# M/S Ajmani Leasing & Finance Ltd v. U.O.I. & Ors

- **Citation:** (2020) 1 ILRA 1588
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-12-16
- **Case number:** Misc. Bench No. 34971 of 2019
- **Bench:** Pankaj Kumar Jaiswal, Alok Mathur
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-ajmani-leasing-finance-ltd-v-u-o-i-ors-45271
- **Pages:** 12

## Headnote

A. Reserve Bank of India Act, 1934 -
Challenging
order-cessation
of
permission-granted
to
the
petitioner
company-to carry on the business of NonBanking Financial Institution (NBFI)-on
account of-failure in complying-with the
directions-issued
by
RBI-regarding
achievement of the specified Net Owned
Fund (NOF)-under section 45-IA (6)-
matters involving policy decision and
economic tests-judicial review-limitedunless decision found contrary to-any
statutory provision or Constitution-Court
would not interfere-principal of natural
justice-duly complied.

B. Held, that in the matter of policy
decision and economic tests, the scope of
1590 INDIAN LAW REPORTS ALLAHABAD SERIES
judicial review is very limited. Unless the
decision is shown to be contrary to any
statutory provision or the Constitution,
the Court would not interfere with an
economic decision taken by the State.
The Court cannot examine the relative
merits of different economic policies and
cannot strike down the same merely on
the ground that another policy would
have been fairer and better. It was
further held that it is neither within the
domain of the Courts, nor the scope of
judicial review to embark upon an
enquiry as to whether a particular public
policy is wise or whether better public
policy can be evolved, nor are the Courts
inclined to strike down a policy at the
behest of a petitioner merely because it
has been urged that a different policy
would have been fairer or wiser or more
scientific or more logical. Wisdom and
advisability
of
economic
policy
are
ordinarily
not
amenable
to
judicial
review. In matters relating to economic
issues the Government has, while taking
a decision, right to "trial and error" as
long as both trial and error are bona fide
and within the limits of the authority. For
testing the correctness of a policy, the
appropriate forum is Parliament and not
the Courts.

C. After considering the facts of the case
as well as the principles enunciated by
the Hon'ble Supreme Court, we are of the
opinion that principles of natural justice
was compiled by the Bank by giving a
show cause notice and considering the
reply of petitioner before cancelling the
registration. The impugned order cannot
be set-aside on the ground of the same
having been passed in violation of
principles of natural justice. Apart from
this, the petitioner has failed to indicates
as to how he was prejudicial in not being
afforded an opportunity of personal
hearing. We do not find any merit in the
contention of the petitioner in this
regard.

Writ Petition dismissed. (E-8)

List of cases cited: -

## Text

_Characters 0–39,962 of 40,145. This is a partial read: ask again with offset=39962 for what follows._

1 All. Ram Prasad & Ors. Vs. A.D.J., Sitapur & Ors.
1589
irrespective of the fact whether or not a
consequential order of dismissal is passed in
such appeal and a second appeal would lie
under section 100 C.P.C. against such an order,
a decree of such an order should also be
prepared treating it an order passed on the
appeal itself, resulting in consequential
dismissal of the appeal. This is the ratio of the
Full Bench of the Kerala High Court om
Thambi's case (supra) wherein the provisions
of the C.P.C., Limitation Act and various
decisions on this issue have been considered
elaborately, which has been approved by the
Supreme Court in Shyam Sunder's case
(supra). In fact, it would be in the fitness of
things if the Civil Courts while dismissing an
application under section 5 of the Act 1963
also pass consequential orders dismissing the
appeal itself, as is also mandated under section
3 of the Limitation Act 1963, as, in such a
scenario, a decree of such an order would
necessarily be prepared in terms of the existing
provisions of the C.P.C. and this would
facilitate filing of a second appeal or its hearing
and decision thereon. It is ordered accordingly.

21. In view of the above this petition
under Article 227 of the Constitution of
India is dismissed as not maintainable
subject, however, to the observations made
hereinabove.

22. Based on this judgment petitioner
can apply for preparation of a decree of the
order impugned. In the meantime he can
prefer a second appeal relying upon Rule
6-A of Order XX C.P.C. He should annex
the original decree of the Trial Court to
facilitate valuation etc. of the second
appeal.

23. Let a copy of this judgment be
circulated amongst District Judges in the
State of U.P., who in turn shall circulate
the same amongst other Judges of the
District so that the practical difficulty
being faced in filing second appeal as
pointed out by the Members of the Bar, is
removed.

24. The Registrar General of this
Court shall take necessary steps for
circulation of this judgment as aforesaid.
----------
(2020)1ILR 1588

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 16.12.2019

BEFORE
THE HON'BLE PANKAJ KUMAR JAISWAL, J.
THE HON'BLE ALOK MATHUR, J.

