NAHAR FINANCE AND LEASING LIMITED Vs. REGIONAL DIRECTOR

JUDGEMENT

(1.) The challenge in these writ petitions is to the cancellation of the Certificate of Registration issued by the Reserve Bank of India in favour of the petitioners.

(2.) The writ petitioners are all Non-Banking Financial Companies (in short, "NBFC") and it is their claim that they have been complying with all the statutory regulations and regularly filing various returns and furnishing the required information before the Registrar of Companies. The petitioner companies claim that they are assessed to income tax. These companies claimed that they have also obtained Certificate of Registration (in short, "CoR"), after the amendment of the Reserve Bank of India Act , 1934 (in short, "RBI Act"), which was brought into force with effect from 09.01.1997.

(3.) There was a prohibition for an NBFC to commence or carry on the business, unless it has a Net Owned Fund (in short, "NOF") of twenty-five lakh rupees or such other amount, not exceeding two hundred lakh rupees, as the Reserve Bank of India (in short, "RBI") may, by notification in the Official Gazette, specify. The RBI, by notification No.DNBR.007/CGM(CDS)-2015, dated 27.03.2015, specified two hundred lakhs rupees as the NOF required for an NBFC to commence or carry on the business. It further provided that an NBFC holding a CoR and having NOF of less than two hundred lakhs of rupees may continue to carry on the business, if such company achieves the NOF of one hundred lakhs or rupees before 01.04.2016 and two hundred lakhs of rupees before 01.04.2017.