IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE FIFTEENTH DAY OF APRIL TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE R.SUBHASH REDDY WRIT PETITION No. 22506 of 2002 Between: The Sitara Cooperative Urban Bank Limited ..... PETITIONER AND Government of India, Ministry of Finance, Department of Economic Affairs, Banking Division, New Delhi and others. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to Counsel for the Petitioner : MR.P.VENUGOPAL Counsel for the Respondent No.: MR.K.SRINIVASA MURTHY The Court made the following : HON’BLE SRI JUSTICE R.SUBHASH REDDY WRIT PETITION No.22506 of 2002 ORAL ORDER : This writ petition is filed by the petitioner-bank challenging the order, dated 18.10.2002, passed by the first respondent-appellate authority in Appeal No.A.14/33/2000-AC, confirming the order passed by the second respondent-primary authority in proceedings No.UBD.BSD(IV)/838/ 12.03.1997/2001-02, dated 6.9.2001, cancelling the licence of the petitioner-bank. 2. The petitioner is a society registered under the Andhra Pradesh Cooperative Societies Act, 1964. It obtained licence under Section 22 of the Banking Regulation Act, 1949 (for brevity “the Act”) to carry on banking business in India on 15.06.1999. Subsequently, a show cause notice was issued against the petitioner-bank alleging certain serious irregularities. After considering the explanation submitted by the petitioner-bank, the second respondent, who is the licensing authority, by order, dated 6.9.2001, cancelled the licence of the petitioner-bank. Aggrieved by the same, the petitioner-bank carried the matter by way of appeal before the first respondent, who is the appellate authority, under Section 22 (5) of the Act. After considering the appeal and the grounds raised therein, the appellate authority rejected the appeal, by order dated 18.10.2002, confirming the orders of the primary authority. Hence, the present writ petition. 3. It is contended by the learned Standing Counsel for the petitioner-bank that no reasons are recorded by the primary authority in cancelling the licence granted to the petitioner-bank under Section 22 of the Act. He further contended that the present Chairman of the petitioner-bank had rectified the anomalies and, therefore, it requires reconsideration for issuance of the licence, afresh. 4. From a perusal of the impugned order of the second respondent, it is clear that the petitioner-bank has committed serious irregularities. It is stated that an amount of Rs.30-62 lakhs collected by the promoters from members towards share capital before commencement of the bank was not brought to the book. Even after collecting the said amount, the share capital as on 10.01.2000 was shown at Rs.0.05 lakh only. It is further alleged that the petitioner-bank secured unwarranted large premises for locating the bank and was incurring waste expenditure on account of huge monthly rent. The further irregularity pointed out was that the petitioner-bank failed to repay the proceeds of the matured deposits with interest and also noticed that some of the Directors of the bank had received payments of huge amounts against the cheques deposited in their accounts. However, the said cheques were subsequently returned for want of funds. There are several other irregularities pointed out by the second respondent. Therefore, in view of the serious irregularities, which were recorded in the impugned order of the second respondent, it cannot be said that no valid reasons are recorded by the second respondent for cancellation of the licence of the petitioner-bank. Even the first respondent-appellate authority also, after re-consideration of the grounds of appeal, affirming with the view expressed by the primary authority in canceling the licence of the petitioner-bank, rejected the appeal. 5. In view of the above, I do not find any illegality or irregularity in the impugned order canceling the licence of the petitioner-bank. 6. However, it is made clear that if the present management of the petitioner-bank has rectified the irregularities, this order will not preclude the petitioner-bank to approach the authority concerned for granting of licence, afresh. 7. Subject to above observation, the writ petition is dismissed. There shall be no order as to costs. ________________________ R.SUBHASH REDDY, J 15-04-2009 Msr HON’BLE SRI JUSTICE R.SUBHASH REDDY WRIT PETITION No.22506 of 2002 15-04-2009 Msr