Misc. Bench No. 34971 of 2019

M/S Ajmani Leasing & Finance Ltd.
 ...Petitioner
Versus
U.O.I. & Ors. ...Respondents

Counsel for the Petitioner:
Shishir Chandra, Vishnu Pratap Singh

Counsel for the Respondents:
A.S.G.

A. Reserve Bank of India Act, 1934 -
Challenging
order-cessation
of
permission-granted
to
the
petitioner
company-to carry on the business of NonBanking Financial Institution (NBFI)-on
account of-failure in complying-with the
directions-issued
by
RBI-regarding
achievement of the specified Net Owned
Fund (NOF)-under section 45-IA (6)-
matters involving policy decision and
economic tests-judicial review-limitedunless decision found contrary to-any
statutory provision or Constitution-Court
would not interfere-principal of natural
justice-duly complied.

B. Held, that in the matter of policy
decision and economic tests, the scope of
1590 INDIAN LAW REPORTS ALLAHABAD SERIES
judicial review is very limited. Unless the
decision is shown to be contrary to any
statutory provision or the Constitution,
the Court would not interfere with an
economic decision taken by the State.
The Court cannot examine the relative
merits of different economic policies and
cannot strike down the same merely on
the ground that another policy would
have been fairer and better. It was
further held that it is neither within the
domain of the Courts, nor the scope of
judicial review to embark upon an
enquiry as to whether a particular public
policy is wise or whether better public
policy can be evolved, nor are the Courts
inclined to strike down a policy at the
behest of a petitioner merely because it
has been urged that a different policy
would have been fairer or wiser or more
scientific or more logical. Wisdom and
advisability
of
economic
policy
are
ordinarily
not
amenable
to
judicial
review. In matters relating to economic
issues the Government has, while taking
a decision, right to "trial and error" as
long as both trial and error are bona fide
and within the limits of the authority. For
testing the correctness of a policy, the
appropriate forum is Parliament and not
the Courts.

C. After considering the facts of the case
as well as the principles enunciated by
the Hon'ble Supreme Court, we are of the
opinion that principles of natural justice
was compiled by the Bank by giving a
show cause notice and considering the
reply of petitioner before cancelling the
registration. The impugned order cannot
be set-aside on the ground of the same
having been passed in violation of
principles of natural justice. Apart from
this, the petitioner has failed to indicates
as to how he was prejudicial in not being
afforded an opportunity of personal
hearing. We do not find any merit in the
contention of the petitioner in this
regard.

Writ Petition dismissed. (E-8)

List of cases cited: -
1. Ashok Kumar Sonkar vs Union of India &
Others (2007) 4 SCC 54

2. P.D. Agrawal v. State Bank of India and
Others (2006) 8 SCC 776

3. S.L. Kapoor vs. Jagmohan & Ors. [(1980) 4 SCC 379]

4. State Bank of Patiala & Ors. vs. S.K.
Sharma [(1996) 3 SCC 364]

5. Rajendra Singh vs. State of M. P. [(1996) 5 SCC 460]

6. State of U.P. vs. Neeraj Awasthi & Ors.
JT 2006 (1) SC 19.

7. Mohd. Sartaj vs. State of U. P. (2006) 1
SCALE 265.]"

8. Arcot Textile Mills Ltd vs Reg. Provident Fund
Commissioner: (2013) 16 SCC 1

9. Ajit Kumar Nag v. General Manager (PJ),
Indian Oil Corpn. Ltd., Haldia and Others

10. In Natwar Singh v. Director of Enforcement
and Another

11. Kesar Enterprises Limited v. State of Uttar
Praesh and Others

12. Swadeshi Cotton Mills v. Union of India[18],
Canara Bank v. V.K. Awasthy

13. Sahara India (Firm) v. CIT

14. Villianur Iyarkkai Padukappu Maiyam vs.
Union of India reported in (2009) 7 SCC 561

(Delivered by Hon'ble Pankaj Kumar
Jaiswal,J. & Hon'ble Alok Mathur,J.)

1. Heard Sri Shishir Chandra, learned
counsel for the petitioner and Sri Surya Bhan
Pandey, learned Assistant Solicitor General of
India, assisted by Sri Varun Pandey, learned
counsel for the respondent no.1.

2. The petitioner, which is a nonbanking financial company, is aggrieved
1 All. M/S Ajmani Leasing & Finance Ltd. Vs. U.O.I. & Ors.
1591
by the order dated 30.10.2018 passed by
the
respondent
no.3-Deputy
General
Manager,
Reserve
Bank
of
India,
Department of Non-Banking Supervision,
Kanpur under Section 45-IA(6) of the
Reserve
Bank
of
India
Act,
1934
(hereinafter referred to as "1934 Act"),
whereby
permission
granted
to
the
petitioner's company for carrying the
business
of
Non-Banking
Financial
Institution (NBFI) has been ceased. The
petitioner has also challenged the appellate
order dated 26.08.2019 passed by the
respondent no.1-Ministry of Finance,
Department of Financial Services, Union
of India, under Section 45-IA (7) of 1934
Act, whereby the appeal filed by the
petitioner,
bearing
No.F
No.
25/247/2019/BOA-II : in re: M/s Ajmani
Leasing & Finance Ltd. Vs. Reserve Bank
of
India,
against
the
order
dated
30.10.2018, has been dismissed.

