M.P. JACKSON Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) The Petitioner is the former President of Respondent No.4 - Urban Co-operative Bank. The Petitioner has filed this Petition challenging Ext.P5 order of the Respondent No.1/Reserve Bank of India issued under Sec. 36AAA r/w Sec. 56 of the Banking Regulation Act, 1949, superseding the Board of Directors of Respondent No.4. Other reliefs sought for in the Writ Petition are to declare that the principles of natural justice are to be read into the provisions of Sec. 36AAA r/w Sec. 56 of the Banking Regulation Act, 1949, and to direct the Respondent No.1 to restore the elected Managing Committee of Respondent No.4, forthwith.

(2.) The Respondent No.1 conducted an inspection on the operation of the Respondent No.4/Bank and prepared Ext.P1 Inspection Report considering the financial position as on 31/3/2022. Several irregularities in the operation of the Respondent No.4 were found in Ext.P1. The Respondent No.1, invoking its powers under Sec. 35A of the Banking Regulation Act, issued Ext.P3 All-Inclusive-Directions (AID) dtd. 29/7/2025 imposing certain regulatory restrictions in the operations of the Respondent No.4 for a period of six months with effect from 30/7/2025. The Respondent No.4 submitted a Request dtd. 8/9/2025 to the Respondent No.1 seeking permission to sell Non-Banking Assets (NBAs) of the Respondent No.4 to come out of AID restrictions, which was replied to by the Respondent No.1 as per Ext.P4 dtd. 24/9/2025 that AID restrictions do not prohibit the sale of NBAs. The contention of the Petitioner is that while the Respondent No.4 initiated action to sell the NBAs to improve its financial position, the Respondent No.1 issued Ext.P5 order of supersession removing the Board of Directors of Respondent No.4 and appointing an Administrator for the Respondent No.4 for a period of one year from 7/10/2025 to 6/10/2026.

(3.) The Respondent No.1 filed Counter Affidavit dtd. 27/2/2026 opposing the prayers in the Writ Petition. Petitioner filed Reply Affidavit dtd. 10/3/2026 answering the contentions raised in the Counter Affidavit. The Respondent No.1 filed Additional Counter Affidavit dtd. 29/5/2026 clarifying certain facts in answer to the contentions raised in the Reply Affidavit.