulate it$
o#n %roce&ure,

052 T"e Tri.unal may "ol& t"e #"ole or any %art o' it$ in/uiry in camera,

0=2 Any clerical or arit"metical error in any or&er o' t"e Tri.unal or any error
ari$ing t"erein 'rom any acci&ental $li% or omi$$ion may+ at any time+ .e
correcte& .y t"e Tri.unal eit"er o' it$ o#n motion or on t"e a%%lication o' any o'
t"e %artie$,G



Banking Regulation Act 1949 > Bare Act > 4art := > Su$%en$ion o' Bu$ine$$
an& Hin&ing u% o' !om%anie$
BRA := )arc" 1:+ 1949
4ART III

SUS4ENSIN A BUSINESS AN3 HIN3ING U4 A BANKING !)4ANIES

1E F5E F=*?B,G Cig" !ourt &e9ne&, Q In t"i$ %art an& in 4art III?A+ NCig" !ourtO in
relation to a .anking com%any+ mean$ t"e Cig" !ourt e8erci$ing Puri$&iction in
t"e %lace #"ere t"e regi$tere& oLce o' t"e .anking com%any i$ $ituate& or+ in
ca$e o' a .anking com%any incor%orate& out$i&e In&ia+ #"ere it$ %rinci%al %lace
o' .u$ine$$ in In&ia i$ $ituate&,G

=6, Su$%en$ion o' .u$ine$$, Q 012 T"e =E FCig" !ourtG may+ on t"e a%%lication o' a
.anking com%any #"ic" i$ tem%orarily una.le to meet it$ o.ligation$+ make an
or&er 0 a co%y o' #"ic" it $"all cau$e to .e 'or#ar&e& to t"e Re$er-e Bank2
$taying t"e commencement or continuance o' all action$ an& %rocee&ing$
again$t t"e com%any 'or a 98e& %erio& o' time on $uc" term$ an& con&ition$ a$ it
$"all t"ink 9t an& %ro%er+ an& may 'rom time to time e8ten& t"e %erio&+ $o
"o#e-er t"at t"e total %erio& o' moratorium $"all not e8cee& $i8 mont"$,

052 No $uc" a%%lication $"all .e maintaina.le unle$$ it i$ accom%anie& .y a
re%ort o' t"e Re$er-e Bank in&icating t"at in t"e o%inion o' t"e Re$er-e Bank t"e
.anking com%any #ill .e a.le to %ay it$ &e.t$ i' t"e a%%lication i$ grante& J

4ro-i&e& t"at t"e 4E FCig" !ourtG may 'or $uLcient rea$on$+ grant relie' un&er
t"i$ $ection e-en i' t"e a%%lication i$ not accom%anie& .y $uc" re%ort+ an& #"ere
$uc" relie' i$ grante&+ t"e 1E FCig" !ourtG $"all call 'or a re%ort 'rom t"e Re$er-e
Bank on t"e a(air$ o' .anking com%any+ on recei%t o' #"ic" it may eit"er re$cin&
any or&er alrea&y %a$$e& or %a$$ $uc" 'urt"er or&er$ t"ereon a$ may .e Pu$t an&
%ro%er in t"e circum$tance$,

1E F0=2 H"en an a%%lication i$ ma&e un&er $u.?$ection 012+ t"e Cig" !ourt may
a%%oint a $%ecial oLcer #"o $"all 'ort"#it" take into "i$ cu$to&y or un&er "i$
control all t"e a$$et$+ .ook$+ &ocument$+ e(ect$ an& actiona.le claim$ to #"ic"
t"e .anking com%any i$ or a%%ear$ to .e entitle& an& $"all al$o e8erci$e $uc"
ot"er %o#er$ a$ t"e Cig" !ourt may &eem 9t to con'er on "im+ "a-ing regar& to
t"e intere$t$ o' t"e &e%o$itor$ o' t"e .anking com%any,G

*E F042 H"ere t"e Re$er-e Bank i$ $ati$9e& t"at t"e a(air$ o' a .anking com%any
in re$%ect o' #"ic" an or&er un&er $u.?$ection 012 "a$ .een ma&e+ are .eing
con&ucte& in a manner &etrimental to t"e intere$t$ o' t"e &e%o$itor$ i' may
make an a%%lication to t"e Cig" !ourt 'or t"e #in&ing u% o' t"e com%any+ an&
#"ere any $uc" a%%lication i$ ma&e+ t"e Cig" !ourt $"all not make any or&er
e8ten&ing t"e %erio& 'or #"ic" t"e commencement or continuance o' all action$
an& %rocee&ing$ again$t t"e com%any #ere $taye& un&er t"e $u.?$ection,G



!))ENT

Sco%e, Q T"e main $tre$$ o' t"e $u.mi$$ion ma&e on .e"al' o' t"e %etitioner #a$
t"at t"e %o#er un&er $u.?$ection 012 o' Sec, =6 can only .e e8erci$e& a'ter t"e
Regi$trar 'orm$ an o%inion t"at t"e committee or any mem.er t"ereo' "a&
%er$i$tently ma&e &e'ault or "a& %er$i$tently negligent in t"e %er'ormance o' t"e
&utie$ im%o$e& u%on it on "im .y t"e Act or rule$ or t"e .ye?la#$ or i$ 'oun& to
"a-e %er$i$tently committe& any act+ #"ic" i$ %rePu&icial to t"e intere$t o' t"e
$ociety or it$ mem.er$, Unle$$+ t"ere i$ %er$i$tent negligence in t"e %er'ormance
o' &utie$ im%o$e& .y t"e Act+ rule$ or .ye?la#$ or %er$i$tent commi$$ion o' act
#"ic" i$ %rePu&icial to t"e intere$t o' t"e .ank or it$ mem.er+ t"e %o#er cannot
.e e8erci$e&, A'ter con$i&ering t"e %lea$ rai$e& .y t"e %etitioner$+ re$%on&ent
No,5 'orme& an o%inion t"at t"e act on t"e %art o' t"e %etitioner$ #a$ &e9nitely
%rePu&icial to t"e intere$t o' t"e .ank, H"et"er $uc" an act #a$ %rePu&icial to t"e
intere$t o' t"e .ank or not+ o%inion t"ereu%on "a& to .e 'ormulate& .y
re$%on&ent No,5 to "er $ati$'action, n e8amination o' t"e %lea$ rai$e& .y t"e
%etitioner$+ cou%le$ #it" t"e &ocument %lace& on recor& an& t"e %ro-i$ion$ o'
t"e Act an& rule$ t"e !ourt &i& not 9n& any in9rmity in t"e ultimate &eci$ion
arri-e& at .y re$%on&ent No,5, Suc" an act may not .e an act o' %er$i$tent
&e'ault or negligence in t"e %er'ormance o' &utie$ im%o$e& un&er t"e Act rule$
or .ye?la#$ .ut #a$ &e9nitely an act committe& .y t"e %etitioner$ #"ic" #a$
'oun& .y re$%on&ent No,5 to .e %rePu&icial to t"e intere$t o' t"e .ank,6E

7E F=7, Hin&ing u% .y Cig" !ourt, Q 012 Not#it"$tan&ing anyt"ing containe& in
Sec$, =91+ =95+ 4== an& 17= o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ .ut #it"out
%rePu&ice to it$ %o#er un&er $u.?$ection 012 o' Sec, =6 o' t"i$ Act+ t"e Cig" !ourt
$"all or&er t"e #in&ing u% o' a .anking com%any Q

0a2 i' t"e .anking com%any i$ una.le to %ay it$ &e.t$I or
0.2 i' an a%%lication 'or it$ #in&ing u% "a$ .een ma&e .y t"e Re$er-e Bank un&er
Sec, =6 o' t"i$ $ection,

052 T"e Re$er-e Bank $"all make an a%%lication un&er t"i$ $ection 'or t"e
#in&ing u% o' a .anking com%any i' it i$ &irecte& $o to &o .y an or&er un&er !1,
0.2 o' $u.?$ection 042 o' Sec,=1

0=2 T"e Re$er-e Bank $"all make an a%%lication un&er t"i$ $ection 'or t"e
#in&ing u% o' a .anking com%any ?

0a2 i' t"e .anking com%any Q
0i2 "a$ 'aile& to com%ly #it" t"e re/uirement$ $%eci9e& in Sec,11 or
0ii2 "a$ .y rea$on o' t"e %ro-i$ion$ o' Sec,55 .ecome &i$entitle& to carry on
.anking .u$ine$$ in In&iaI or
0iii2 "a$ .een %ro"i.ite& 'rom recei-ing 're$" &e%o$it$ .y an or&er un&er !1, 0a2
o' $u.?$ection 042 o' Sec,=1 or un&er !1, 0.2 o' $u.?$ection 0=?A2 o' Sec,45 o' t"e
Re$er-e Bank o' In&ia Act+ 19=4 05 o' 19=42I or
0i-2 "a-ing 'aile& to com%ly #it" t"e re/uirement o' t"i$ Act ot"er t"an
re/uirement $ lai& &o#n in Sec,11+ "a$ continue& $uc" 'ailure+ or+ "a-ing
contra-ene& any %ro-i$ion o' t"i$ Act "a$ continue& $uc" contra-ention .eyon&
$uc" %erio& or %erio&$ a$ may .e $%eci9e& in t"at .e"al' .y t"e Re$er-e Bank
'rom time to time+ a'ter notice in #riting o' $uc" 'ailure or contra-ention "a$
.een con-eye& to t"e .anking com%anyI or
0.2 i' in t"e o%inion o' t"e Re$er-e Bank+ ?
0i2 a com%romi$e or arrangement $anctione& .y a !ourt in re$%ect o' .anking
com%any cannot .e #orke& $ati$'actorily #it" or #it"out mo&i9cation$I or
0ii2 t"e return$+ $tatement$ or in'ormation 'urni$"e& to it un&er or in %ur$uance o'
t"e %ro-i$ion$ o' t"i$ Act &i$clo$e t"at t"e .anking com%any i$ una.le to %ay it$
&e.t$I or
0iii2 t"e continuance o' t"e .anking com%any i$ %rePu&icial to t"e intere$t o' it$
&e%o$itor$,

042 Hit"out %rePu&ice to t"e %ro-i$ion$ containe& in Sec,4=4 o' t"e !om%anie$
Act+ 191* 91 o' 191*2+ a .anking com%any $"all .e &eeme& to .e una.le to %ay
it$ &e.t$ i' it "a$ re'u$e& to meet any la#'ul &eman& ma&e at any o' it$ oLce$ or
.ranc"e$ #it"in t#o #orking &ay$+ i' $uc" &eman& i$ ma&e at a %lace #"ere
t"ere i$ an oLce+ .ranc" or agency o' t"e Re$er-e Bank+ or #it"in 9-e #orking
&ay$+ i' $uc" &eman& i$ ma&e el$e#"ere+ an& i' t"e Re$er-e Bank certi9e$ in
#riting t"at t"e .anking com%any i$ una.le to %ay it$ &e.t$,

012 A co%y o' e-ery a%%lication ma&e .y t"e Re$er-e Bank un&er $u.?$ection 012
$"all .e $ent .y t"e Re$er-e Bank to t"e Regi$trar,G

!))ENTS

Hin&ing u% %etition, Q T"e %etitioner in t"i$ %etition "a$ $tate& t"e rea$on$ 'or it$
inter-ention in $eeking t"e relie'$, It i$ not in &i$%ute t"at all t"e .anking
o%erational acti-itie$ o' t"e $ai& B,!,!,I 02 "a-e come to $tan&$till 'rom 1?6?91,
A'ter 9ling o' t"e %etition -ariou$ or&er$ "a-e al$o .een %a$$e& .y t"e !ourt$ in
'oreign countrie$ #"ere un&er t"e a$$et$ o' t"e B,!,!,I, 02 "a-e .een $eiMe& an&
taken c"arge o' .y t"e Lcial Li/ui&ator or t"e Recei-er, Similar i$ t"e %o$ition
a$ 'ar a$ t"e .anking acti-itie$ o' t"e $ai& .ank in t"i$ country are concerne& ,
T"at t"e $ai& B,!,!,I, 02 i$ una.le to %ay it$ &e.t$ i$ am%ly &emon$trate& 'rom
t"e 'act t"at e-en Soint Lcial Li/ui&ator$+ !ayman I$lan&$+ #"o earlier o%%o$e&
a&mi$$ion o' t"i$ %etition+ "a-e .een no# $u%%orting t"e grant o' relie'$ in t"e
%etition an& #"o "a-e al$o a%%ro-e& t"e arrangement arri-e& at, H"at i$ more+
e-en t"e $ai& )V$, RaM in t"eir %etition in %ara$ 6 an& 7 a&mit t"at t"e acti-itie$
o' t"e $ai& B,!,!,I 02 are &etrimental an& %rePu&icial to t"e %u.lic intere$t an&
t"e intere$t o' t"e &e%o$itor$ an& cre&itor$, It i$ in t"e$e circum$tance$+ t"at t"e
%etitioner Re$er-e Bank o' In&ia "a$ a%%roac"e& t"e Cig" !ourt $eeking relie' in
t"i$ %etition i$ grante&,9E