3. Brief facts of the case are that the
petitioner's company was incorporated on
12.8.1988 under the Companies Act, 1956
and
was
granted
a
Certificate
of
Registration, bearing No. A-12.00284
dated 10.1.2001 by the Reserve Bank of
India (hereinafter referred to as "Bank")
and on reclassification of the Company as
an Asset Finance Company, CoR No.A1200284, dated 21.9.2007 was issued to it,
under the provisions of Section 45-IA of
1934 Act to carry on the business of a nonbanking
financial
institution
(NBFI)
subject to fulfilling the requirements under
Chapter III-B of the 1934 Act and
complying
the directions,
regulations
including prudential norms issued by the
Bank from time to time as also the terms
and conditions under which the said
Certificate of Registration was issued to it.
The said Certificate of Registration was
cancelled by the Reserve Bank of India
vide order dated 30.10.2018 in terms of
Section 45-IA (6) of 1934 Act on account
of its failure to comply with the directions
of the Reserve Bank of India as regard
achievement of the specified Net Owned
Fund (NOF).

4.

The
petitioner's
company,
thereafter, had challenged the aforesaid
order dated 30.10.2018 by filing appeal,
which
was
registered
as
F
No.
25/247/2019/BOA-II : in re: M/s Ajmani
Leasing & Finance Ltd. Vs. Reserve Bank
of India. The appellate authority, vide
order dated 26.08.2019, dismissed the
appeal on the ground that the writ
petitioner/appellant company has failed to
achieve a NOF of Rs.200.00 before 1st
April, 2017 and has also not given any
valid reasons for not achieving the same.
Paras 5 and 6 of the order dated
26.08.2019 (supra) are relevant, which
reads as under :-

"5. In its reply dated 20th June,
2018 to the Show Cause Notice of RBI, the
appellant company had stated that their
business in previous years had gone
through tough and stressful situation due
to inconsistent state government policies
towards Vikram and Auto permits in
Lucknow. It was a very hard time for the
industry and as a result, the NonPerforming
Assets
increased.
The
appellant further requested RBI to give
time
till
June,
2019
to
meet
the
requirements of the RBI notification. In his
appeal also, the appellant has reiterated
his request for time upto June, 2019. In
addition, the appellant company has
raised the issues of natural justice and not
being granted reasonable opportunity of
being heard.

6. After going through the
records and hearing the arguments put
1592 INDIAN LAW REPORTS ALLAHABAD SERIES
before me, it is observed that the RBI
circular dated 10th November, 2014 read
with notification dated 27th March, 2015
had
clearly
prescribed
a
NOF
of
Rs.200.00 lakh as on 31st March, 2017 for
NBFCs to commence or carry on the
business of NBFI. It was also stated in the
circular that NBFCs failing to achieve the
prescribed ceiling within the stipulated
time period shall not be eligible to hold the
CoR as NBFCs and RBI will initiate the
process for cancellation of CoR against
such NBFCs. The appellant company, in
its reply dated 20th June, 2018 to the SCN,
had sought time upto June, 2019 which
was not granted by the RBI and the CoR
was cancelled. As regards the contentions
of the appellant invoking principles of
natural justice for not being granted
reasonable opportunity of being heard
before cancellation of CoR, it is observed
that RBI has specifically vide letter dated
19th October, 2015 specified the details of
its notification dated 27th March, 2015
and advised the appellant to submit plans
for increasing the NOF to the prescribed
levels in view of its NOF being only
Rs.88.89 lakh as on 31st March, 2015.
Thus, ample opportunity was provided to
the appellant. Its contention that due to
inconsistent policy on autos they faced
hardships cannot be taken as a reason for
not following a statutory requirement of
doing business. It is observed that
reasonable opportunity of being heard
does not necessarily mean an opportunity
of personal hearing."

5. Learned counsel for the petitioner
has fairly admitted the fact that the
notification dated 27.03.2015 specifying
Rs.200 Lakhs as NOF for NBFCs to
commence or carry on business has not
been
challenged
by
the
petitioner.
However, he submits that while passing
the impugned order dated 26.08.2019, the
appellate authority erred in not considering
the fact that prior to passing the order
dated 30.10.2018, no opportunity was
granted to the writ petitioner, therefore, the
impugned order is liable to be quashed.

6. Learned counsel for the petitioner
has assailed the impugned order dated
26.08.2019 on the ground that he was not
given an opportunity of hearing and the
respondents
have
acted
in
a
most
unreasonable manner without considering
the reasons stated by the petitioner in reply
to the show cause notice and, therefore,
the impugned order is vitiated in the eyes
of law and is liable to be set aside.

