Challenge to RBI regulation of cooperatives: Supreme Court refuses to stay proceedings in high courts

The Reserve Bank of India (RBI) on Monday moved to the Supreme Court seeking the transfer of around two dozen petitions pending before various high courts challenging the legality and validity of the Banking Regulation (Amendment) Act 2020 and the consequential circular that brought all cooperative banks under the market regulator’s supervision.

A Bench led by Chief Justice NV Ramana while seeking a response from all the petitioners refused to stay the proceedings pending before various high courts of Bombay, Madras, Kerala, Karnataka, Chhatisgarh, Rajasthan, Uttrakhand, Punjab and Haryana, Allahabad, Andhra Pradesh, Madhya Pradesh, etc.

While the CJI told the central bank counsel that it intended to transfer all the petitions to the Bombay High court, where the RBI headquarters is also located, the counsel insisted that the case should be heard by the apex court itself.

Senior counsel Rakesh Dwivedi and counsel Liz Mathews, appearing for RBI, argued that the ordinance was passed only to bring the banks under the banking regulations and protect the interest of the public. They said the matter needs immediate attention otherwise the “financial system would become unworkable.”

RBI has sought transfer of all the petitions to the SC as they all deal with the legality of the Amendment Act by which the provisions relating to appointments of the board of directors and CEO/MD were extended to co-operative banks.

“Though the co-operative banks have been incorporated under the different state Co-operative Societies Acts, the common cause involved for filing all these writ petitions is challenging the constitutionality of the Amendment Act and the consequential Circular issued by RBI. Therefore, transfer of these will prevent multiplicity of proceedings and will also prevent inconsistency in decisions by the HCs,” RBI said in its transfer petition before the HC.

Moreover, it is essential that there was no contradictory or inconsistent judgment passed by the different HCs on the very same issue, Mattews said, adding such inconsistent directions was likely to hamper the effective implementation of the Amendment Act and the RBI circular of June 25, 2021.

Various petitions including those filed by two century-old cooperative banks, Big Kanchipuram Cooperative Town Bank and Velur Cooperative Urban Bank, had argued that the ordinance dealt with the matters which were within the exclusive domain of the state list, List II of Schedule VII of the Constitution, over which Parliament had no legislative competence.

The market regulator also added that given the ongoing pandemic it has become all the more difficult for RBI and its counsel to conduct proceedings in different HCs especially when the issues involved in all the proceedings are the same or similar.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/TkdswU3