!ourt$ to act in t"e intere$t o' &e%o$itor, ? It #oul& conclu&e t"at t"e
arrangement a$ reac"e& an& arri-e& at+ in t"e agreement .et#een t"e %artie$
an& a$ $anctione& .y t"e !ourt+ i$ .y an& large in t"e .e$t intere$t o' t"e
cre&itor$ an& &e%o$itor$ o' t"e B,!,!,I 02+ Bom.ay Branc", It i$ note#ort"y t"at
1::< claim$ o' $uc" cre&itor$ an& &e%o$itor$ are $ecure&, T"e intere$t o' t"e
%u.lic at large i$ an& $"oul& .e a %aramount con$i&eration .e'ore t"e !ourt
#"ic" $"oul& o-erri&e t"e claim an& t"e intere$t o' any in&i-i&ual a$ in t"e ca$e
o' )V$, RaM #"o$e intere$t+ i' any+ "a$ .een $a'eguar&e&, T"e %en&ency o' t"e
%etition o' $ai& )V$, RaM .y it$el'+ in t"e circum$tance+ #"ere 'act$ an&
circum$tance$ an& t"e la# Pu$ti'y t"e grant o' relie'$ a$ claime&+ #oul& not Pu$ti'y
t"e !ourt in #it""ol&ing t"e $ame, T"e &elay #oul& re$ult in great %rePu&ice to
t"e cre&itor$ an& &e%o$itor$ o' t"e $ai& B,!,!,I 02+ Bom.ay Branc", It #oul& al$o
a&-er$ely a(ect t"e S,B,I, an& it$ $u.$i&iary ne# com%any #"o "a-e+ in
accor&ance #it" t"e a%%ro-e& arrangement$+ %rocee&e& to take -ariou$ $te%$
an& "a-e com%lie& #it" -ariou$ 'ormalitie$+ $uc" a$+ in cor%oration o' t"e
$u.$i&iary com%any, A$ %er or&er &ate& =r& Augu$t+ 199= t"e !ourt "a$ $et
Ae.ruary 1994 a$ a &ea&line 'or t"e com%letion,1:E

11E F=7?A, !ourt li/ui&ator, Q 012 T"ere $"all .e attac"e& to e-ery Cig" !ourt a
!ourt li/ui&ator to .e a%%ointe& .y t"e !entral Go-ernment 'or t"e %ur%o$e o'
con&ucting all %rocee&ing$ 'or t"e #in&ing u% o' .anking com%anie$ an&
%er'orming $uc" ot"er &utie$ in re'erence t"ereto a$ t"e Cig" !ourt may im%o$e,

15F E E E G

042 H"ere "a-ing regar& to t"e num.er o' .anking com%anie$ #oun& u% an&
ot"er circum$tance$ o' t"e ca$e+ t"e !entral Go-ernment i$ o' o%inion t"at it i$
not nece$$ary or e8%e&ient to attac" 'or t"e time .eing a !ourt li/ui&ator to a
Cig" court+ it may+ 'rom time to time+ .y noti9cation in t"e Lcial GaMette+ &irect
t"at t"i$ $ection $"all not "a-e e(ect in relation to t"at Cig" !ourt,G

1=E F=9, Re$er-e Bank to .e oLcial li/ui&ator , ? 14E F012G Not#it"$tan&ing
anyt"ing containe& in Sec, =7?A o' t"i$ Act or in Sec, 447 or Sec, 449 o' t"e
!om%anie$ Act+ 191* 01 o' 191*2+ #"ere in any %rocee&ing 'or t"e #in&ing u% .y
t"e Cig" !ourt o' a .anking com%any+ an a%%lication i$ ma&e .y t"e Re$er-e
Bank in t"i$ .e"al'+ t"e Re$er-e Bank+ t"e State Bank o' In&ia or any ot"er .ank
noti9e& .y t"e !entral Go-ernment in t"i$ .e"al' or any in&i-i&ual+ a$ $tate& in
$uc" a%%lication $"all .e a%%ointe& a$ t"e oLcial li/ui&ator o' t"e .anking
com%any in $uc" %rocee&ing an& t"e li/ui&ator+ i' any+ 'unctioning in $uc"
%rocee&ing $"all -acate oLce u%on $uc" a%%ointment,G

11E F052 Su.Pect to $uc" &irection$ a$ may .e ma&e .y t"e Cig" !ourt+ t"e
remuneration o' t"e oLcial li/ui&ator a%%ointe& un&er t"i$ $ection+ co$t an&
e8%en$e$ o' "i$ e$ta.li$"ment an& t"e co$t o' e8%en$e$ o' t"e #in&ing u% $"all
.e met out o' t"e a$$et$ o' t"e .anking com%any #"ic" i$ .eing #oun& u%+ an&
not#it"$tan&ing anyt"ing to t"e contrary containe& in any ot"er la# 'or t"e time
.eing in 'orce+ no 'ee$ $"all .e %aya.le to t"e !entral Go-ernment+ out o' t"e
a$$et$ o' t"e .anking com%any,G

1*E F=9?A, A%%lication o' !om%anie$ Act to li/ui&ator$, Q 012 All t"e %ro-i$ion$ o'
t"e !om%anie$ Act+ 191* 01 o' 191*2+ relating to a li/ui&ator+ in $o 'ar a$ t"ey are
not incon$i$tent #it" t"i$ Act+ $"all a%%ly to or in relation to a li/ui&ator
a%%ointe& un&er Sec, =7?A or Sec,=9,

052 Any re'erence to t"e NoLcial li/ui&atorO in t"i$ %art an& 4art III?A $"all .e
con$true& a$ inclu&ing a re'erence to any li/ui&ator o' a .anking com%any,G

4:, Stay o' %rocee&ing$,? Not#it"$tan&ing anyt"ing to t"e contrary containe& 16E
FSec, 4** o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ t"e 17E FCig" !ourtG $"all not
make any or&er $taying t"e %rocee&ing$ in relation to t"e #in&ing u% o' a
.anking com%any+ unle$$ t"e 19E FCig" !ourtG i$ $ati$9e& t"at an arrangement
"a$ .een ma&e #"ere.y t"e com%any can %ay it$ &e%o$itor$ in 'ull a$ t"eir
claim$ accrue,

5:E F41, 4reliminary re%ort .y oLcial li/ui&ator , ? Not#it"$tan&ing anyt"ing to
t"e contrary containe& in Sec, 411 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+
#"ere a #in&ing u% or&er "a$ .een ma&e in re$%ect o' a .anking com%any
#"et"er .e'ore or a'ter t"e commencement o' t"e Banking !om%anie$ 0Secon&
Amen&ment2 Act+ 19*: 0=6 o' 19*:2 t"e oLcial li/ui&ator $"all $u.mit a
%reliminary re%ort to t"e Cig" !ourt #it"in t#o mont"$ 'rom t"e &ate o' t"e
#in&ing u% or&er or #"ere t"e #in&ing u% or&er "a$ .een ma&e .e'ore $uc"
commencement+ #it"in t#o mont"$ 'rom $uc" commencement+ gi-ing t"e
in'ormation re/uire& .y t"at $ection $o 'ar a$ it i$ a-aila.le to "im an& al$o
$tating t"e amount o' a$$et$ o' t"e .anking com%any in ca$" #"ic" are in "i$
cu$to&y or un&er "i$ control on t"e &ate o' t"e re%ort an& t"e amount o' it$
a$$et$ #"ic" are likely to .e collecte& in ca$" .e'ore t"e e8%iry o' t"at %erio& o'
t#o mont"$ in or&er t"at $uc" a$$et$ may .e a%%lie& $%ee&ily to#ar&$ t"e
making o' %re'erential %ayment$ un&er Sec,1=: o' t"e !om%anie$ Act+ 191* 01 o'
191*2+ an& in t"e &i$c"arge+ a$ 'ar a$ %o$$i.le+ o' t"e lia.ilitie$ an& o.ligation$ o'
t"e .anking com%any to it$ &e%o$itor$ an& ot"er cre&itor$ in accor&ance #it" t"e
%ro-i$ion$ "ereina'ter containe&I an& t"e oLcial li/ui&ator $"all make 'or t"e
%ur%o$e a'ore$ai& e-ery en&ea-our to collect in ca$" a$ muc" o' t"e a$$et$ o'
t"e .anking com%any a$ %ractica.le,G

51E F41?A, Notice to %re'erential claimant$ an& $ecure& an& un$ecure& cre&itor$,
Q 012 Hit"in 9'teen &ay$ 'rom t"e &ate o' t"e #in&ing u% or&er o' a .anking
com%any or #"ere t"e #in&ing u% or&er "a$ .een ma&e .e'ore t"e
commencement o' t"e Banking !om%anie$ 0Secon& Amen&ment2 Act+ 19*: 0=6
o' 19*:2+ #it"in one mont" 'rom $uc" commencement li/ui&ator $"all+ 'or t"e
%ur%o$e o' making an e$timate o' t"e &e.t$ an& lia.ilitie$ o' t"e .anking
com%any 0ot"er t"an it$ lia.ilitie$ an& o.ligation$ to it$ &e%o$itor$2+ .y notice
$er-e& in $uc" manner a$ t"e Re$er-e Bank may &irect+ call u%on Q

0a2 e-ery claimant entitle& to %re'erential %ayment un&er Sec,1=: o' t"e
!om%anie$ Act+ 191* 01 o' 191*2+ an&
0.2 e-ery $ecure& an& e-ery un$ecure& cre&itor+

to $en& to t"e oLcial li/ui&ator #it"in one mont" 'rom t"e &ate o' t"e $er-ice o'
t"e notice a $tatement o' t"e amount claime& .y "im,

052 E-ery notice un&er $u.?$ection 012 $ent to a claimant "a-ing a claim un&er
Sec, 1=: o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ $"all $tate t"at i' a $tatement
o' t"e claim i$ not $ent to t"e oLcial li/ui&ator .e'ore t"e e8%iry o' t"e %erio&
one mont" 'rom t"e &ate o' t"e $er-ice+ t"e claim $"all not .e treate& a$ a claim
entitle& to .e %ai& un&er Sec,1=: o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ in
%riority to all ot"er &e.t$ .ut $"all .e treate& a$ an or&inary &e.t &ue .y t"e
.anking com%any,

0=2 E-ery notice un&er $u.?$ection 012 $ent to a $ecure& cre&itor $"all re/uire "im
to -alue "i$ $ecurity .e'ore t"e e8%iry o' t"e %erio& o' one mont" 'rom t"e &ate
o' t"e $er-ice o' t"e notice an& $"all $tate t"at i' a $tatement o' t"e claim
toget"er #it" t"e -aluation o' t"e $ecurity i$ not $ent to t"e oLcial li/ui&ator
.e'ore t"e e8%iry o' t"e $ai& %erio&+ t"en t"e oLcial li/ui&ator $"all "im$el' -alue
t"e $ecurity an& $uc" -aluation $"all .e .in&ing on t"e cre&itor,

042 I' a claimant 'ail$ to com%ly #it" t"e notice $ent to "im un&er $u.?$ection 012+
"i$ claim #ill not .e entitle& to .e %ai& un&er Sec, 1=: o' t"e !om%anie$ Act+
191* 01 o' 191*2+ in %riority to all ot"er &e.t$ .ut $"all .e treate& a$ an or&inary
&e.t$ &ue .y t"e .anking com%anyI an& i' a $ecure& cre&itor 'ail$ to com%ly #it"
t"e notice $ent to "im un&er $u.?$ection 012+ t"e oLcial li/ui&ator $"all "im$el'
-alue t"e $ecurity an& $uc" -aluation $"all .e .in&ing on t"e cre&itor,

45, 4o#er to &i$%en$e #it" meeting$ o' cre&itor$+ etc, Q Not#it"$tan&ing
anyt"ing to t"e contrary containe& in 55E FSec,4*:G o' t"e !om%anie$ Act+ 191*
01 o' 191*2+ t"e 5=E FCig" !ourtG may in t"e %rocee&ing$ 'or #in&ing?u% a
.anking com%any+ &i$%en$e #it" any meeting$ o' cre&itor$ or contri.utorie$
54F E E E G i' it con$i&er$ t"at no o.Pect #ill .e $ecure& t"ere.y $uLcient to Pu$ti'y
t"e &elay an& e8%en$e,

