SHIVABHAI ZAVERBHAI PATEL Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) The two petitioners are the promoters of a proposed Urban Co-operative Bank. They have challenged the refusal of the banking licence by Reserve Bank of India. They had applied for such licence by their application of 12/09/1980 (Ann. D to the petition). Therein the. have mentioned that Chaklashi town (in which the proposed Urban Co-operalive Bank was to be established) was having the population of about 30 and as per the census of 1971 the population was 20900. A case was sought to be made out for the necessity and feasibility of the proposed co-operative bank by citing various needs of different kinds of business industries etc. On that application the Reserve Bank by its letter dt. 27/09/1980 (Ann. E) asked the Assistant District Registrar of Co-operative Societies Nadiad to conduct a preliminary survey of the area of operation of the proposed Bank with the assistance of its promoters and their state/district central co-operative bank to identify the potentials for the growth of the proposed bank i.e. potential for deposit mobilisation as well as lending particularly lending to small scale and cottage industries. In pursuance thereof a Joint Report prepared by the Assistant District Registrar and the Manager of Kaira District Central Co-op. Bank Ltd. was sent by the letter dt. 21/10/1980 (Ann. F).

(2.) However by the letter dt. 3/03/1982 (Ann. G) the Reverse Bank refused the licence after considering the preliminary survey report and the Joint Survey Report and observed that the area of operation of the proposed bank was limited to Nagar Panchayat Chaklashi and the inclusion of nonurban area was not permissible in the area of operation of an Urban Co-operative Bank and it was further observed that Chaklashi was reported to have the population. of 9000 (urban population) and was served by two commercial banks and therefore there was existing adequate banking facility. It was also observed that the Chaklashi and the surrounding villages were predominantly agricultural in character and the preliminary and joint studies showed that there was little scope for industrial advances and therefore a need for organising a new primary (Urban) co-operative bank was not established and therefore the Reserve Bans refused the licence and refused the registering authority to proceed withe the registration of the co-operative bank.

(3.) A further representation was made by the promoters by letter dt. 22/03/1982 (Ann. H) and thereby an attempt was made to rebut In points made by the Reserve Bank for refusing the licence. It appears that on 10/04/1982 there was a meeting and some further discussion in pursuance thereof the promoters had written a letter dt. 13th May 198 (Ann. I) remaining about fresh decision. It appears that there was some further discussion on 8/06/1982 and in pursuance of that discussion the promoters by their letter dt. 21/06/1982 (Ann. J) forwarded more details and facts justifying the grant of the licence.