# JOSEPH KURUVILLA •VELLUKUNNEL v. THE RESERVE BANK OF INDIA AND OTHERS - **Citation:** [1962] Supp. 3 S.C.R. 632 - **Court:** Supreme Court of India - **Decided:** 1960-08-08 - **Case number:** Civil Appeal No. 487 of 1961 - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/joseph-kuruvilla-vellukunnel-v-the-reserve-bank-of-india-and-others-2487 - **Pages:** 81 ## Headnote I96Z s1;dr;J;;;rd M tnU}aeturing Co. . v. "G'obind v,;;:;~J; 1962 March 7. .. 632 Sl)'PREl\lE COURT RE;E'ORTS [1962] SUPP. This being the only'poin~ on whioh the labour court had refu~ed to give approval, the appeal m~st suc'ceed. We therefore allow the appeal, .set.aside the order of the labour court and approve the action taken by· 'the appellant. In the circumstances we pass na order as to costs. {l.ppool allowed. JOSEPH KURUVILLA •VELLUKUNNEL v. THE RESERVE BANK OF INDIA AND OTHERS (With connected petition) Banking Companies-Winding up-Enactment providing for an order for winding up by High Court on the basis of Reser11e Bank's opinion-Constitutional validity-Banking Companies Act, 1949 (10 of 1949), ss. 2, 35, 35A, 36, 38- -Reserve Bank of India Act, 1934 (2 of 1934), ss. 7, 8, 38Companies Act, 1956 (I of 1956), ss. 433, 450(2)-Constitution of Inaia, Arts. U, 19(1)( f) and (g), 301, 302. · ~ I Sub·section (l) of s. 38 of the Banking Companies Act, 1949, provided : '1Notwithstanding anything contained in ss. 391, 392, 433 and 583 of the Companies Act, 1956 .... the High Court shall order the win'ding 'up for a banking company . ... if an application for its winding up has been made by the Reserve Bank under s. 47 of this .section." Under s. 38(b)(iii) of the Act .''the Reserve Ban'k may make an application under this section for the winding up of a ~ banking company• if in the opinion of the Reserve Bank the . ·1 continuance of the banking company is prejudicjal to the interests of its depositors." · ·rn exercise of, the p9wers vested in it by the Banking companies Act, 1949, as w'ell -as the Reserve Bank of India Act, 1934, the Reserve Bank had been inspecting the Palai Central Bank Ltd., periodically, and had been warning the Bank that its business was being .conducted in a manner detrimental to the .interest of its depositoi-s. In June 1960, there was ·a run on several branches of the Bank. The R·eserve Bank was of the opnion that the Palai Bank was not jn a positipn to fay its depositors in f'lll and ~h11t lhr 3 S.C.R. SUPREME COURT REPORTS 633 continuance of the Bank was prejudicial to the interest of the depositors. On August 8, 1960 the Reserve Bank made an application in the High Court of Kerala under s. 38(3)(b)(iii) of the Banking Companies Act, 1949, read with the Companies Act, 1956, for the winding up of the Palai Central Bank Ltd. After hearing the Reserve Bank, the Palai Bank and the creditors, the High Court passed an order allowing the application of the Reserve Bank, and directing the winding up of the Palai Bank. It was contended for those who opposed the application that ss. 38(1) and 3(b) (iii) of the Banking Companies Act contravened Arts. 14 and 19 (!) (f) and (g) of the Constitution of India and, therefore were void because (a) they permitted discrimination between a banking company and any other company by prescribing different laws for their respective winding up, (b) they created an unreasonable restriction upon the right lo carry on banking and ( c) the whole procedure was denial of the principles of natural justice chiefly by denying an ac~ess to courts, inasmuch as under s. 433 of the Compames Act, 1956, when an application was made to wind up a company, the High Court had to be satisfied after a fair trial that an order to wind up the company was called for, and the Judge was free to reach a decision after the company had sho\vn cause, and there was a right of appeal against the decision if adverse to the company, while under the procedure laid down in s. 38 of the Banking Companies Act, 1939, the Reserve Bank was made the sole judge to decide whether the affairs of a banking company were being so conducted as to be prejudicial to the interests of the depositors, and the court had no option but to _an order winding up the bankh:;g company, when the.application was made. It was also contended that ss. 38(1) and 3(b)(iii) were ultra vires being in conflict with Art. 301 of the Constitutipn. Hel ## Text _Characters 0–39,859 of 158,561. This is a partial read: ask again with offset=39859 for what follows._ I96Z s1;dr;J;;;rd M tnU}aeturing Co. . v. "G'obind v,;;:;~J; 1962 March 7. .. 