51E F4=, Booke& &e%o$itor$U cre&it$ to .e &eeme& %ro-e&,? In any %rocee&ing 'or
t"e #in&ing u% o' a .anking com%any+ e-ery &e%o$itor o' t"e .anking com%any
$"all .e &eeme& to "a-e 9le& "i$ claim 'or t"e amount $"o#n in t"e .ook$ o' t"e
.anking com%any a$ $tan&ing to "i$ cre&it an&+ not#it"$tan&ing anyt"ing to t"e
contrary containe& in 5*E FSec,464 o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ t"e
Cig" !ourt $"all %re$ume $uc" claim$ to "a-e .een %ro-e&+ unle$$ t"e oLcial
li/ui&ator $"o#$ t"at t"ere i$ rea$on 'or &ou.ting it$ correctne$$,G

56E F4=?A, 4re'erential %ayment$ to &e%o$itor$ , ? 012 In e-ery %rocee&ing 'or t"e
#in&ing u% o' a .anking com%any #"ere a #in&ing?u% or&er "a$ .een ma&e
#"et"er .e'ore or a'ter t"e commencement o' t"e Banking !om%anie$ 0Secon&
Amen&ment2 Act+ 19*: 0=6 o' 19*:2+ #it"in t"ree mont"$ 'rom t"e &ate o' t"e
#in&ing?u% or&er or #"ere t"e #in&ing?u% or&er "a$ .een ma&e .e'ore $uc"
commencement+ #it"in t"ree mont"$ t"ere'rom+ t"e %re'erential %ayment
re'erre& to in Sec, 1=: o' t"e !om%anie$ Act+ 191* 01 o' 191*2+ in re$%ect o'
#"ic" $tatement$ o' claim$ "a-e .een $ent #it"in one mont" 'rom t"e &ate o'
t"e $er-ice o' t"e notice re'erre& to in Sec, 41?A+ $"all .e ma&e .y t"e oLcial
li/ui&ator or a&e/uate %ro-i$ion 'or $uc" %ayment$ $"all .e ma&e .y "im,

052 A'ter t"e %re'erential %ayment$ a$ a'ore$ai& "a-e .een ma&e or a&e/uate
%ro-i$ion "a$ .ee ma&e in re$%ect t"ereo'+ t"ere $"all .e %ai& #it"in t"e
a'ore$ai& %erio& o' t"ree mont"$ Q

0a2 in t"e 9r$t %lace to e-ery &e%o$itor in t"e $a-ing$ .ank account o' t"e
.anking com%any a $um o' t#o "un&re& an& 9'ty ru%ee$ or t"e .alance at "i$
cre&it+ #"ic"e-er i$ le$$I an& t"erea'terI
0.2 in t"e ne8t %lace+ to e-ery ot"er &e%o$itor o' t"e .anking com%any a $um o'
t#o "un&re& an& 9'ty ru%ee$ or t"e .alance at "i$ cre&it #"ic"e-er+ i$ le$$+

in %riority to all ot"er &e.t$ 'rom out o' t"e remaining a$$et$ o' t"e .anking
com%any a-aila.le 'or %ayment to general cre&itor$ J

4ro-i&e& t"at t"e $um total o' t"e amount$ %ai& un&er !l$, 0a2 an& 0.2 to any one
%er$on #"o in "i$ o#n name 0an& not Pointly #it" any ot"er %er$on2 i$ a
&e%o$itor in t"e $a-ing$ .ank account o' t"e .anking com%any an& al$o a
&e%o$itor in any ot"er account+ $"all not e8cee& t"e $um o' t#o "un&re& an& 9'ty
ru%ee$,

0=2 H"ere #it"in t"e a'ore$ai& %erio& o' t"ree mont"$ 'ull %ayment cannot .e
ma&e o' t"e amount$ re/uire& to .e %ai& un&er !l,0a2 or !l, 0.2 o' $u.?$ection 052
#it" t"e a$$et$ in ca$" t"e oLcial li/ui&ator $"all %ay #it"in t"at %erio& to e-ery
&e%o$itor un&er !l, 0a2 or+ a$ ca$e may .e+ !l, 0.2 o' t"at $u.?$ection on a %ro
rata .a$i$ $o muc" o' t"e amount &ue to t"e &e%o$itor un&er t"at clau$e a$ t"e
oLcial li/ui&ator i$ a.le to %ay #it" t"o$e a$$et$I an& $"all %ay t"e re$t o' t"at
amount to e-ery $uc" &e%o$itor a$ an& #"en $uLcient a$$et$ are collecte& .y
t"e oLcial li/ui&ator in ca$",

042 A'ter %ayment$ "a-e .een ma&e 9r$t to &e%o$itor$ in t"e $a-ing$ .ank
account an& t"en to t"e ot"er &e%o$itor$ in accor&ance #it" t"e 'oregoing
%ro-i$ion$+ t"e remaining a$$et$ o' t"e .anking com%any a-aila.le 'or %ayment
to general cre&itor$ $"all .e utiliMe& 'or %ayment on a %ro rata .a$i$ o' t"e &e.t$
o' t"e general cre&itor$ an& o' t"e 'urt"er $um$+ i' an+ &ue to t"e &e%o$itor$I an&
a'ter making a&e/uate %ro-i$ion 'or %ayment on a %ro rata .a$i$ a'ore$ai& o' t"e
&e.t$ o' t"e general cre&itor$+ t"e oLcial li/ui&ator $"all+ a$ an& #"en t"e a$$et$
o' t"e com%any are collecte& in ca$"+ make %ayment on a %ro rata .a$i$ a$
a'ore$ai& o' t"e 'urt"er $um$+ i' any+ #"ic" may remain &ue to t"e &e%o$itor$
re'erre& to in !l$, 0a2 an& 0.2 o' $u.?$ection 052,

012 In or&er to ena.le t"e oLcial li/ui&ator to "a-e in "i$ cu$to&y or un&er "i$
control in ca$" a$ muc" o' t"e a$$et$ o' t"e .anking com%any a$ %o$$i.le+ t"e
$ecuritie$ gi-en to e-ery $ecure& cre&itor may .e re&eeme& .y t"e oLcial
li/ui&ator ?

0a2 #"ere t"e amount &ue to t"e cre&itor i$ more t"an t"e -alue o' $ecuritie$ a$
a$$e$$e& .y "im or+ a$ t"e ca$e may .e+ a$ a$$e$$e& .y t"e oLcial li/ui&ator+ on
%ayment o' $uc" -alueI an&
0.2 #"ere t"e amount &ue to t"e cre&itor i$ e/ual to or le$$ t"an t"e -alue o' t"e
$ecuritie$ a$ $o a$$e$$e&+ on %ayment o' t"e amount &ue J

4ro-i&e& t"at #"ere t"e oLcial li/ui&ator i$ not $ati$9e& #it" t"e -aluation ma&e
.y t"e cre&itor+ "e may a%%ly to t"e Cig" !ourt 'or making a -aluation,

0*2 H"en any claimant+ cre&itor or &e%o$itor to #"om any %ayment i$ to .e
ma&e in accor&ance #it" 57E Ft"e %ro-i$ion$ o' t"i$ $ection G+ cannot .e 'oun& or
i$ not rea&ily tracea.le+ a&e/uate %ro-i$ion $"all .e ma&e .y t"e oLcial
li/ui&ator 'or $uc" %ayment,

062 Aor t"e %ur%o$e$ o' t"i$ $ection t"e %ayment$ $%eci9e& in eac" o' t"e
'ollo#ing clau$e$ $"all .e treate& a$ %ayment$ o' a &i(erent cla$$+ namely J

0a2 %ayment$ to %re'erential claimant$ un&er Sec, 1=: o' t"e !om%anie$ Act+
191* 01 o' 191*2I
0.2 %ayment$ un&er !l, 0a2 o' $u.?$ection 052 to t"e &e%o$itor$ in t"e $a-ing$
.ank accountI
0c2 %ayment$ un&er !l, 0.2 o' $u.?$ection 052 to t"e ot"er &e%o$itor$I
0&2 %ayment$ to t"e general cre&itor$ an& %ayment$ to t"e &e%o$itor$ in a&&ition
to t"o$e $%eci9e& in !l$, 0a2 an& 0.2 o' $u.?$ection 052,

072 T"e %ayment$ o' eac" &i(erent cla$$ $%eci9e& in $u.?$ection 062 $"all rank
e/ually among t"em$el-e$ an& .e %ai& in 'ull unle$$ t"e a$$et$ are in$uLcient to
meet t"em+ in #"ic" ca$e t"ey $"all a.ate in e/ual %ro%ortion,G

59E F092 Not"ing containe& in $u.?$ection$ 052+ 0=2+ 042+ 062 an& 072 $"all a%%ly to
a .anking com%any in re$%ect o' t"e &e%o$itor$ o' #"ic" t"e 3e%o$it In$urance
!or%oration i$ lia.le un&er Sec, 1* o' t"e 3e%o$it In$urance !or%oration Act+
19*1 046 o' 19*12,

01:2 A'ter %re'erential %ayment$ re'erre& to in $u.?$ection 012 "a-e .een ma&e or
a&e/uate %ro-i$ion "a$ .een ma&e in re$%ect t"ereo'+ t"e remaining a$$et$ o'
t"e .anking com%any re'erre& to in $u.?$ection 092 a-aila.le 'or %ayment to
general cre&itor$ $"all .e utiliMe& 'or %ayment on %ro rata .a$i$ o' t"e &e.t$ o'
t"e general cre&itor$ an& o' t"e $um$ &ue to t"e &e%o$itor$ J

4ro-i&e& t"at #"ere any amount in re$%ect o' any &e%o$it i$ to .e %ai& .y t"e
li/ui&ator to t"e 3e%o$it In$urance !or%oration un&er Sec, 51 o' t"e 3e%o$it
In$urance !or%oration Act+ 19*1 046 o' 19*12+ only t"e .alance+ i' any+ le't a'ter
making t"e $ai& %ayment $"all .e %aya.le to t"e &e%o$itor,G

=:E F44, 4o#er$ o' Cig" !ourt in -oluntary #in&ing u%, Q 012 Not#it"$tan&ing
anyt"ing to t"e contrary containe& in Sec, 474o' t"e !om%anie$ Act+ 191* 01 o'
191*2+ no .anking com%any may .e -oluntarily #oun& u% unle$$ t"e Re$er-e
Bank certi9e& in #riting t"at t"e com%any i$ a.le to %ay in 'ull it$ &e.t$ to it$
cre&itor$ a$ t"ey accrue,

052 T"e Cig" !ourt may+ in any ca$e #"ere a .anking com%any i$ .eing #oun&
u% -oluntarily+ make an or&er t"at t"e -oluntary #in&ing u% $"all continue .ut
$u.Pect to t"e $u%er-i$ion o' t"e !ourt,

0=2 Hit"out %rePu&ice o' t"e %ro-i$ion$ containe& in Sec$,441 an& 151 o' t"e
!om%anie$ Act+ 191* 01 o' 191*2+ t"e Cig" !ourt may o' it$ o#n motion an&
$"all+ on t"e a%%lication o' t"e Re$er-e Bank+ or&er t"e #in&ing Qu% o' a .anking
com%any in any o' t"e 'ollo#ing ca$e$+ namely7 J

0a2 #"ere t"e .anking com%any i$ .eing #oun& u% -oluntarily an& at any $tage
&uring t"e -oluntary #in&ing u% %rocee&ing t"e com%any i$ not a.le to meet it$
&e.t$ a$ t"ey accrueI or
0.2 #"ere t"e .anking com%any i$ .eing #oun& u% -oluntarily or i$ .eing #oun&
u% $u.Pect to t"e $u%er-i$ion o' t"e !ourt an& t"e Cig" !ourt i$ $ati$9e& t"at t"e
-oluntary #in&ing u% or #in&ing u% $u.Pect to t"e $u%er-i$ion o' t"e !ourt
cannot .e continue& #it"out &etriment to t"e intere$t$ o' t"e &e%o$itor$,G

=1E F44?A, 4roce&ure 'or amalgamation o' .anking com%anie$, ? 012
Not#it"$tan&ing anyt"ing containe& in any la# 'or t"e time .eing in 'orce+ no
.anking com%any $"all .e amalgamate& #it" anot"er .anking com%any+ unle$$
a $c"eme containing t"e term$ o' $uc" amalgamation "a$ .een %lace& in &ra't
.e'ore t"e $"are"ol&er$ o' eac" o' t"e .anking com%anie$ concerne& $e%arately+
an& a%%ro-e& .y a re$olution %a$$e& .y a maPority in num.er re%re$enting t#o?
t"ir&$ in -alue o' t"e $"are"ol&er$ o' eac" o' t"e $ai& com%anie$+ %re$ent eit"er
in %er$on or .y %ro8y at a meeting calle& 'or t"e %ur%o$e,

