WP(C) 582/2003 BEFORE THE HON’BLE MR JUSTICE HRISHIKESH ROY 1. WP(C) NO. 582/2003 M/S Pancharatna Finance Ltd & & & Petitioner Vs- Union of India & & & Respondents For the Petitioner : Mr. B K Bhattacharjee, Mr. D J Barman. For the Respondents : Mr N Bora, CGSC, Mr A K Phukan, Mr M Bhuyan, Mr H Das, Mr P Hazarika, Mr S K Talukdar. 2. WP(C) NO. 256/2003 M/S Pancharatna Finance Ltd & & & Petitioner Vs- Union of India & & & Respondents For the Petitioner : Mr. B K Bhattacharyya, Mr. D J Barman, Mr R Sarma, Mr J P Gogoi. For the Respondents : Mr N Bora, CGSC, Mr G P Bhowmik, Mr H Mahanta. Date of Hearing : 13.06.2007 Date of Judgment : 13.06.2007 JUDGMENT AND ORDER (ORAL) Heard Mr B K Bhattacharyya, learned counsel for the petitioner. Also heard Mr M Bhuyan, learned counsel appearing for respondent Nos 2,3 & 4 and Mr N Bora, learned counsel appearing on behalf of The Union of India. 2. The petitioner is a Company registered on 27.6.1985 under the Co mpanies Act, 1956 and carries on, inter alia, the business of finance and invest ment and has established itself as a Residuary Non-Banking Company under the Res erve Bank of India Act, 1934, (for short, ’the Act’) herein referred to as the A ct. The grievance of the petitioner raised in first writ petition re late to the process of scrutiny of the application for a certificate of registra tion made by the petitioner Company before the Reserve Bank of India (for short, ’the RBI’) under the provisions of Section 45-IA of the Act. The petitioner Company, by filing the second WP(C) 582/2003 has challenged the order dated 1.1.2003 passed by the RBI ,whereby it has been held that the petitioner/Company is not entitled for a certificate of registration to carry on the business of a Non-Banking Financial Company (for short, ’NBFC’), a s contemplated under Section 45  IA of the Act. 3. Mr Bhattacharyya, learned counsel appearing for the petitioner, contends that although the petitioner/Company fulfills the norms laid down by th e Act for obtaining the certificate as a Non-Banking Financial Company, the Rese rve Bank of India has not dealt with their application in a fair manner but has instead rejected the application for extraneous and irrelevant consideration. It is further contended that the show cause notice dated 25.11.2 002 of the Reserve Bank of India, requiring the petitioner to give reply within 10 (ten) days, was actually received after the stipulated 10 (ten) days was alre ady over, and it has been cited as a ground of unfair consideration of the appli cation made by the petitioner/ Company. 4. Mr M Bhuyan, learned counsel appearing for the respondent/Reserv e Bank of India on the other hand, argues that after the amendment of Act 23 of 1993, Section 45  IA in the Act was incorporated which, for the first time requ ired a Non-Banking Financial Company to obtain a certificate of registration fro m the Reserve Bank of India. The conditions required to be fulfilled by the Non- Banking Financial Company before such certificates are issued, have been stipula ted under Sub-Section 4 of 45  IA of the Act. It is contended by the learned counsel appearing for the RBI tha t the petitioner/Company applied for a certificate on 4.7.1997 and since the pet itioner/Company could not fulfill the conditions laid down under the Act, the Re serve Bank of India took the decision to reject the application made by the peti tioner/Company, by its order dated 1.1.2003. It is further contended that the Reserve Bank of India is the co mpetent and expert authority to take a decision in the matter and since the peti tioner/Company could not fulfill the conditions laid down under the Act, despite several opportunities given to it, the impugned order dated 1.1.2003 has been r ightly passed by the Reserve Bank of India. Mr Bhuyan has also drawn attention to the postal receipts pertai ning to the show cause notice dated 25.11.2002 and submits that the said show ca use notice was posted for delivery on 27.11.2002 and was also received by the pe titioner/Company on 3.12.2002 as has been acknowledged in their letter dated 12. 12.2002 and accordingly, the grievance made of non-receipt of adequate time for responding to the show cause notice, is totally unfounded. 5. It is also submitted on behalf of the respondent/Reserve Bank of India that under Section 45-IA (7) of the Act, an Appeal can be preferred to th e Central Government against an order of rejection of application or cancellatio n of certificate of registration, within a period of thirty days and since the p etitioners had an alternative remedy, the present petitions are not maintainable . 