7. Heard the learned counsels for the
parties.

8. The Bank in exercise of the
powers under sub- Clause (b) of subSection (1) of Section 45-IA of the 1934
Act, and in supersession of Notification
No.132/CGM
(VSNM)-99
dated
20.04.1999, specified Rs.200 Lakhs as
NOF requirement for an NBFC to
commence or carry on the business of
Non-Banking Financial Institutions. The
notification provided that an NBFC
holding a Combined Operating Ratio
(CoR) issued by the Reserve Bank of
India, may continue to carry on the
business of a Non-Banking Financial
Institution, if such company has NOF of
(i) 100 Lakhs of rupees before April 1,
2016; and (ii) 200 Lakhs of rupees before
April 1, 2017.

9. The writ petitioner is a NBFC who
was granted CoR in terms of Section 45-
IA of the 1934 Act. The respondents do
not dispute the power of the Reserve Bank
of India to fix the monetary limit of NOF
1 All. M/S Ajmani Leasing & Finance Ltd. Vs. U.O.I. & Ors.
1593
required to be furnished by NBFCs. In
fact, this power is traceable to Section 45-
IA(a)(b) of the Act. The writ petitioner
having not disputed the power of the
Reserve Bank of India to fix the NOF, can
obviously not challenge the date fixed by
the Reserve Bank of India for complying
with the said norms.

10.

The
notification
dated
27.03.2015 applies to NBFCs who seek to
commence business and also to the
existing NBFCs who want to carry on the
business. Thus, the writ petitioner was
forewarned as early as March, 2015 that, if
he wants to carry on business of NBFCs,
he has to achieve NOF of 100 lakhs of
rupees before April 1, 2016 and 200 Lakhs
of
rupees
before
April
1,
2017.
Admittedly, the writ petitioner did not
achieve the said monetary limit fixed in
the notification within the cut of date.

11. What is required to be seen is
whether the respondents were justified in
cancelling the CoR granted to the writ
petitioner for non-compliance of the NOF
requirement within the time stipulated.
The respondent issued show cause notice
dated 07.06.2018. The attention of the writ
petitioner was invited to the CoR issued by
the Reserve Bank of India underSection
45-IAof the 1934 Act and the respondents
were reminded that as per the provisions
of Section 45- IA(6) of the 1934 Act, by
which the Reserve Bank of India is
empowered to cancel the CoR issued to a
company on account of any of the reasons
referred to in sub-Clauses (i) to (v) of that
sub-Section. Further, the respondents were
informed that in terms of the Revised
Regulatory
Framework
for
NBFCs
(RBI/2014-15/520DNBR
(PD)
CC.No.024/03.10.001/2014-15) read with
notification dated 27.03.2015, the Reserve
Bank of India had specified Rs.200 lakhs
of rupees as the NOF required for NBFCs
to commence or carry on the business of
non-banking financial institution.

12. It was submitted that as per the
records available with the RBI, the writ
petitioner was holding CoR on the date of
issuance of the aforementioned direction
and has failed to achieve the NOF of 200
lakhs of rupees before April 1, 2017, thus,
violating the provisions under which the
Company was permitted to continue the
business of a non-banking financial
institution. Thus, the writ petitioner was
informed that he has acted in violation of
the directions issued by the Reserve Bank
of India in exercise of its powers under
Chapter III- B of the 1934 Act while
conducting its business as a non-banking
financial institution. The writ petitioner
was called upon to show cause within
fifteen days of the receipt of the order as to
why the CoR issued to him should not be
cancelled under Section 45-IA(6) of the
1934 Act and penal action be not initiated
against the writ petitioner for offences
punishable under Section 58 of the 1934
Act.

13. The writ petitioner submitted his
reply within the time permitted in which,
he accepted the fact that he has not
complied with the requirement of NOF of
200 lakhs of rupees before April 1, 2017.
The writ petitioner stated that his business
has been affected due to the inconsistent
State
Government
policies
towards
Vikram and auto permits in Lucknow, as a
result the non-performing assets increased,
and the Courts have failed in providing
timely justice which may have helped the
company recover its outstanding dues.
Accordingly, he sought for withdrawal of
the show cause notice. The respondents
1594 INDIAN LAW REPORTS ALLAHABAD SERIES
passed an order dated 30.10.2018 rejecting
the reply given by the writ petitioner as not
being satisfactory and also having violated
the statutory provisions contained in
Section 45-M of the 1934 Act, cancelled
the CoR in terms of Section 45- IA(6) of
the 1934 Act.

14. To consider the submissions of
the writ petitioner, we need to refer to
Section 45-IA of 1934 Act which is as
follows:-

"45-IA.
Requirement
of
registration and net owned fund.-

(1) Notwithstanding anything
contained in this Chapter or in any other
law for the time being in force, no nonbanking
financial
company
shall
commence or carry on the business of a
non-banking financial institution without-

(a) obtaining a certificate of
registration issued under this Chapter; and

(b) having the net owned fund of
twenty five lakh rupees or such other
amount, not exceeding two hundred lakhs,
as the bank may, be notification in the
Official Gazette, specify.