052 Notice o' e-ery $uc" meeting a$ i$ re'erre& to in $u.?$ection 012 $"all .e gi-en
to e-ery $"are"ol&er o' eac" o' t"e .anking com%anie$ concerne& in accor&ance
#it" t"e rele-ant article$ o' a$$ociation in&icating t"e time+ %lace an& o.Pect o'
t"e meeting+ an& $"all al$o .e %u.li$"e& at lea$t once a #eek 'or t"ree
con$ecuti-e #eek$ in not le$$ t"an t#o ne#$%a%er$ #"ic" circulate in t"e locality
or localitie$ #"ere t"e regi$tere& oLce$ o' t"e .anking com%anie$ concerne& are
$ituate& one o' $uc" ne#$%a%er$ .eing in language commonly un&er$too& in t"e
locality or localitie$,

0=2 Any $"are"ol&er+ #"o "a$ -ote& again$t t"e $c"eme o' amalgamation at t"e
meeting or "a$ gi-en notice in #riting at or %rior to t"e meeting o' t"e com%any
concerne& or to t"e %re$i&ing oLcer o' t"e meeting t"at "e &i$$ent$ 'rom t"e
$c"eme o' amalgamation+ $"all .e entitle&+ in t"e e-ent o' t"e $c"eme .eing
$anctione& .y t"e Re$er-e Bank to claim 'rom .anking com%any concerne&+ in
re$%ect o' t"e $"are$ "el& .y "im in t"at com%any+ t"eir -alue a$ &etermine& .y
t"e Re$er-e Bank #"en $anctioning t"e $c"eme an& $uc" &etermination .y t"e
Re$er-e Bank a$ to t"e -alue o' t"e $"are$ to .e %ai& to t"e &i$$enting
$"are"ol&er $"all .e 9nal 'or all %ur%o$e$,
042 I' t"e $c"eme o' amalgamation i$ a%%ro-e& .y re/ui$ite maPority o'
$"are"ol&er$ in accor&ance #it" t"e %ro-i$ion$ o' t"i$ $ection+ it $"all .e
$u.mitte& to t"e Re$er-e Bank 'or $anction an& $"all+ i' $anctione& .y t"e
Re$er-e Bank .y an or&er in -oting %a$$e& in "i$ .e"al'+ .e .in&ing on t"e
.anking com%anie$ concerne& an& al$o on all t"e $"are"ol&er$ t"ereo',

=5F E E E E G

0*2 n t"e $anctioning o' a $c"eme o' amalgamation .y t"e Re$er-e Bank t"e
%ro%erty o' t"e amalgamate& .anking com%any $"all+ .y -irtue o' t"e or&er o'
$anction+ .e tran$'erre& to an& -e$t in+ an& t"e lia.ilitie$ o' t"e $ai& com%any
$"all+ .y -irtue o' t"e $ai& or&er .e tran$'erre& to+ an& .ecome t"e lia.ilitie$ o'
t"e .anking com%any #"ic" un&er t"e $c"eme or amalgamation i$ to ac/uire t"e
.u$ine$$ o' t"e amalgamate& .anking com%any+ $u.Pect in all ca$e$ to ==Ft"e
%ro-i$ion$ o' t"e $c"eme a$ $anctione&G,

=4E F0*?A2 H"ere a $c"eme o' amalgamation i$ $anctione& .y t"e Re$er-e Bank
un&er t"e %ro-i$ion$ o' t"i$ $ection+ t"e Re$er-e Bank may+ .y a 'urt"er or&er in
#riting+ &irect+ t"at on $uc" &ate a$ may .e $%eci9e& t"erein in t"e .anking
com%any 0"ereina'ter in t"i$ $ection re'erre& to $ t"e amalgamate& .anking
com%any2 #"ic" .y rea$on o' amalgamation #ill cea$e to 'unction+ $"all $tan&
&i$$ol-e& an& any $uc" &irection $"all take e(ect not#it"$tan&ing anyt"ing to
t"e contrary containe& in any ot"er la#,

0*?B2 H"ere t"e Re$er-e Bank &irect$ a &i$$olution o' t"e amalgamate& .anking
com%any+ it $"all tran$mit a co%y o' t"e or&er &irecting $uc" &i$$olution to t"e
Regi$trar .e'ore #"om t"e .anking com%any "a$ .een regi$tere& an& on recei%t
o' $uc" or&er t"e Regi$trar $"all $trike o( t"e name o' t"e com%any,

0*?!2 An or&er un&er $u.?$ection 042 #"et"er ma&e .e'ore or a'ter t"e
commencement o' Sec, 19 o' t"e Banking La#$ 0)i$cellaneou$ 4ro-i$ion$2+ Act+
19*= 011 o' 19*=2+ $"all .e conclu$i-e e-i&ence t"at all t"e re/uirement$ o' t"i$
$ection relating to amalgamation "a-e .een com%lie& #it"+ an& a co%y o' t"e
$ai& or&er certi9e& in #riting .y an oLcer o' t"e Re$er-e Bank to .e a true co%y
o' $uc" or&er an& a co%y o' t"e $c"eme certi9e& in t"e like manner to .e a true
co%y t"ereo' $"all+ in all legal %rocee&ing$ 0#"et"er in a%%eal or ot"er#i$e an&
#"et"er in$titute& .e'ore or a'ter commencement o' t"e $ai& Sec,192+ .e
a&mitte& a$ e-i&ence to "e $ame e8tent a$ t"e original or&er an& t"e original
$c"eme,G

=1E F062 Not"ing in t"e 'oregoing %ro-i$ion$ o' t"i$ $ection $"all a(ect t"e %o#er
o' t"e !entral Go-ernment to %ro-i&e 'or t"e amalgamation o' t#o or more
.anking com%anie$ =*F E E E G un&er Sec,=9* o' t"e !om%anie$ Act+ 191* 01 o'
199*2 J

4ro-i&e& t"at no $uc" %o#er $"all .e e8erci$e& .y t"e !entral Go-ernment
e8ce%t a'ter con$ultation #it" t"e Re$er-e Bank,G

!))ENT

3e%art 'rom %ro-i$ion$ o' !om%anie$ Act+ 191* Q T"e %ro-i$ion containe& in t"e
Banking Regulation Act+ -iM,+ Sec 44?A+ regar&ing amalgamation o' .anking
com%anie$ i$ a $el'?containe& %ro-i$ion an& a com%lete co&e on t"e
amalgamation o' .anking com%anie$, A clo$e rea&ing o' t"e %ro-i$ion$ o' Sec,44?
A o' t"e Banking Regulation Act $"o#$ t"at it &e%art$ 'rom t"e %ro-i$ion$ o' t"e
!om%anie$ Act+ 191*+ in t#o im%ortant a$%ect$+ namely+ t"e Cig" !ourt i$ not
gi-en t"e %o#er to grant it$ a%%ro-al to t"e $c"eme or merger o' .anking
com%anie$ an& t"e Re$er-e Bank o' In&ia i$ gi-en $uc" %o#er an& $econ&ly+ t"e
Re$er-e Bank o' In&ia i$ al$o em%o#ere& to &etermine t"e market -alue o'
$"are$ o' t"e $"are"ol&er #"o "a$ -ote& again$t t"e $c"eme o' amalgamation or
#"o "a$ gi-en $uc" notice again$t t"e amalgamation in #riting %rior to t"e
meeting o' t"e com%any to t"e 4re$i&ing Lcer concerne&, T"e Banking
Regulation Act ena.le$ t"e &i$$enting $"are"ol&er to o.tain 'rom t"e .anking
com%any concerne& t"e market -alue& o' "i$ $"are$ a$ &etermine& .y t"e
Re$er-e Bank o' In&ia, T"e %ro-i$ion o' Sec,44?A al$o ena.le re$er-e Bank o'
In&ia to &etermine t"e market -alue o' $"are$ o' t"e &i$$enting $"are"ol&er, =6E

=7E F=9E F44,B, Re$triction on com%romi$e arrangement .et#een .anking
com%any an& cre&itor$, ? 4:E F012G Not#it"$tan&ing anyt"ing containe& in any
la# 'or t"e time .eing in 'orce+ 41E FCig" !ourtG $"all $anction a com%romi$e or
arrangement .et#een a .anking com%any an& it$ cre&itor$ or any cla$$ o' t"em
or .et#een $uc" com%any an& it$ mem.er$ or any cla$$ o' t"em 45E F'or
$anction any mo&i9cation in any $uc" com%romi$e or arrangement unle$$ t"e
com%romi$e or arrangement or mo&i9cation+ a$ t"e ca$e may .eG+ i$ certi9e& .y
t"e Re$er-e Bank 4=E Fin #riting a$ not .eing inca%a.le o' .eing #orke& an& a$
not .eing &etrimental to t"e intere$t o' t"e &e%o$itor$ o' $uc" .anking com%any,G

44E F052 H"ere an a%%lication un&er 41E FSec,=91 o' t"e !om%anie$ Act+ 191* 01
o' 191*2G+ i$ ma&e in re$%ect o' a .anking com%any+ t"e 4*E FCig" !ourtG may
&irect t"e Re$er-e Bank to make an in/uiry in relation to t"e a(air$ o' t"e
.anking com%any an& t"e con&uct o' it$ &irector$ an& #"en $uc" a &irection i$
gi-en+ t"e Re$er-e Bank $"all make $uc" in/uiry an& $u.mit it$ re%ort to t"e 46E
FCig" !ourt,G

47E F41, 4o#er o' Re$er-e Bank to a%%ly to !entral Go-ernment 'or $u$%en$ion o'
.u$ine$$ .y a .anking com%any to %re%are $c"eme o' recon$titution or
amalgamation , ? 012 Not#it"$tan&ing anyt"ing containe& in t"e 'oregoing
%ro-i$ion$ o' t"i$ 4art or in anot"er la# or 49E Fany agreement or ot"er
in$trumentG+ 'or t"e time .eing in 'orce+ #"ere it a%%ear$ to t"e Re$er-e Bank
t"at t"ere i$ goo& rea$on to &o $o+ t"e Re$er-e Bank may a%%ly to t"e !entral
Go-ernment 'or an or&er o' moratorium in re$%ect o' 1:E Fa .anking com%anyG,

052 T"e !entral Go-ernment+ a'ter con$i&ering t"e a%%lication ma&e .y t"e
Re$er-e Bank un&er $u.?$ection 012+ may make an or&er o' moratorium $taying
t"e commencement or continuance o' all action$ an& %rocee&ing$ again$t t"e
com%any 'or a 98e& %erio& o' time on $uc" term$ an& con&ition$ a$ it t"ink$ 9t
an& %ro%er an& may 'rom time to time e8ten& t"e %erio&+ $o "o#e-er t"at t"e
total %erio& o' moratorium $"all not e8cee& $i8 mont"$,

0=2 E8ce%t a$ ot"er#i$e %ro-i&e& .y any &irection gi-en .y t"e !entral
Go-ernment in t"e or&er ma&e .y it un&er $u.?$ection 052 or at any time
t"erea'ter+ t"e .anking com%any $"all not &uring t"e %erio& o' moratorium make
any %ayment to any &e%o$itor$ or &i$c"arge any lia.ilitie$ or o.ligation to any
ot"er cre&itor$ J

11E F042 3uring t"e %erio& o' moratorium+ i' t"e Re$er-e Bank i$ $ati$9e& t"at Q

0a2 in t"e %u.lic intere$tI or
0.2 in t"e intere$t o' t"e &e%o$itor$I or
0c2 in or&er to $ecure t"e %ro%er management o' t"e .anking com%anyI or
0&2 in t"e intere$t o' t"e .anking $y$tem o' t"e country a$ a #"ole,+ it i$
nece$$ary $o to &o+ t"e Re$er-e Bank may %re%are a $c"eme Q
0i2 'or t"e recon$truction o' t"e .anking com%any+ or
0ii2 'or t"e amalgamation o' t"e .anking com%any #it" ot"er .anking in$titution
in t"i$ $ection re'erre& to a$ Nt"e tran$'eree .ankO,G

