LexRESERVE BANK OF INDIA AND ORS. versus PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LTD. AND ANR.
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A B c D RESERVE BANK OF INDIA AND ORS. v. PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LTD. AND ANR. JANUARY 19, 1996 [S.C. AGRAWAL AND G.B. PATTANAJK,, JJ.] Reserve Bank of India Act, 1934-Sectwn 45;K (3)-Pnwer of Reserve Bank to issue directions-Scope of-The Section confers a wide power 011 the Bank to issue directions and the said power is not restricted to or limited to the receipt of deposits only-The Section is an ·eiiabling Provision-Held, ena- bling provision n1ust be so construed as to subserve the purpose for which it has been enacted. Residuary Non-Banking Companies (Reserve Bank) Directions I987-Para 4A (as inserted by Notification dated I9.4.I993)-Enacted to prevent evasion of directions contained in Paras 6 & 12 o_f 1987 DireLtions- Held, Directions fall within the power conferred on the Bank to issue directions--R.esiduary Non-Banking Companies (Res,erve Bank) Directions I987-Paras 6 to I2. E Suggestio'tzs to U. 0.1 . ..:.._To create separate instrumentality to supervise and enforce the provisions regulating the' fUnctioning1 of the companies._,__iVhether ex.iSting p'rovisions needed further 'strengthening so as to give greater protection IQ depositors-Whether the prov~sions, similar to the provisions for Deposi(Protecrion Scheme in the Banking Act, 1987 of ,. England can be introduced in India-l?.equirement for introduction in India. ;..... F G Constitution of India, I950 Art. 14-Non-Banking Companies (Reserve Bank) Directions, I987-Para 4A (as inserted by Notification dated I9.4.I993-Fixing of Rs. 10 as uniform amount by Bank for expenses .for brochure/ Application forms & servicing deposit or account-Held, not violative n,f Article 14-Equal treatment ofIAnequal objects, transaction or persons, not liable to be._ struck down as discri1ninatory unless there is simultaneously absence of a rationattelation lo the object intended to be achieved by the law. The 1987 Direction~~applicable to non·banking cornpanies and not to co1nmercial banks-Held siinilarity not proved-Hence not discriminatory. H Art. I9( I)( g)-Non-banking Companies prohibited from recovering any 58 ),. RBI v. PEERLESS GENL. FINANCE 59 an1oullf us processing/nulintenance Gharge-Para 4A-Whether violative of A Article 19( I )(g)-Held, not violative-SEBI (Mutual Funds) Re11ulation, 1993. !11terpretation of Stalutes--Construction of enablillf? provisio11-To be construed as to subserve the pu17HJse o.f lVhich it ivas enacted. Words & Phrases :-"lncluding"--Meaning of In order to regularise the non-hanking financial· companies, the Reserve Bank of India Act, 1934 was amended by Act No. 55 of 1963 and Chapter III-B (Section 45(H) to 45 (Q) was inserted. Section 45-K enables the Reserve Bank of India, to collect information from non-banking institutions as to deposits and to give directions to such institutions. B c After insertion of Chapter - 10-B the Reserve Bank issued Misc. Non- Banking Companies (Reserve Bank) Directions, 1973 to regulate accept- ance of deposits by non-banking companies. Respondent Company, a non- banking financial company, sought exemption from complying with the D above directions.· Exemption was granted only from para 4 of the Direc- tions. In 1977, Non-Banking Financial Companies (Reserve Bank) Direc- tions, 1977 were issued wherein a ceiling was fixed in respect of the period for which deposits could be accepted. E The Respondent Company applied for the exemption from the said provision of the 1977 Directions. During the pendency of the exemption "" application, Prize Chits and Money Circulation Schemes (Banking) Act 1978 was enacted by Parliament. The Reserve hank took the view that the schemes of the Respondent Bank were covered by the Act. 1978, and directed the Respondent Company to wind up its business and cancelled the exemption which was granted already. F The Respondent Company filed Writ Petition in the Calcutta High Court with the plea that the 1978 Act did not apply to them. The writ G Petition was allowed and the Reserve Bank filed appeal to the Supreme Court. Supreme Court dismissed the appeal of the Reserve Bank with the observation that the Bank should regulate such schemes to prevent exploi- tation of ignorant subscribers. (Peerless· I*) In view of the observation made by the Supreme Court in (Peerless- H 60 SUPREME COURT REPORTS [1996] 1 S.C.R. A 1), the Reserve Bank issued Residuary Non-Banking Companies (Reserve
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