(2) Every non-banking financial
company shall make an application for
registration to the bank in such form as the
bank may specify:

Provided that a non-banking
financial company in existence on the
commencement of the Reserve Bank of
India (Amendment) Act, 1997 shall make
an application for registration to the bank
before the expiry of six months from such
commencement
and
notwithstanding
anything contained in sub-section (1) may
continue to carry on the business of a nonbanking
financial
institution
until
a
certificate of registration is issued to it or
rejection of application for registration is
communicated to it.

(3) Notwithstanding anything
contained in sub- section (1), a nonbanking financial company in existence on
the commencement of theReserve Bank of
India (Amendment) Act, 1997 and having
a net owned fund of less than twenty five
lakh rupees may, for the purpose of
enabling such company to fulfill the
requirement
of
thenet
owned
fund,
continue to carry on the business of a nonbanking financial institution-

(i) for a period of three years
from such commencement; or

(ii) for such further period as the
bank may, after recording the reasons in
writing for so doing, extend, subject to the
condition that such company shall, within
three months of fulfilling the requirement
of the net owned fund, inform the bank
about such fulfilment:

Provided that the period allowed to
continue business under this sub-section shall
in no case exceed six years in the aggregate.

(4) The Bank may, for the
purpose of considering the application for
registration, require to be satisfied by an
inspection of the books of the non-banking
financial company or otherwise that the
following conditions are fulfilled:-

(a)
that
the
non-banking
financial company is or shall be in a
position to pay its present or future
depositors in full as and when their claims
accrue;

(b) that the affairs of the nonbanking financial company are not being
or are not likely to be conducted in a
manner detrimental to the interest of its
present or future depositors;

(c) that the general character of
the
management
or
the
proposed
management of the non-banking financial
company shall not be prejudicial to the
public interest or the interests of its
depositors;
1 All. M/S Ajmani Leasing & Finance Ltd. Vs. U.O.I. & Ors.
1595

(d)
that
the
non-banking
financial company has adequate capital
structure and earning prospects;

(e) that the public interest shall
be served by the grant of certificate of
registration to the non-banking financial
company to commence or to carry on the
business in India;

(f) that the grant of certificate of
registration shall not be prejudicial to the
operation
and
consolidation
of
the
financial sector consistent with monetary
stability and economic growth considering
such other relevant factors which the bank
may, by notification in the Official
Gazette, specify; and

(g) any other condition, fulfilment
of which in the opinion of the bank, shall be
necessary to ensure that the commencement of
or carrying on of the business in India by a
non-banking financial company shall not be
prejudicial to the public interest or in the
interest of the depositors.

(5) The Bank may, after being
satisfied that the conditions specified in subsection (4) are fulfilled, grant a certificate of
registration subject to such conditions which it
may consider fit to impose.

(6) The Bank may cancel a
certificate of registration granted to a nonbanking financial company under this
section if such company-

(i) ceases to carry on the
business of a non-banking financial
institution in India; or

(ii) has failed to comply with any
condition subject to which the certificate
of registration had been issued to it; or

(iii) at any time fails to fulfil any
of the conditions referred to in clauses (a)
to (g) of sub-section (4); or

(iv) fails-

(a) to comply with any direction
issued by the bank under the provisions of
this Chapter; or

(b) to maintain accounts in
accordance with the requirements of any
law or any direction or order issued by the
bank under the provisions of this Chapter;
or

(c) to submit or offer for
inspection its books of accounts and other
relevant documents when so demanded by
an inspecting authority of the bank; or

(v) has been prohibited from
accepting deposit by an order made by the
bank under the provisions of this Chapter
and such order has been in force for a
period of not less than three months:

Provided that before cancelling a
certificate of registration on the ground
that the non-banking financial company
has failed to comply with the provisions of
clause (ii) or has failed to fulfil any of the
conditions referred to in clause (iii) the
bank, unless it is of the opinion that the
delay in cancelling the certificate of
registration shall be prejudicial to public
interest or the interest of the depositors or
the non-banking financial company, shall
give an opportunity to such company on
such terms as the bank may specify for
taking necessary steps to comply with such
provisions or fulfilment of such condition:

Provided further that before
making any order of cancellation of
certificate of registration, such company
shall be given a reasonable opportunity of
being heard"

15. The 1934 Act was enacted to
constitute the Reserve Bank of India to
regulate the issue of bank notes and
keeping of reserves of the view of securing
monetary stability in the country and
generally operate the currency and credit
of the country to its advantage. The
Reserve Bank of India being an expert
body with regard to operation of the credit
system for securing monetary stability in
1596 INDIAN LAW REPORTS ALLAHABAD SERIES
the country and it is expected to take
decisions by taking into consideration all
the relevant aspects, laws and the policies
of the government, and in this regard there
is very little scope of judicial intervention.

