HG admits PIL against RBI, DIGGCL directions to 'failed' co-op banks

HG admits PIL against RBI, DIGGCL directions to 'failed' co-op banks

JUSTICE Vasanti Naik and Justice P R Bora at the High Court have admitted the public interest litigation (PIL) filed by city lawyer Sunil Prabhat Khare. allegedly on behalf of 55.000 depositors of "failed" bank  Nagpur Mahila Nagari Sahakari Bank Limited in particular and thousands of other depositors of all the failed co-operative banks in State, finding fault with the Reserve Bank of India's (RBI ) action against these banks and violation by the Deposit Insurance & Credit Guarantee Corporation Limited (DICGCL).

According to the petitioner, the PIL is aimed at securing judicial redressal to all (lie aggrieved depositors of this and such other banks, who do not have resources. The petitioner has pointed out that the RBI and the DICGCL have violated the provisions of Sections 15(1) and 13 C of the DIGC Act. I%l and forced the Mahila Bank defunct since September 21. 2004 - to part with about Rs 50 lakh during years 2004 to 2009 from the funds/assets belonging to the depositors. At the instance of the RBI. the amount was required to be paid to the DICGCL in the name of'insurance premium'for the period after occurrence of peril covered and the DICGCL retained such amounts received though not entitled for - unwarranted, according to law. According to petitioner, crores of rupees belonging to the public were extorted by the RBI and the DICGCL from such "failed  banks, about 200 in number.

Furlher. the petitioner has contended that the RBI invoked the provisions of Section 35 A of the Banking Regulations Act, 1949 and imposed "a restraint/hold" on withdrawal of the deposits by the depositors. This "hold" was continued for years together, but it was not found necessary by RBI to communicate the decisions, rationale and the strategics to the petitioner-depositors, who were in fact aggrieved having exposed to continuous uncertainty, without any fault on their part As a mailer of fact. Section 45 of the Act is more applicable being specific provision than Section 35 A.

Under the Section 45. the moratorium on the banks would have ended in 6 months and not continued for 73 months as in the present case.

In the P1L. prayer has been made to the court to order RBI and DICG-CL to make refund, pay compensation and after due probe liability be fixed against the culpable officials and they be prosecuted and punished.

The petitioner appeared in person. Adv S N Kumar. Adv Priyanka Verma and Adv Swapnil Doundkar represented RBI.

Posted in: News 2014