012 T"e $c"eme a'ore$ai& may contain %ro-i$ion$ 'or all or any o' t"e 'ollo#ing
matter$+ namely J

0a2 t"e con$titution+ name an& regi$tere& oLce+ t"e ca%ital+ a$$et$+ %o#er$+
rig"t$+ intere$t+ aut"oritie$ an& %ri-ilege$+ t"e lia.ilitie$+ &utie$ an& o.ligation$+
o' t"e .anking com%any on it$ recon$truction or+ a$ t"e ca$e may .e+ o' t"e
tran$'eree .ankI
0.2 in t"e ca$e o' amalgamation o' t"e .anking com%any+ t"e tran$'er to t"e
tran$'eree .ank o' t"e .u$ine$$+ %ro%ertie$+ a$$e$ an& lia.ilitie$ o' t"e .anking+
com%any on $uc" term$ an& con&ition$ a$ may .e $%eci9e& in t"e $c"emeI
0c2 any c"ange in t"e Boar& o' 3irector$+ or t"e a%%ointment o' a ne# Boar& o'
3irector$+ o' t"e .anking com%any on it$ recon$truction or+ a$ t"e ca$e may .e+
o' t"e tran$'eree .ank an& t"e aut"ority .y #"om+ t"e manner in #"ic"+ an& t"e
ot"er term$ an& con&ition$ on #"ic"+ $uc" c"ange or a%%ointment $"all .e ma&e
an& in t"e ca$e o' a%%ointment o' a ne# Boar& o' 3irector$ or o' any &irector+ t"e
%erio& 'or #"ic" $uc" a%%ointment $"all .e ma&eI
0&2 t"e alteration o' t"e memoran&um an& article$ o' a$$ociation o' t"e .anking
com%any on it$ recon$truction or a$ t"e ca$e may .e+ o' t"e tran$'eree .ank 'or
t"e %ur%o$e o' altering t"e ca%ital t"ereo' or 'or $uc" ot"er %ur%o$e$ a$ may .e
nece$$ary to gi-e e(ect to t"e recon$truction or amalgamationI
0e2 $u.Pect to t"e %ro-i$ion$ o' t"e $c"eme+ t"e continuation .y or again$t t"e
.anking com%any on it$ recon$truction or+ a$ t"e ca$e may .e+ t"e tran$'eree
.ank+ o' any action on %rocee&ing$ %en&ing again$t t"e .anking com%any
imme&iately .e'ore t"e &ate o' t"e or&er o' moratoriumI
0'2 t"e re&uction o' intere$t or rig"t$ #"ic" t"e mem.er$+ &e%o$itor$ an& ot"er
cre&itor$ "a-e in or again$t t"e .anking com%any .e'ore it$ recon$truction or
amalgamation to $uc" e8tent a$ t"e Re$er-e Bank con$i&er$ nece$$ary in t"e
%u.lic intere$t or in t"e intere$t$ o' t"e mem.er$+ &e%o$itor$ an& ot"er cre&itor$
or 'or t"e maintenance o' t"e .u$ine$$ o' t"e .anking com%anyI
0g2 t"e %ayment in ca$" or ot"er#i$e to &e%o$itor$ an& ot"er cre&itor$ in 'ull
$ati$'action o' t"eir claim Q
0i2 in re$%ect o' t"eir intere$t or rig"t$ in or again$t t"e .anking com%any .e'ore
it$ recon$truction or amalgamationI or
0ii2 #"ere t"eir intere$t or rig"t$ a'ore$ai& in or again$t t"e .anking com%any "a$
or "a-e .een re&uce& un&er !l,0'2+ in re$%ect o' $uc" intere$t or rig"t$ a$ $o
re&uce&I

0"2 t"e allotment to t"e mem.er$ o' t"e .anking com%any 'or $"are$ "el& .y
t"em t"erein .e'ore it$ recon$truction or amalgamation #"et"er t"eir intere$t in
$uc" $"are$ "a$ .een re&uce& un&er !l,0'2 or not+ o' $"are$ in t"e .anking
com%any on it$ recon$truction or+ a$ t"e ca$e may .e+ in t"e tran$'eree .ank an&
#"ere any mem.er$ claim %ayment in ca$" an& not allotment o' $"are$+ or
#"ere it i$ not %o$$i.le to allot $"are$ to any mem.er$+ t"e %ayment in ca$" o'
t"o$e mem.er$ in 'ull $ati$'action o' t"eir claim Q
0i2 in re$%ect o' t"eir intere$t in $"are$ in t"e .anking com%any .e'ore it$
recon$truction or amalgamationI or
0ii2 #"ere $uc" intere$t "a$ .een re&uce& un&er !l,0'2+ in re$%ect$ o' t"eir intere$t
in $"are$ or amalgamationI or
0i2 t"e continuance o' t"e $er-ice o' all t"e em%loyee$ o' t"e .anking com%any
Fe8ce%ting $uc" o' t"em a$ not .eing #orkmen #it"in t"e meaning o' t"e
In&u$trial 3i$%ute$+ Act+ 1946 014 o' 19462+ are $%eci9cally mentione& in t"e
$c"emeG in t"e .anking com%any it$el' on it$ recon$truction or+ a$ t"e ca$e may
.e+ in t"e tran$'eree .ank at t"e $ame remuneration an& on t"e $ame term$ an&
con&ition$ o' $er-ice+ #"ic" t"ey #ere getting or+ a$ ca$e may .e+ .y #"ic" t"ey
#ere .eing go-erne&+ imme&iately .e'ore t"e &ate o' t"e or&er o' moratorium J

4ro-i&e& t"at t"e $c"eme $"all contain a %ro-i$ion t"at Q

0i2 t"e .anking com%any $"all %ay or grant not later t"an t"e e8%iry o' t"e %erio&
o' t"ree year$ 'rom t"e &ate on #"ic" t"e $c"eme i$ $anctione& .y t"e !entral
Go-ernment+ to t"e $ai& em%loyee$ t"e $ame remuneration an& t"e $ame term$
an& con&ition$ o' $er-ice 15E Fa$ are+ at t"e time o' $uc" %ayment or grant+
a%%lica.leG to t"e ot"er em%loyee$ o' corre$%on&ing rank or $tatu$ o' a
com%ara.le .anking com%any to .e &etermine& 'or t"i$ %ur%o$e .y t"e Re$er-e
Bank 0#"o$e &etermination in t"i$ re$%ect $"all .e 9nal2I

0ii2 t"e tran$'eree .ank $"all %ay or grant not later t"an t"e e8%iry o' t"e
a'ore$ai& %erio& o' t"ree year$+ to t"e $ai& em%loyee$ t"e $ame remuneration
an& t"e $ame term$ an& con&ition$ o' $er-ice 15Fa$ are+ at t"e time o' $uc"
%ayment or grant+ a%%lica.leG to t"e ot"er em%loyee$ o' corre$%on&ing rank or
$tatu$ o' t"e tran$'eree .ank $u.Pect to t"e /uali9cation$ an& e8%erience o' t"e
$ai& em%loyee$ .eing t"e $ame a$ or e/ui-alent to t"o$e o' $uc" ot"er
em%loyee$ o' t"e tran$'eree .ankJ

4ro-i&e& 'urt"er t"at i' in any ca$e un&er !l,0ii2 o' t"e 9r$t %ro-i$o any &ou.t or
&i(erence ari$e$ a$ to #"et"er t"e /uali9cation an& e8%erience o' any o' t"e
$ai& em%loyee$ are t"e $ame a$ or e/ui-alent to t"e /uali9cation$ an&
e8%erience o' t"e ot"er em%loyee$ o' corre$%on&ing rank or $tatu$ o' t"e
tran$'eree .ank+ 11E Ft"e &ou.t or &i(erence $"all .e re'erre&+ .e'ore t"e e8%iry
o' a %erio& o' t"ree year$ 'rom t"e &ate o' t"e %ayment or grant mentione& in
t"at clau$eG+ to t"e Re$er-e Bank #"o$e &eci$ion t"ereon $"all .e 9nalI

0P2 not#it"$tan&ing anyt"ing containe& in !l,0i2 #"ere any o' t"e em%loyee$ o'
t"e .anking com%any not .eing #orkmen #it"in t"e meaning o' t"e In&u$trial
3i$%ute$ Act+ 1946 014 o' 19462+ are $%eci9cally mentione& in t"e $c"eme un&er
!l, 0i2 or #"ere any em%loyee$ o' t"e .anking com%any "a-e .y notice in #riting
gi-en to t"e .anking com%any or+ a$ t"e ca$e may .e+ t"e tran$'eree .ank at
any time .e'ore t"e e8%iry o' one mont" ne8t 'ollo#ing t"e &ate on #"ic" t"e
$c"eme i$ $anctione& .y t"e !entral Go-ernment+ intimate& t"eir intention o' not
.ecoming em%loyee$ o' t"e .anking com%any o' it$ recon$truction or+ a$ t"e
ca$e may .e+ o' t"e tran$'eree .ank+ t"e %ayment to t"e $uc" em%loyee$ o'
com%en$ation+ i' any+ to #"ic" t"ey are entitle& un&er t"e In&u$trial 3i$%ute$
Act+ 1946 014 o' 19462+ an& $uc" %en$ion+ gratuity+ %ro-i&ent 'un& an& ot"er
retirement .ene9t$ or&inarily a&mi$$i.le to t"em un&er t"e rule$ or
aut"oriMation$ o' t"e .anking com%any imme&iately .e'ore t"e &ate o' t"e or&er
o' moratoriumI

0k2 any ot"er term$ an& con&ition$ 'or t"e recon$truction or amalgamation o' t"e
.anking com%anyI

0l2 $uc" inci&ental+ con$e/uential an& $u%%lemental matter$ a$ are nece$$ary to
$ecure t"at t"e recon$truction or amalgamation $"all .e 'ully an& e(ecti-ely
carrie& out,

0*2 0a2 A co%y o' t"e $c"eme %re%are& .y t"e Re$er-e Bank $"all .e $ent in &ra't
to t"e .anking com%any an& al$o to t"e tran$'eree .ank an& any ot"er .anking
com%any concerne& in t"e amalgamation+ 'or $ugge$tion$ an& o.Pection$+ i' any+
#it"in $uc" %erio& a$ t"e Re$er-e Bank may $%eci'y 'or t"i$ %ur%o$e,

0.2 T"e Re$er-e Bank may make $uc" mo&i9cation$+ i' any+ in t"e &ra't $c"eme+
a$ it may con$i&er nece$$ary in t"e lig"t o' t"e $ugge$tion$ an& o.Pection$
recei-e& 'rom t"e .anking com%any an& al$o 'rom t"e tran$'eree .ank+ an& any
ot"er .anking com%any concerne& in t"e amalgamation an& 'rom any mem.er$+
&e%o$itor$ or ot"er cre&itor$ o' $uc" o' t"o$e com%anie$ an& t"e tran$'eree
.ank,

062 T"e $c"eme $"all t"erea'ter .e %lace& .e'ore t"e !entral Go-ernment 'or it$
$anction an& t"e !entral Go-ernment may $anction t"e $c"eme #it"out any
mo&i9cation$ or #it" $uc" mo&i9cation a$ it may con$i&er nece$$aryI an& t"e
$c"eme a$ $anctione& .y t"e !entral Go-ernment $"all come into 'orce on $uc"
&ate a$ t"e !entral Go-ernment may $%eci'y in t"i$ .e"al'J

4ro-i&e& t"at &i(erent &ate$ may .e $%eci9e& 'or &i(erent %ro-i$ion$ o' t"e
$c"eme,

15E F06?A2 T"e $anction accor&e& .y t"e !entral Go-ernment un&er $u.?$ection
062+ #"et"er .e'ore or a'ter t"e commencement o' Sec,51 o' t"e Banking La#$
0)i$cellaneou$ 4ro-i$ion$2 Act+ 19*= 01: o' 19*=2+ $"all .e conclu$i-e e-i&ence
t"at all t"e re/uirement$ o' t"i$ $ection relating to recon$truction+ or+ a$ t"e ca$e
may .e+ amalgamation "a-e .een com%lie& #it" an& a co%y o' t"e $anctione&
$c"eme certi9e& in #riting .y an oLcer o' t"e !entral Go-ernment to .e a true
co%y t"ereo'+ $"all+ in all legal %rocee&ing$ 0#"et"er in a%%eal or ot"er#i$e an&
#"et"er in$titute& .e'ore or a'ter t"e commencement o' t"e $ai& Sec,512+ .e
a&mitte& a$ e-i&ence to t"e $ame e8tent a$ t"e original $c"eme,G

072 n an& 'rom t"e &ate o' t"e coming into o%eration o' t"e $c"eme or any
%ro-i$ion t"ereo'+ t"e $c"eme or $uc" %ro-i$ion $"all .e .in&ing on t"e .anking
com%any or+ a$ t"e ca$e may .e+ on t"e tran$'eree .ank an& any ot"er .anking
com%any concerne& in t"e amalgamation an& al$o on all t"e mem.er$+
&e%o$itor$ an& ot"er cre&itor$ an& em%loyee$ o' eac" o' t"o$e com%anie$ an& o'
t"e tran$'eree .ank+ an& on any ot"er %er$on "a-ing any rig"t or lia.ility in
relation to any o' t"o$e com%anie$ or t"e tran$'eree .ankI 1=E Finclu&ing t"e
tru$tee$ or ot"er %er$on$+ managing+ or connecte& in any ot"er manner #it"+
any %ro-i&ent 'un& or ot"er 'un& maintaine& .y any o' t"o$e com%anie$ or t"e
tran$'eree .ank,G