16. The notification dated 27/03/15
was issued by the Reserve Bank of India,
Department of Non-banking Regulation,
Central Office, Mumbai, which provided
that a non-banking financial company
holding a certificate of registration issued
by reserve bank of India and having net
owned fund of less than 200 lakh of
rupees, may continue to carry on business
of non-banking financial institution, if
such company achieved net owned fund
of:-

(i) 100 lakh of rupees before
01/04/16

(ii) 200 lakh of rupees before
01/04/17.

17. The petitioner's have candidly
admitted that he has not fulfilled the NOF
requirement before the cut-off dates as
prescribed in the aforesaid notification,
and in terms of provisions contained in
Section 45-IA (6) of the 1934 Act has
cancelled the registration on the ground
that the petitioner has failed to comply
with the directions issued by the bank.

18. The impugned order rejecting the
appeal of the petitioner has been mainly
assailed on the ground that he was not
provided with an opportunity of personal
hearing before passing of the impugned
order and, therefore, the same is liable to
be set aside score alone. The notification
dated 27/03/15 itself provided that the
petitioner was to achieve the NOF of 100
lakh of rupees before 01/04/16 and 200
lakh of Rupees before 01/04/17 which was
admittedly not achieved by him. The
petitioner submitted a reply in response to
the show cause notice on 20/06/18. The
reply submitted by the Company was duly
considered by the Reserve Bank of India
and the same is not found to be
satisfactory and, therefore, by means of the
order dated 30/10/18, the certificate of
registration dated 21/09/07 was cancelled
after recording a finding that the company
is not eligible to continue to carry on the
business of a non-banking financial
institution on account of its failure to
comply with the directions of the reserve
bank as regard achievement of specified
NOF, and it was further recorded that the
bank is satisfied that no public interest will
be served in allowing the company to
continue to undertake the business of the
non-banking financial institution.

19. The petitioner preferred an
appeal against the aforesaid order to the
Central Government assailing the order of
cancellation of registration on the ground
that the same having been passed in
violation of principles of natural Justice,
that it vague in as much as it did not
specify the provisions which had not been
complied by the petitioner, and also that
the petitioner had a concrete plan for
raising its NOF.

20. The Central Government by
means of the impugned order dated
20/10/18 has rejected the appeal after
considering the grounds stated by the
petitioner in the appeal. Before the
appellate authority, the petitioner was
granted an opportunity of hearing to
present his case. The appellate authority
while rejecting the appeal of the petitioner
relied
upon
the
notification
dated
27/03/15, and held that the petitioner had
failed to achieve the prescribed ceiling
1 All. M/S Ajmani Leasing & Finance Ltd. Vs. U.O.I. & Ors.
1597
within the stipulated time period and,
therefore, he is not eligible to hold the
certificate of registration as NBFC.

21. With regard to the contention of the
petitioner that he was not afforded an
opportunity of hearing before cancellation of
the registration, it was held that the petitioner
was granted reasonable opportunity of being
heard before cancellation of the registration
and that by means of notification dated
27/03/15, he was advised to submit plans for
increasing the NOF to the prescribed level, but
the NOF was only 88.89 lakhs as on 31/03/15
and ample opportunity was provided to him to
raise the NOF and the ground taken by the
petitioner with regard to the inconsistent policy
on the autos as well as other hardship would
not be a reason for not following the statutory
requirement of doing business. It was also held
that the reasonable opportunity of being heard
does not necessarily mean an opportunity of
personal hearing.

22. It is clear that a show was notice
was issued to the petitioner before
cancellation of the registration and it was
indicated in the show cause notice that the
petitioner has not achieved the NOF within
the stipulated period prescribed in the
notification of 2015. The reply submitted
by the petitioner was duly considered. It
cannot be said that no opportunity of
hearing was given to the petitioner.

23. To consider the contention of the
petitioner that it was mandatory to provide
opportunity of personal hearing, it would
be
necessary
to
consider
the
pronouncements of the Apex Court in this
regard.

24. In Ashok Kumar Sonkar vs
Union Of India & Others : (2007) 4 SCC
54, the Hon'ble Apex Court observed:-

"In P.D. Agrawal v. State Bank
of India and Others[(2006) 8 SCC 776],
this Court observed :

"The
Principles
ofnaturaljusticecannot
be
put
in
astraightjacketformula. It must be seen in
circumstantial flexibility. It has separate
facets. It has in recent time also undergone
a sea change."

