SC: Rupee Co-op Bank’s Appeal Against Cancellation of License Directed to be Decided by 31st Oct

Priyanka Singh

Published on: October 4, 2022 at 20:20 IST

In a recent order by the Bombay High Court, where a stay was granted against the Reserve Bank of India’s order cancelling the license of the Rupee Co-op Bank, is directed by the Supreme Court to be restricted till 31^st October, 2022.

Under Section 22(5) of the Banking Regulation Act, 1949, the Court directed the appellate authority to take up the final disposal on 17^th October, 2022 and the completion of the disposal on/before 31^st October, 2022.

The bench of Justices D.Y Chandrachud and Hima Kohli were in the event of consideration of a special leave petition filed by the RBI challenging the order issued by the Bombay High Court.

Background –

On 8^th August, the RBI had issued an order cancelling the license issued to the Rupee Co-Op Bank for carrying out business u/s 22 of the Banking Regulation Act. 1949.

The RBI recorded that the gross NPA of the Bank were as high as 98.44% on 31^st March, 2021 and the erosion in deposit being at 41.49% dated the same, on the contrary to its net worth being (-) 537.97 Cr.

The cancellation by RBI was challenged by the Bank (order dated 19^th September, 2022) before the appellate authority, where the authority declined to stay the operation of the order.

The order by the authority was subsequently challenged before the High Court, which suspended the operation of the order by the RBI dated 22^nd September 2022, and the HC had iterated the stay to be imposed until the appeal is further decided and disposed off on 17^th October 2022.

The Supreme Court Escapade –

Appearing for the RBI, Solicitor General Tushar Mehta challenged the order of the High Court stating the order by the RBI being a reasoned one and highlighted the NPA of the bank as well.

The claims of the RBI were contended by the counsel for the Rupee Co-Op Bank stating that the bank and Board of Administrators were protected by an order passed by the High Court dated 12^th September, 2017 opposing any order passed by the RBI adversely towards the Respondent Bank or Board of Administrators for the next 6 weeks.

The bench observed that the Solicitor General’s submissions had substance and that the HC found no fault prima facie while considering the order of RBI or in the order of the appellate authority’s denial to stay the order of cancellation.

Thus, the bench directed a swifter disposal of the matter and directed the appellate authority to take up the appeal for the final disposal on 17^th October 2022, and for the complete disposal on/before 31^st October.