092 14E Fn an& 'rom t"e &ate o' t"e coming into o%eration o'+ or a$ t"e ca$e
may .e+ t"e &ate $%eci9e& in t"i$ .e"al' in t"e $c"eme+G t"e %ro%ertie$ an&
a$$et$ o' t"e .anking com%any $"all+ .y -irtue o' an& to t"e e8tent %ro-i&e& in
t"e $c"eme+ $tan& tran$'erre& to+ an& -e$t in an& t"e lia.ilitie$ o' t"e .anking
com%any $"all+ .y -irtue o' an& to t"e e8tent %ro-i&e& in t"e $c"eme+ $tan&
tran$'erre& to+ .ecome t"e lia.ilitie$ o' t"e tran$'eree .ank,

01:2 I' any &iLculty ari$e$ in gi-ing e(ect to t"e %ro-i$ion$ o' t"e $c"eme+ t"e
!entral Go-ernment may .y or&er &o anyt"ing not incon$i$tent #it" $uc"
%ro-i$ion$ #"ic" a%%ear$ to it nece$$ary or e8%e&ient 'or t"e %ur%o$e o'
remo-ing t"e &iLculty,

0112 !o%ie$ o' t"e $c"eme or o' any or&er ma&e un&er $u.?$ection 01:2 $"all .e
lai& .e'ore .ot" Cou$e o' 4arliament+ or+ a$ $oon a$ may .e+ a'ter t"e $c"eme
"a$ .een $anctione& .y t"e !entral Go-ernment+ or+ a$ t"e ca$e may .e+ t"e
or&er "a$ .een ma&e,

0152 H"ere t"e $c"eme i$ a $c"eme 'or amalgamation o' t"e .anking com%any+
any .u$ine$$ ac/uire& .y t"e tran$'eree .ank un&er t"e $c"eme or un&er any
%ro-i$ion t"ereo' $"all+ a'ter t"e coming into o%eration o' t"e $c"eme or $uc"
%ro-i$ion+ .e carrie& on .y t"e tran$'eree .ank in accor&ance #it" t"e la#
go-erning t"e tran$'eree .ank+ $u.Pect to $uc" mo&i9cation$ in t"at la# or $uc"
e8em%tion$ o' t"e tran$'eree .ank 'rom t"e o%eration o' any %ro-i$ion$ t"ereo'
a$ t"e !entral Go-ernment on t"e recommen&ation o' t"e Re$er-e Bank may+ .y
noti9cation in t"e oLcial GaMette+ make 'or t"e %ur%o$e o' gi-ing 'ull e(ect to
t"e $c"emeJ

4ro-i&e& t"at no $uc" mo&i9cation or e8em%tion $"all .e ma&e $o a$ to "a-e
e(ect 'or a %erio& o' more t"an $e-en year$ 'rom t"e &ate o' t"e ac/ui$ition o'
$uc" .u$ine$$,

01=2 Not"ing in t"i$ $ection $"all .e &eeme& to %re-ent t"e amalgamation #it" a
.anking in$titution .y a $ingle $c"eme o' $e-eral .anking com%anie$ in re$%ect
o' eac" o' #"ic" an or&er o' moratorium "a$ .een ma&e un&er t"i$ $ection,

0142 T"e %ro-i$ion$ o' t"i$ $ection an& o' any $c"eme ma&e un&er it $"all "a-e
e(ect not#it"$tan&ing anyt"ing to t"e contrary containe& in any ot"er %ro-i$ion$
o' t"i$ Act or in any ot"er la# or any agreement+ a#ar& or ot"er in$trument 'or
t"e time .eing in 'orce,

0112 In t"i$ $ection+ N.anking in$titutionO mean$ any .anking com%any an&
inclu&e$ t"e State Bank o' In&ia or 11E Fa $u.$i&iary .ank or a corre$%on&ing
ne# .ank,G

1*E FE8%lanation,? Re'erence in t"i$ $ection to t"e term$ an& con&ition$ o'
$er-ice a$ a%%lica.le to an em%loyee $"all not .e con$true& a$ e8ten&ing to t"e
rank an& $tatu$ o' $uc" em%loyee,G

!))ENTS

Amalgamation o' .ank$ an& 9tment o' t"e %er$onnel,? In t"e in$tant ca$e+ t"ere
i$ not"ing in t"e conte8t or t"e circum$tance$ o' t"e $tatutory concerne&
%ro-i$ion to limit t"e content o' t"e term Ne8%erienceO to mere /uantitati-e
a$$e$$ment an& not to a$$e$$ment o' t"e $ame on a /ualitati-e .a$i$, H"ile it i$
true t"at 'or t"e %ur%o$e o' recruitment to a %ro'e$$ion or to a tec"nical in$titute
or to an in&u$trial concern+ e8%erience may generally connote lengt" or &uration
o' $er-ice in a %ro'e$$ion or in$titution+ !ourt$ cannot altoget"er rule out t"e
ric"ne$$ an& t"e -ariegate& nature o' t"e e8%erience in t"e matter o' $er-ice in a
.ank, T"e N&ou.t or &i(erenceO may %ertain to /uali9cation$ a$ #ell a$ to
e8%erience, A$$e$$ment in&i-i&ually #it" re$%ect to t"e 'act$ an& circum$tance$
o' eac" ca$e i$ im%ractica.le+ i' not im%o$$i.le+ #"ile &ealing #it" a num.er o'
in$titution$ an& t"eir multi?tiere& $ta(I an&+ "a-ing regar& to t"e e8%ert .o&y
0Re$er-e Bank2 to #"o$e &eci$ion t"e collecti-e a$$e$$ment i$ le't+ an& it$
$%ecial $tatu$ an& %o$ition in t"e .anking #orl&+ one cannot 9n& groun& to ca-il
at t"e con'erment o' a %o#er o' grou% a$$e$$ment, It i$ not correct to $ay t"at
any &i$%arity in regar& to t"e nature o' #ork an& t"e /uality an& range o' $er-ice
an& eLciency in t"e -ariou$ .ank$ coul& #ell .e le-elle& u% .y e8%erience in t"e
tran$'eree .ank 'or any $"ort %erio&+ an& t"at t"e o.Pect o' t"e Nt"e cu$"ioning
%erio&O o' t"ree year$ %ro-i&e& un&er Sec,41 012 0i2 %ro-i$o to !l,0ii2 #a$ to le-el
u% t"i$ &i$%arity, T"e outer?mo$t limit o' t"ree year$ in&icate& in t"e a.o-e
clau$e to e(ect t"e 9tment &oe$ not nece$$arily %re-ent t"e tran$'eree .ank
'rom e(ecting it at any earlier %oint o' time+ an& t"e !ourt$ are una.le to rea&
t"e cu$"ioning %erio& %ro-i&e& in t"e rele-ant %ro-i$ion a$ meant to co-er u%
t"e &e9ciencie$ o' t"e tran$'eror .ank an& le-el u% t"e &i$%arity .et#een it an&
t"e tran$'eree .ank,16E

T"e rig"t o' t"e em%loyee$ o' t"e .anking com%any in t"e tran$'eree .ank on
continuance o' t"e $er-ice .y -irtue o' $uc" a %ro-i$ion in t"e $c"eme a$
%ro-i&e& in !l,0i2 o' $u.?$ection 012 i$ merely t"at #"ic" i$ containe& in t"e
%ro-i$o t"ereun&er+ t"at i$+ t"at t"e tran$'eree .ank #oul& treat t"em at %ar #it"
it$ o#n em%loyee$ o' corre$%on&ing rank or $tatu$ $u.Pect to t"e /uali9cation$
an& e8%erience irre$%ecti-e o' t"e earlier term$ an& con&ition$ o' $er-ice, In
ot"er #or&$+ i' t"e $c"eme %ro-i&e$ 'or continuance o' t"e $er-ice$ o' t"e
em%loyee$ in t"e tran$'eree .ank+ t"en .eyon& a %erio& o' t"ree year$ 'rom t"e
&ate on #"ic" t"e $c"eme i$ $anctione& .y t"e !entral Go-ernment+ t"e
tran$'eree .ank cannot &i$criminate .et#een $uc" em%loyee$ an& it$ ot"er
em%loyee$ o' corre$%on&ing rank or $tatu$, T"e only rig"t o' $uc" an em%loyee
#"o$e $er-ice i$ $o continue&+ i$+ t"ere'ore+ to claim %arity #it" t"e em%loyee$ o'
t"e tran$'eree .ank it$el' o' a corre$%on&ing rank or $tatu$ $u.Pect to e/ui-alent
/uali9cation$ an& e8%erience an& no more, T"e rig"t o' $uc" an em%loyee i$
%ro-i&e& in t"e %ro-i$o to !l,0i2 an& not in t"e earlier enacting %art o' !l,0i2 o'
$u.?$ection 012 a$ claime& .y re$%on&ent No,1 an& u%"el& .y t"e Cig" !ourt,
!lau$e$ 1: an& 15 o' t"e $c"eme merely incor%orate t"e matter $%eci9e& in !l,0i2
an& t"e %ro-i$o t"ereun&er $o rea& an& un&er$too&+ t"ere i$ no am.iguity or
con>ict in t"o$e clau$e$ o' t"e Sc"eme eit"er inter $e or #it" !l,0i2 an& t"e
%ro-i$o t"ereun&er in $u.?$ection 012 o' Sec,41 17E

T"e man&ate o' Sec,41012 0i2 i$ t"at t"e Sc"eme #"ic" i$ 'ormulate& may contain
%ro-i$ion$ #it" regar& to continuation o' $er-ice o' t"e em%loyee$ o' t"e .anking
com%anie$ an& $uc" $c"eme $"oul& %rotect t"e remuneration an& ot"er term$
an& con&ition$ o' t"e em%loyee, T"e $econ& %ro-i$o to Sec,41012 0i2 o' t"e Act a$
#ell a$ !l,15 o' t"e $c"eme "a-e to .e rea& "armoniou$ly #it" Sec,41 012 0i2 an&
!l,1: o' t"e Sc"eme,19E

Arom enclo$ure TAU it i$ a.$olutely clear t"at t"e Re$er-e Bank un&er Sec,41 o'
t"e Act %re%are& a &ra't $c"eme o' amalgamation an& in term$ o' t"e $ai&
$c"eme t"e em%loyee$ o' t"e Unite& In&u$trial Bank Lt&,+ !alcutta+ $"all continue
to .e in $er-ice an& .e &eeme& to "a-e .een a%%ointe& .y Alla"a.a& Bank on
t"e $ame remuneration an& con&ition$ o' $er-ice a$ #ere a%%lica.le to t"em
imme&iately .e'ore t"e amalgamation, T"e Enclo$ure TBU #a$ t"e %ro'orma o' a
&ra't o' acce%tance or re'u$al .y an em%loyee, T"e Alla"a.a& Bank on t"e .a$i$
o' t"e &irection o' t"e Re$er-e Bank o' In&iaU$ letter &ate& 19t" Suly+ 1979 #rote
to t"e %etitioner on 54t" Suly+ 1979 t"roug" t"e Unite& In&u$trial Bank Lt&,+
reiterating t"at in term$ o' t"e %ro%o$e& $c"eme+ t"e em%loyee$ $"all continue
to .e in $er-ice an& .e &eeme& to "a-e .een a%%ointe& .y Alla"a.a& Bank on
t"e $ame remuneration an& con&ition$ o' $er-ice a$ #ere a%%lica.le to t"em
imme&iately .e'ore t"e clo$e o' .u$ine$$ on 1:t" Sune+ 1979, In 'act+ Alla"a.a&
Bank "a& to acce%t t"e &irection gi-en .y t"e Re$er-e Bank o' In&ia an& at t"i$
$tage Alla"a.a& Bank cannot a-oi& t"e &irecti-e a$ containe& in !l, 01:2 o' t"e
Sc"eme o' amalgamation, T"e letter o' t"e Unite& In&u$trial Bank Lt&, o' 59t"
cto.er+ 1979 a&&re$$e& to t"e %etitioner an& &uly recei-e& .y "im on t"e &ate
o' amalgamation on =1$t cto.er+ 1979 i$ o' no legal -alue in t"e lig"t o' t"e
a'ore$ai& &ocument$, nce t"e &irection o' t"e Re$er-e Bank #a$ gi-en to t"e
Alla"a.a& Bank, T"e Alla"a.a& Bank "a$ no rig"t or Puri$&iction to >out t"at
&irection+ #"et"er it i$ #ritten on t"e letter?"ea& o' t"e Unite& In&u$trial Bank
Lt&, or on t"e letter "ea& o' Alla"a.a& Bank,*:E