6. The decision reported in 1992 2 SCC 343 Peerless General Finance and Investment Co.Limited and Another Vs- Reserve Bank of India has been cited on behalf of the respondent to demonstrate the position of the Reserve Bank of India. The Supreme Court in Para 30 of the Judgment has indicated that the Reser ve Bank of India is a creature of statute and it has large contingent of expert advice relating to matters affecting the economy of the entire country and the b onafides of the Reserve Bank of India in playing a vital role in the economy and financial affairs of India as well as its role in safeguarding the economy and financial stability cannot be undermined. It is further held by the Supreme Court that it is not the funct ion of the Courts to sit in Judgment over matters of economic policy, which must necessarily be left to expert bodies. The Courts cannot be expected to decide t hem without having the aid of experts. 7. By relying upon the decision in Peerless General Finance (Supra) Mr Bhuyan contends that the Reserve Bank of India has a role to protect the int erest of the depositors in Companies, such as the petitioner Company and since t he petitioner/Company is unable to fulfill the requirement of the provisions of Sub-Section  4 45-IA of the Act, the Reserve Bank of India had to order rejecti on of application of the Company for the certificate of registration. 8. I have taken note of the voluminous correspondences between the petitioner/Company and the Reserve Bank of India and from the said correspondenc es, it appears that before the impugned rejection order was passed, adequate opp ortunities were afforded to the petitioner/Company to rectify the deficiencies w hich were noticed by the Reserve Bank of India. Show cause notices, including th e show cause notices dated 1.1.1998 and 25.11.2002 were sent to the petitioner/C ompany by the Reserve Bank of India and the response received from the petitione r/Company have also been duly considered by the Reserve Bank of India. In the rejection order dated 1.1.2003, responses given by the pe titioner/Company were taken note of and the responses of the petitioner were fou nd to be unsatisfactory by the Reserve Bank of India by recording the following reasons: i) The Company admitted to the violation of credit concentration norms. ii) Unsound investment policies of the Company resulted in erosion of the in vestments. This reflects the Company’s poor management strategy of the investmen t portfolio. iii) The company explained that the losses incurred were due to provisions ma de for the depreciation on investments made. However, the Company, in its explan ation, had not given any convincing and concrete proposal to improve its profita bility. iv) The Company replied that the frequent overdrafts were due to non-receipt of fresh deposits during 2001-2002, resulting in liquidity crisis. The Company’ s explanation is not convincing and reflects on poor funds management by the Com pany. From the above reasons indicated for rejection of the applicatio n for registration, it appears that relevant considerations were made by the Res erve Bank of India while considering the application of the petitioner/Company. Because of failure of the petitioner Company to comply with the statutory provis ions laid down under the Act and the direction issued thereunder, the Bank was n ot satisfied that the conditions contained under Sub-Section (4) of Section 45-I A of the Act have been fulfilled by the petitioner/Company. On such conclusion, the application for certificate of registration to carry on the business of Non- Banking Financial Company was rejected by the respondents/Reserve Bank of India. 9. In view of the above, no infirmities are seen in the decision ma king process of the Reserve Bank of India and accordingly I am not inclined to e ntertain the writ petitions filed by the petitioner/Company. Another ground for not accepting the writ petitions is the avail ability of alternative remedy by way of an Appeal, which may be filed under Sect ion 45-IA (7) of the Act. Although the prescribed time for filing an Appeal to the Central Government has already expired as such an Appeal should have been filed within 30 days from the date of communication of the rejection order dated 1.1.2003, co nsidering the fact that the petitioner/Company had approached this Court at the stage of receipt of the show cause notice dated 25.11.2002 and also considering the fact that the writ petition challenging the rejection order has been pending in this Court, I am of the view that the ends of justice would be met by permit ting the writ petitioner to file an Appeal, if so advised, under the provisions of Section 45-IA (7) of the Act. If such an Appeal is filed, instead of disposin g of the Appeal on the ground of limitation, the Appeal decided on merit, withou t in any manner being influenced by the discussions made in this order. 10. In view of the above discussions, the writ petitions are not acc epted and the same are accordingly, dismissed. JUDGE dtg