It was further observed :

"Decision of this Court in S.L.
Kapoor vs. Jagmohan & Ors. [(1980) 4
SCC 379], whereupon Mr. Rao placed
strong reliance to contend that non-
observance of principle of natural justice
itself causes prejudice or the same should
not be read "as it causes difficulty of
prejudice", cannot be said to be applicable
in the instant case. The principles of
natural justice, as noticed hereinbefore,
has undergone a sea change. In view of
the decision of this Court inState Bank of
Patiala & Ors. vs. S.K. Sharma[(1996) 3
SCC 364] and Rajendra Singh vs. State of
M.P. [(1996) 5 SCC 460], the principle of
law is that some real prejudice must have
been caused to the complainant. The Court
has shifted from its earlier concept that
even a small violation shall result in the
order being rendered a nullity. To the
principal doctrine of audi alterem partem,
a clear distinction has been laid down
between the cases where there was no
hearing at all and the cases where there
was mere technical infringement of the
principal. The Court applies the principles
ofnaturaljusticehaving regard to the fact
situation obtaining in each case. It is not
applied in a vacuum without reference to
the relevant facts and circumstances of the
case. It is no unruly horse. It cannot be put
in a straightjacket formula. [See Viveka
Nand Sethi vs. Chairman, J. & K. Bank
Ltd. & Ots. (2005) 5 SCC 337 and State of
U.P. vs. Neeraj Awasthi & Ors. JT2006
1598 INDIAN LAW REPORTS ALLAHABAD SERIES
(1) SC 19. See also Mohd. Sartaj vs. State
of U.P. (2006) 1 SCALE 265.]"

25. In the case of Arcot Textile
Mills Ltd vs Reg. Provident Fund
Commissioner : (2013) 16 SCC 1, it was
observed by the Apex Court :-

"25. We may state with profit
that principles of natural justice should
neither be treated with absolute rigidity
nor should they be imprisoned in a
straight-jacket. It has been held in Ajit
Kumar Nag v. General Manager (PJ),
Indian Oil Corpn. Ltd., Haldia and
Others[14] that the maxim audi alteram
partem cannot be invoked if the import of
such maxim would have the effect of
paralyzing the administrative process or
where the need for promptitude or the
urgency so demands. It has been stated
therein that the approach of the Court in
dealing with such cases should be
pragmatic rather than pedantic, realistic
rather than doctrinaire, functional rather
than formal and practical rather than
precedential. The concept of natural
justice sometimes requires flexibility in the
application of the rule. What is required to
be seen the ultimate weighing on the
balance of fairness. The requirements of
natural
justice
depend
upon
the
circumstances of the case.

26. In Natwar Singh v. Director
of Enforcement and Another[15], this
Court
while
discussing
about
the
applicability of the rule had reproduced
the following passage:-

"It is not possible to lay down
rigid rules as to when the principles of
natural justice are to apply: nor as to their
scope and extent. Everything depends on
the subject-matter:" [see R. v. Gaming
Board for Great Britain, ex p Benaim and
Khaida[16] at QB p. 430 C], observed
Lord Denning, M.R.

... Their application, resting as it
does upon statutory implication, must
always be in conformity with the scheme of
the Act and with the subject-matter of the
case."

27. In this context, we may
fruitfully refer to the verdict in Kesar
Enterprises Limited v. State of Uttar
Praesh and Others[17] wherein the Court
was considering the applicability of
principles of natural justice to Rule 633(7)
of the Uttar Pradesh Excise Manual. The
said Rule provided that if certificate was
not received within the time mentioned in
the bond or pass, or if the condition of
bond was infringed, the Collector of the
exporting district or the Excise Inspector
who granted the pass shall take necessary
steps to recover from executant or his
surety the penalty due under the bond. A
two- Judge Bench referred to the decisions
in Swadeshi Cotton Mills v. Union of
India[18],
Canara
Bank
v.
V.K.
Awasthy[19] and Sahara India (Firm) v.
CIT[20] and came to hold as follows:-

"30. ... we are of the opinion that
keeping in view the nature, scope and
consequences of direction under sub-rule
(7) of Rule 633 of the Excise Manual, the
principles of natural justice demand that a
show- cause notice should be issued and
an opportunity of hearing should be
afforded to the person concerned before
an order under the said Rule is made,
notwithstanding the fact that the said Rule
does not contain any express provision for
the
affected
party
being
given
an
opportunity of being heard."

28. Regard being had to the
discussions made and the law stated in the
field, we are of the considered opinion that
natural
justice
has
many
facets.
Sometimes, the said doctrine applied in a
1 All. M/S Ajmani Leasing & Finance Ltd. Vs. U.O.I. & Ors.
1599
broad way, sometimes in a limited or
narrow manner. Therefore, there has to be
a limited enquiry only to the realm of
computation which is statutorily provided
regard being had to the range of delay.
Beyond that nothing is permissible. We are
disposed to think so, for when an
independent order is passed making a
demand, the employer cannot be totally
remediless and would have no right even
to
file
an
objection
pertaining
to
computation. Hence, we hold that an
objection can be filed challenging the
computation in a limited spectrum which
shall be dealt with in a summary manner
by the Competent Authority."

26.

Applying
the
principles
enunciated by the Hon'ble Supreme Court
with regard to principles of natural Justice,
it is clear that Section 45-IA(6)(v) 1934
Act provides for cancellation of certificate
of registration after giving a reasonable
opportunity of being heard.