Amalgamation o' Bank$? Rig"t o' Em%loyee$,? T"e u$e o' t"e e8%re$$ion T%ayU or
TgrantU $eem$ to im%ly t"at t"e tran$'eree .ank #a$ re/uire& to gi-e $omet"ing
more t"an #"at t"e tran$'erre& em%loyee$ #ere originally getting 'rom t"e
tran$'eror .ank, I' t"e intention o' t"e Legi$lature #a$ t"at #it" t"e %romulgation
o' t"e $c"eme t"ere $"oul& .e no &i(erence in t"e con&ition$ o' %ay+
remuneration+ etc, .et#een t"e tran$'erre& em%loyee$ an& t"at o' t"e e8i$ting
em%loyee$ o' t"e tran$'eree .ank+ t"en t"e %rotection containe& in Sec,41 012 0i2
#oul& not "a-e .een t"ere an&+ $econ&ly t"e $econ& %ro-i$o #oul& "a-e clearly
$ti%ulate& t"at on a $c"eme .eing %romulgate&+ not#it"$tan&ing t"e %ro-i$on$ o'
Sec,41 012 0i2+ all t"e em%loyee$ o' t"e tran$'eree .ank inclu&ing em%loyee$ like
t"e %etitioner+ #ill get $ame remuneration an& #ill .e entitle& to t"e $ame term$
an& con&ition$ o' $er-ice, No $uc" %ro-i$ion "a$ .een incor%orate& in t"e Act or
in t"e $c"eme, !lau$e15 o' t"e $c"eme or t"e $econ& %ro-i$o o' Sec,41012 0i2
cannot .e rea& a$ to take a#ay t"e -e$te& rig"t$ o' t"e tran$'erre& em%loyee$
#"ic" rig"t$ #ere t"at t"eir remuneration a$ #ell a$ t"e term$ an& con&ition$ o'
$er-ice #ere not to .e a&-er$ely a(ecte&,*1E

A%%lica.ility o' amalgamation $c"eme -i$?a?-i$ Rent !ontrol Act Q 3ecree .in&ing
on tenant,? In S"e%"ar& -, Union o' In&ia*5E it #a$ o.$er-e& .y t"e Su%reme
!ourt t"at t"e 'raming o' t"e $c"eme un&er Sec,41 o' t"e Banking Regulation
Act+1949 &oe$ not in-ol-e a legi$lati-e %roce$$, It+ t"ere'ore+ 'ollo#$ t"at t"e
$c"eme t"ereun&er "a$ no $tatutory 'orce, Cence+ t"e term$ an& con&ition$ in
t"e $c"eme $"all .e $u.Pect to t"e $tatutory %ro-i$ion$ o' t"e Rent !ontrol Act
an& no $uc" term$ an& con&ition$ in t"e $c"eme can o-erri&e t"e %ro-i$ion$ o'
t"e Act,

In -ie# o' #"at "a$ .een lai& &o#n .y t"e Su%reme !ourt+ it i$ not o%en to t"e
%etitioner$ to c"allenge t"e rig"t o' t"e 9r$t re$%on&ent a$ tran$'eree o' t"e
original lan&lor& to e8ecute t"e &ecree #"ic" "a$ .ecome 9nal an& at t"i$ $tage
no !ourt "a$ t"e Puri$&iction to in-e$tigate a$ to #"et"er or not re$%on&ent No,1
al$o "a$ t"e .ona 9&e nee& o' t"e %remi$e$ 'or it$ o#n occu%ation,*=E

Arrear$ o' Salary i$ a lia.ility to .e &i$c"arge& .y t"e tran$'eror Bank,? It i$
conten&e& .y t"e learne& coun$el 'or t"e re$%on&ent t"at un&er t"e $c"eme+ t"e
a$$et$ an& lia.ilitie$ are to .e taken o-er .y t"e a%%ellant Bank an&+ t"ere'ore
t"e em%loyment o' t"e a%%ellant i$ one o' t"e lia.ilitie$, Su&icial re-ie# .eing one
o' t"e .a$ic 'eature$ o' t"e !on$titution+ t"e a%%ellant cannot .e %re-ente& to
a-ail o' t"e Pu&icial re-ie# again$t t"e a%%ellant Bank, A$ 'ar a$ $er-ice
con&ition$ are concerne&+ in -ie# o' t"e $%eci9c %ro-i$ion in t"e $c"eme
containe& in %ara$,= an& 1: o' t"e noti9cation arrear$ o' $alary i$ a lia.ility to .e
&i$c"arge& .y t"e tran$'eror Bank an& not o' t"e a%%ellant Bank,*4E

Age o' retirement accor&ing to rule$ o' tran$'eree .ank,? In t"e ca$e o' S,4,
3u.ey -, ),4,S,R,T,!, !or%n,*1E t"e em%loyee$ o' a com%any #ere to
$u%erannuate at t"e age o' *: year$, T"i$ com%any #a$ taken o-er .y t"e State
Go-ernment, A$$urance #a$ gi-en at t"e term$ an& con&ition$ o' t"e em%loyee$
o' t"e er$t#"ile com%any #oul& not .e a&-er$ely a(ecte&, T"e State Ser-ice
Rule$+ "o#e-er+ 98e& t"e age o' $u%erannuation at 17 year$, T"e Su%reme !ourt
"el& t"at t"e tran$'erre& em%loyee$ #"o #ere to retire at t"e age o' *: year$
#oul& not .e lia.le to retire at t"e age o' 17 year$ an& t"e State Ser-ice Rule$
#ere not a%%lica.le,**E

Age o' $u%erannuation,? T"e em%loyee$ o' t"e Unite& In&u$trial Bank #"o &i& not
c"oo$e to e8erci$e t"e o%tion to &i$continue $er-ice an& o.tain %ayment o'
com%en$ation un&er t"e In&u$trial 3i$%ute$ Act on amalgamation o' t"e Unite&
In&u$trial Bank #it" t"e Alla"a.a& Bank cannot no# com%lain t"at t"e tran$'eree
.ank cannot alter t"eir age o' retirement, It #a$ "el& t"at t"e contention o' t"e
re$%on&ent No,4 t"at t"e age o' $u%erannuation a$ #a$ a%%lica.le to "im #"ile
in $er-ice in t"e Unite& In&u$trial Bank cannot .e altere& .y t"e Alla"a.a& Bank
i$ not $u$taina.le,*6E

Rig"t o' .ank em%loyee$ tran$'erre& to anot"er .ank,? T"e rig"t o' t"e
em%loyee$ o' t"e .anking com%any in t"e tran$'eree .ank on continuance o' t"e
$er-ice .y -irtue o' $uc" a %ro-i$ion in t"e $c"eme a$ %ro-i&e& in !l,0i2 o' $u.?
$ection 012 i$ merely t"at #"ic" i$ containe& in t"e %ro-i$o t"ereun&er+ t"at i$+
t"at t"e tran$'eree .ank #oul& treat t"em at %ar #it" it$ o#n em%loyee$ o'
corre$%on&ing rank or $tatu$ $u.Pect to t"e /uali9cation$ an& e8%erience
irre$%ecti-e o' t"e earlier term$ an& con&ition$ o' $er-ice, In ot"er #or&$+ i' t"e
$c"eme %ro-i&e$ 'or continuance o' t"e $er-ice$ o' t"e em%loyee$ in t"e
tran$'eree .ank+ t"en .eyon& a %erio& o' t"ree year$ 'rom t"e &ate on #"ic" t"e
$c"eme i$ $anctione& .y t"e !entral Go-ernment+ t"e tran$'eree .ank cannot
&i$criminate .et#een $uc" em%loyee$ an& it$ ot"er em%loyee$ o' corre$%on&ing
rank or $tatu$, T"e only rig"t o' $uc" an em%loyee #"o$e $er-ice i$ $o continue&
i$+ t"ere'ore+ to claim %arity #it" t"e em%loyee$ o' t"e tran$'eree .ank it$el' o'
corre$%on&ing rank or $tatu$ $u.Pect to e/ui-alent /uali9cation$ an& e8%erience
an& no more, T"e rig"t o' $uc" an em%loyee i$ %ro-i&e& in t"e %ro-i$o to !l, 0i2
an& not in t"e earlier enacting %art o' !l,0i2 o' $u.?$ection 012 a$ claime& .y
re$%on&ent No,1 an& u%"el& .y t"e Cig" !ourt,*7E

It #oul& not .e nece$$ary to i$$ue a 're$" c"arge?$"eet in t"e matter on t"e
groun& t"at t"e c"arge?$"eet i$$ue& .y t"e tran$'eror .ank "a$ cea$e& to e8i$t
#it" t"e merger o' t"e $ai& .ank #it" t"e tran$'eree .ank, T"i$ clearly mean$
t"at t"e re$%on&ent continue$ to .e in t"e $er-ice o' t"e tran$'eree .ank 'or all
intent$ an& %ur%o$e$ inclu&ing "i$ lia.ility+ i' any+ to 'ace t"e c"arge?$"eet
$er-e& on "im .y t"e tran$'eree .ank,*9E

A clear ca$e 'or moratorium #oul& ari$e #"en t"ere i$ an actual or likely run on
t"e .ank .y t"e &e%o$itor$ or t"e cre&itor$ o' t"e .ank, A near or imminent
%o$$i.ility o' a run on t"e .ank can ari$e #"en a .ank i$ on t"e .rink o'
in$ol-ency meaning t"ere.y t"at t"e a$$et$ at any gi-en %oint o' time 'all $"ort
o' t"e lia.ility, T"e $ituation may ari$e a$ a re$ult o' utter mi$management o' t"e
a(air$ o' t"e .ank an& in&i$criminate a&-ance$ ma&e #it" eit"er are not
imme&iately reco-era.le or irreco-era.le $uc" loan$ are $tyle& a$ $ticky loan$,
Some o' t"em may .e irreco-era.le an& $ome are reco-era.le+ .ut not
imme&iately, In t"e ca$e o' .ank$+ NmoratoriumO i$ un&i$%ute&ly a mea$ure
#"ic" "a$ to .e a&o%te& in rare ca$e$ an& a$ a tem%orary mea$ure to %re-ent
t"e &e%o$itor$ an& cre&itor$ o' t"e .ank 'rom $eeking reali$ation o' t"eir
&utie$,6:E

Retirement age o' tran$'eror .ank not a-aila.le in tran$'eree .ank,? T"e man&ate
o' Sec,41 012 0i2 i$ t"at t"e $c"eme #"ic" i$ 'ormulate& may contain %ro-i$ion$
#it" regar& to continuation o' $er-ice o' t"e em%loyee$ o' t"e .anking
com%anie$ an& $uc" a $c"eme $"oul& %rotect t"e remuneration an& ot"er term$
an& con&ition$ o' an em%loyee, T"e $econ& %ro-i$o to Sec,41 012 0i2 o' t"e Act a$
#ell a$ !l,15 o' t"e $c"eme "a-e to .e rea& "armoniou$ly #it" Sec,41 012 0i2 an&
!l,1: o' t"e $c"eme,61E

4o$t?&eci$ional "earing,? T"e learne& Su&ge "a$ "el& t"at ina$muc" a$ no "earing
#a$ gi-en to t"e %etitioner$ .e'ore t"e $c"eme #a$ %re%are&+ t"ey $"oul& .e
gi-en a "earing at lea$t a'ter t"e $c"eme #a$ %re%are&, T"e %o$t?&eci$ional
o%%ortunity a$ contem%late& .y t"e learne& Su&ge #ill .e o%%o$e& to t"e -ery
%ro-i$ion$ o' Sec,41 o' t"e Act, T"e Cig" !ourt cannot &irect t"e amen&ment o'
t"e $c"eme an& inclu&e or &elete t"e name o' t"e %er$on$ in t"e $c"e&ule an& in
t"e $c"eme+ #"ere t"e $c"eme it$el' i$ la#+ a$ "el& .y t"e learne& Su&ge "im$el'+
t"e Cig" !ourt cannot &irect an amen&ment o' t"at la#, T"e $c"eme it$el' i$ not
in c"allenge an& t"e Act al$o i$ not c"allenge&, It #a$ "el& t"at t"e %etitioner$
#ere not entitle& to any "earing .e'ore t"e $c"eme #a$ 9nali$e& an& $anction
#a$ gi-en, A %o$t?&eci$ional o%%ortunity &oe$ not+ t"ere'ore+ ari$e in any ca$e,
T"ere'ore+ t"e Cig" !ourt &i& not agree #it" t"e learne& $ingle Su&ge t"at t"e
%etitioner$ are entitle& to any %o$t?&eci$ional o%%ortunity, T"e &irection $o i$$ue
cannot t"ere'ore+ .e $u$taine&,65E

)oratorium Q T"e $u.mi$$ion$ t"at t"e .anker$ $"oul& "a-e .een "ear& .e'ore
t"e moratorium #a$ i$$ue& cannot .e $u$taine& in la# a$ to gi-e any notice o'
$uc" a mea$ure #oul& .e &e'eating t"e #"ole %ur%o$e o' moratorium an& t"i$
%ea "a$ .een clearly &i$car&e& an& o-errule& in matter$ o' urgent nature,6=E

Un&er t"e $tatute+ t"e or&er o' moratorium can remain in o%eration only 'or a
limite& %erio&, T"e %roce$$ a$ contem%late& un&er Sec,414 o' t"e Act "a$ to .e
com%lete& #it"in t"e %erio& o' $i8 mont"$,64E

Aoot note

1 In$, .y At 15 o' 191=+ Sec,= 0#,e,', =:t" 3ecem.er+ 191=2,
5 Section =*?A re?num.ere& a$ =*?B .y Act == o' 1919+ Sec,54 0#,e,', 1$t
cto.er+ 19192,
= Su.$, .y Act 15 o' 191=+ Sec,4+ 'or N!ourtO,
4 I.i&,
1 In$, .y Act 15 o' 191=+ Sec,1 0#,e,', =:t" 3ecem.er+ 191=2,
* In$, .y Act == o' 1919+ Sec,51 0#,e,', 1$t cto.er+ 19192,
6 Riren&ra Gautam -, State o' C,4,+ 1995 052 Bank !,L,R, *1= at %%, *5* 0C,4,2,
7 Su.$, .y Act == o' 1919+ Sec,5*+ 'or Sec, =7 0#,e,', 1$t cto.er+ 19192,
9 R,B,I,-, S,4,L, Bank o' !re&it ; !ommerce International 0-er$ea$2 Lt&,+ A,I,R,
1994 0Bom,2 166 at %, 171I RaM Aor#ar&ing Lt&, -, State Bank o' In&ia+ 019112 1*
!,I,A, 5=7 0Bom,2 J 0199*2 71 !om%, !a$e$ *:= 0Bom,2,
1: R,B,I, -, Bank o' !re&it ; !ommerce International Lt&,+ 1994 012 Bank L,S, 574
at %,591 0Bom,2J A,I,R, 1994 Bom,166 at %,171,
11 In$,.y Act 15 o' 191=+ Sec,*,
15 Su.?$ection 052 an& 0=2 omitte& .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule 0#,e,',
14t" Sanuary+ 19162,
1= Section =9 "a$ $ucce$$i-ely .een amen&e& .y Act 15 o' 191=+ Sec$,4 an& 6I
Act 5= o' 1911, Sec, 1= an& Sc", IRI Act 69 o' 191*+ Sec,4=+ Sc",III Act 91 o'
191*+ Sec,14 an& Sc"e&uleI Act == o' 1919+ Sec,56 an& Act =6 o' 19*:+ Sec, 5 to
rea& a$ a.o-e,
14 Section =9 #a$ re?num.ere& a$ $u.?$ection 012 o' t"at $ection .y Act 17 o'
19*7+ Sec,1* 0#,e,', 1$t Ae.ruary+19*92,
11 In$, .y Act 17 o' 19*7+ Sec,1* 0#it" retro$%ecti-e e(ect2,
1* In$, .y Act == o' 1919+ Sec,57 0#,e,', 1$t cto.er+ 19192,
16 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ N'or Sec,16= o' t"e In&ian
!om%anie$ Act+ 191= 01 o' 191=2O 0#,e,', 14t" Sanuary+ 19162,
17 Su.$, .y Act 15 o' 191=+ Sec,4+ 'or N!ourtO,
19 Su.$,.y Act =6 o' 19*:+ Sec,=+ 'or NSec,41O,
5: Su.$, .y I.i&,+ 'or NSec,41?AO,
51 Su.$, .y Act 1 o' 1974+ Sec,== 0#,e,',11t" Ae.ruary+ 19742,
55 Su.$, .y Act 15 o' 191=+ Sec,4+ 'or N!ourtO,
5= T"e Hor&$ Nor #it" t"e a%%ointment o' a committee o' in$%ectionO omitte& .y
Act 1 o' 1974+ Sec, == 0#,e,',11t" Ae.ruary+ 19742,
54 Su.$, .y Act 15 o' 191=+Sec,7+ 'or Sec,4=,
51 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec,191 o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2O 0#,e,', 14t" Sanuary+ 19162,
5* Su.$, .y Act =6 o' 19*:+ Sec,4+ 'or Sec,4=?A,
56 Su.$, .y Act 46 o' 19*1+ Sec,11 an& Sc",II+ 4t,II+ 'or Nt"e 'oregoing %ro-i$ion$O
0#,e,', 1$t Sanuary19*52,
57 In$, .y i.i&,
59 Su.$, .y Act == o' 1919+ Sec,=:+ 'or Sec,44 0#,e,',1$t cto.er+19192,
=: In$, .y Act 5: o' 191:+ Sec,7,
=1 Su.?Section 012 omitte& .y Act 11 o' 19*=+ Sec,19 0#,e,', 1$t Ae.ruary+ 19*42
=5 Su.$, .y Act 11 o' 19*=+ Sec,19+ 'or t"e #or&$ Nterm$ o' t"e or&er $anctioning
t"e $c"emeO 0#,e,', 1$t Ae.ruary+ 19*42,
== In$, .y i.i&, 0#,e,', 1$t Ae.ruary+ 19*42,
=4 In$, .y Act =6 o' 19*:+ Sec,1,
=1 mitte& .y Act 6 o' 19*1+ Sec,=+ 'or t"e #or&$ Nin national intere$tO,
=* Bank o' )a&ura S"are"ol&er$ Hel'are A$$ociation -, Go-ernor+ Re$er-e Bank
o' In&ia !ur, !,5::1 01:12 **= at %,**9 0)a&,2,
=6 Su.$, .y Act 5: o' 191:+ Sec,9+ 'or Sec 41 0no# re?num.ere& a$ 44?B2,
=7 Section 41 re?num.ere& a$ Sec,44?B+ .y Act =6 o' 19*:+ Sec,*,
=9 Re?num.ere& a$ $u.?$ection 012 .y Act 15 o' 191=+ Sec,9,
4: Su.$, .y Act 15 o' 191=+ Sec,4 'or N!ourtO
41 Su.$, .y Act 11 o' 19*=+ Sec,5:+ 'or Nunle$$ t"e com%romi$e or arrangementO
0#,e,', 1$t Ae.ruary+ 19*42,
45 Su.$, .y Act 15 o' 191=+ Sec,9+ 'or Na$ not .eing &etrimental to t"e intere$t o'
t"e &e%o$itor$ o' $uc" com%anyO,
4= In$, .y i.i&,
44 Su.$, .y Act 91 o' 191*+ Sec,14 an& Sc"e&ule+ 'or NSec,11= o' t"e In&ian
!om%anie$ Act+ 191= 06 o' 191=2+ 0#,e,', 14t" Sanuary+ 19162,
41 Su.$, .y Act 15 o' 191=+ Sec,4+ 'or N!ourtO,
4* In$, .y Act =6 o' 19*:+ Sec,*,
46 Su.$, .y Act 6 o' 19*1+ Sec,4 'or Nany agreementO,
47 Su.$, .y Act 6 o' 19*1+ Sec,4 'or Nt"e .anking com%anyO,
49 Su.$, .y i.i&,+ 'or $u.?$ection 042 to 092,
1: Su.$, .y Act 1 o' 1974+ Sec,=4 0#,e,', 11t" Ae.ruary+ 19742,
11 In$, .y Act 11 o' 19*=+ Sec,51 0#,e,', 1$t Ae.ruary+ 19*42,
15 In$, .y Act 1 o' 1974+ Sec,=4 0#,e,', 11t" Ae.ruary+ 19742,
1= Su.$, .y Act1 o' 1974+ Sec,=4 0#,e,', 11t" Ae.ruary+19742,
14 In$, .y i.i&,
11 Su.$, .y i.i&,+ 0#,e,', 11t" Ae.ruary+ 19742,
1* State Bank o' Tra-ancore -, General Secretary+ A$$ociation o' t"e State Bank
o' Tra-ancore+ Tric"ur+ 019672 La., I,!, 1=4= at %%, 1=46?47 0Ker,2 I !"airman+
!anara Bank -, ),S, Sa$ra+ 1995 012 Bank !,L,R, 111 0S,!,2 J A,I,R, 1995 S,!,
1=41 I 3e.a$i$ 4al !"ou&"ury -, Alla"a.a& Bank+ 1995 012 Bank !,L,R, 5*1 I
Re$er-e Bank o' In&a -, State Bank o' In&ia+ 0199*2 71 !om%, !a$e$ 114 at %,
1*7 0Bom,2,
16 !"airman+ !anara Bank+ Bangalore -, ),S, Sa$ra+ 1995 La., I,!, 1::1 at %,
1::6 0S,!,2,
17 ),S, Sa$ra -, Go-ernor+ R,B,I,+ 1995 La. I,!, 1*4 at %%,1*6+ 1*7 03el"i2 J 1995
04*2 3,L,T, **1,
19 3e.a$i$ 4al !"ou&"uri -, Alla.a& Bank+ 1995 La., I,!, 54 at %, =4 0!al,2,
*: ),S, Sa$ra -, Go-ernor+ R,B,I,+ 1994 0=2 Bank L,S, 564 at %, 569 03el"i2 I In&ian
Bank -, K, U$"a+ 019972 5 S,!,!, **= at %, *61 0S,!,2 J A,I,R, 1997 S,!, 7** at
%,765,
*1 1976 052 K,L,T, 6:6,
*5 rient Tra&ing !om%any -, State Bank o' In&ia+ 199* 052 Bank L,S, 15 at %%,
1=+11+ 16+17 0Ker,2I 4,R, 4a%anna -, K, 4a&amana."aia"+ 1994 052 S,!,!, =1*,
*= Bank o' Baro&a -, RaPen&er 4al Soni+ 199* 012 Bank L,S, 517 at %,551 0S,!,2,
*4 S,T, 199: 042 S,!,5=*,
*1 ),S, Sa$ra -, Go-ernor+ R,B,I, 1995 04*2 3,L,T,**1 at %%,*6:+ *61 03el"i2 J 1995
La.,I,!,1*4 03el"i2,
** Alla"a.a& Bank -, All In&ia Alla"a.a& Bank Lcer$ A$$ociation+ 199* 012 Bank
L,S,==7 at %%, =4*+ =46 0!al,2,
*6 T"e !"airman+ !anara Bank+ Bangalore -, ),S, Sa$ra+ A,I,R, 1995 S,!,11: at
%%, 11:1+ 11:*,
*7 !anara Bank -, K,L, S"arma+ 1991 012 A,L,T,44* at %,411,
*9 S"i- Kumar Tul$ian -, Union o' In&ia+ 199: 0*72 !om%, !a$, 65: at %%, 6=1+
6=5+ 6== 0Bom,2,
6: ),S, Sa$ra -, Go-ernor+ Re$er-e Bank o' In&ia+ 1995 La. I,!, 1*4 at %%,1*6+
1*7 03el,2 J 1991 0*=2 A,L,R, 9:5,
61 Re$er-e Bank o' In&ia -, 4aul Aranci$ A, Am.ookan+ 199: 0*92 !om%, !a$, =5:
at %%,==7+ ==9 0Ker,2I 4unPa. !o?o%erati-e Bank Lt&, -, Union o' In&ia+ 5::1 012
R,!,R, 0!i-il2 114 at %%,1*1+ 1*5I 05::12 1:1 !om%, !a$, 914 at %, 955 04,;C,2,
65 Bari 3oa. Bank Lt&, -, Union o' In&ia+ A,I,R, 1997 3el"i 91 at %,154,
6= 4unPa. !o?o%erati-e Bank Lt&, -, Union o' In&ia+ 05::12 1:1 !om%, !a$, 914 at
%,955 04,; C,2 J 5::1 012 R,!,R, 0!i-il2 114 at %%, 1*1+ 1*5I Nort" Ea$t Ainance
!or%oration Lt&, -, Union o' In&ia+ 05:::2 1:1 !om%, !a$, =6= 0Sikkim2,