27. In the facts of the present case, it
has been admitted that the petitioner did
not comply with the requirement of the
end NOF before the cut-off date of April 1
2017. This is not a case where if
opportunity of personal hearing was
afforded to the petitioner they could have
pleaded before the authority about the
reasons
for
non-compliance
of
the
notification of 2015, and in our considered
opinion
in
the
present
set
of
circumstances, no useful purpose would
have
been
served
in
providing
an
opportunity of personal hearing to the
petitioner, taking into account the fact that
he has already admitted that he did not
comply with the notification of 2015. The
business of the petitioner is subject to
obtaining a licence from the reserve bank
of India after fulfilling certain conditions
prescribed by the Bank from time to time. The
petitioner is under a duty to comply with the
directions of the reserve bank as provided in
section 45IA of 1934 Act, and the statute itself
mandates that in case the direction are not
complied then the registration is liable to be
cancelled, and that there is no escape from the
statutory provisions. It is further needless to
say that the petitioner does not have a right to
carry on the business of non-banking finance
company
without
complying
with
the
directions of the Reserve Bank of India. We
further take into account the fact that it has not
been argued or submitted by the petitioner that
they suffered any prejudice on being denied
opportunity of personal hearing, and therefore
sufficient opportunity of hearing was provided
to them by putting them under notice and
considering the reply before proceeding to
cancel their registration.

28.

Hon'ble
Supreme
Court
inVillianur
Iyarkkai
Padukappu
Maiyam vs. Union of Indiareported in
(2009) 7 SCC 561 held that in the matter
of policy decision and economic tests, the
scope of judicial review is very limited.
Unless the decision is shown to be
contrary to any statutory provision or the
Constitution, the Court would not interfere
with an economic decision taken by the
State. The Court cannot examine the
relative merits of different economic
policies and cannot strike down the same
merely on the ground that another policy
would have been fairer and better. It was
further held that it is neither within the
domain of the Courts, nor the scope of
judicial review to embark upon an enquiry
as to whether a particular public policy is
wise or whether better public policy can be
evolved, nor are the Courts inclined to
strike down a policy at the behest of a
petitioner merely because it has been
urged that a different policy would have
1600 INDIAN LAW REPORTS ALLAHABAD SERIES
been fairer or wiser or more scientific or
more logical. Wisdom and advisability of
economic
policy
are
ordinarily
not
amenable to judicial review. In matters
relating
to
economic
issues
the
Government has, while taking a decision,
right to "trial and error" as long as both
trial and error are bona fide and within the
limits of the authority. For testing the
correctness of a policy, the appropriate
forum is Parliament and not the Courts.

29. After considering the facts of the
case as well as the principles enunciated
by the Hon'ble Supreme Court, we are of
the opinion that principles of natural
justice was complied by the Bank by
giving
a
show
cause
notice
and
considering the reply of petitioner before
cancelling the registration. The impugned
order cannot be set-aside on the ground of
the same having been passed in violation
of principles of natural justice. Apart from
this, the petitioner has failed to indicates as
to how he was prejudicial in not being
afforded an opportunity of personal
hearing. We do not find any merit in the
contention of the petitioner in this regard.

30. For the reasons stated herein
above, we are of the considered view that
there is no infirmity in the appellate order
dated
26/08/19
and
the
order
of
cancellation of registration dated 30/10/18.

31. The petition being devoid of merits is
hereby dismissed. No order as to costs.
----------
(2020)1ILR 1599

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.11.2019

BEFORE
THE HON'BLE RAM KRISHNA GAUTAM, J.
Matters Under Article-227 (Crl.)No. 6995 of 2019

Mahesh Kumar & Ors. ...Applicants
Versus
State of U.P. & Anr. ...Respondents

Counsel for the Petitioners:
Sri Ved Prakash Shukla

Counsel for the Respondents:
C.S.C.

A. Criminal Procedure Code, 1973 -
Section 245 - CJM u/s 245 Cr.P.C dropped
Section
452
IPC,
though
offences
punishable u/s 323, 504, 506 IPC were
prima facie present - In revision Sessions
Judge held that by framing charge under
Section 452 of IPC, no loss will be caused
to the applicants - Held - Ingress &
trespass was said by the complainant in
his own portion of premises where he
was residing and on the basis of it,
direction was given by the learned
Sessions Judge.

Matter Under Article 227 dismissed. (E-5)

(Delivered by Hon'ble Ram Krishna Gautam, J.)

1. This Application, under Article
227 of the Constitution of India, has been
filed by the Applicants, Mahesh Kumar,
Suresh Kumar and Rudresh, against State
of U.P. and Dinesh Kumar Agrawal, with
a prayer for setting aside impugned order,
dated 18.4.2016, passed by the Additional
Sessions Judge, Sant Kabir Nagar, in
Criminal Revision, filed against the order
of Chief Judicial Magistrate, Sant Kabir
Nagar,
dated
15.3.2016,
passed
in
Complaint Case No.