632 Sl)'PREl\lE COURT RE;E'ORTS [1962] SUPP. This being the only'poin~ on whioh the labour court had refu~ed to give approval, the appeal m~st suc'ceed. We therefore allow the appeal, .set.aside the order of the labour court and approve the action taken by· 'the appellant. In the circumstances we pass na order as to costs. {l.ppool allowed. JOSEPH KURUVILLA •VELLUKUNNEL v. THE RESERVE BANK OF INDIA AND OTHERS (With connected petition) Banking Companies-Winding up-Enactment providing for an order for winding up by High Court on the basis of Reser11e Bank's opinion-Constitutional validity-Banking Companies Act, 1949 (10 of 1949), ss. 2, 35, 35A, 36, 38- -Reserve Bank of India Act, 1934 (2 of 1934), ss. 7, 8, 38Companies Act, 1956 (I of 1956), ss. 433, 450(2)-Constitution of Inaia, Arts. U, 19(1)( f) and (g), 301, 302. · ~ I Sub·section (l) of s. 38 of the Banking Companies Act, 1949, provided : '1Notwithstanding anything contained in ss. 391, 392, 433 and 583 of the Companies Act, 1956 .... the High Court shall order the win'ding 'up for a banking company . ... if an application for its winding up has been made by the Reserve Bank under s. 47 of this .section." Under s. 38(b)(iii) of the Act .''the Reserve Ban'k may make an application under this section for the winding up of a ~ banking company• if in the opinion of the Reserve Bank the . ·1 continuance of the banking company is prejudicjal to the interests of its depositors." · ·rn exercise of, the p9wers vested in it by the Banking companies Act, 1949, as w'ell -as the Reserve Bank of India Act, 1934, the Reserve Bank had been inspecting the Palai Central Bank Ltd., periodically, and had been warning the Bank that its business was being .conducted in a manner detrimental to the .interest of its depositoi-s. In June 1960, there was ·a run on several branches of the Bank. The R·eserve Bank was of the opnion that the Palai Bank was not jn a positipn to fay its depositors in f'lll and ~h11t lhr 3 S.C.R. SUPREME COURT REPORTS 633 continuance of the Bank was prejudicial to the interest of the depositors. On August 8, 1960 the Reserve Bank made an application in the High Court of Kerala under s. 38(3)(b)(iii) of the Banking Companies Act, 1949, read with the Companies Act, 1956, for the winding up of the Palai Central Bank Ltd. After hearing the Reserve Bank, the Palai Bank and the creditors, the High Court passed an order allowing the application of the Reserve Bank, and directing the winding up of the Palai Bank. It was contended for those who opposed the application that ss. 38(1) and 3(b) (iii) of the Banking Companies Act contravened Arts. 14 and 19 (!) (f) and (g) of the Constitution of India and, therefore were void because (a) they permitted discrimination between a banking company and any other company by prescribing different laws for their respective winding up, (b) they created an unreasonable restriction upon the right lo carry on banking and ( c) the whole procedure was denial of the principles of natural justice chiefly by denying an ac~ess to courts, inasmuch as under s. 433 of the Compames Act, 1956, when an application was made to wind up a company, the High Court had to be satisfied after a fair trial that an order to wind up the company was called for, and the Judge was free to reach a decision after the company had sho\vn cause, and there was a right of appeal against the decision if adverse to the company, while under the procedure laid down in s. 38 of the Banking Companies Act, 1939, the Reserve Bank was made the sole judge to decide whether the affairs of a banking company were being so conducted as to be prejudicial to the interests of the depositors, and the court had no option but to _an order winding up the bankh:;g company, when the.application was made. It was also contended that ss. 38(1) and 3(b)(iii) were ultra vires being in conflict with Art. 301 of the Constitutipn. Held, (Kapur and Shah, JJ;, dissenting), that ss. 38(1) and (3) (b)(iii) of the Banking Companies Act, 1939, did not offend of Arts. 19( I) (f)' and (g) of the Constitution of India and were valid. In view of the history of the establishment of the Reserve Bank as a C~ntral Bank for India, its position as a Banker·s Bank, its control over banking companies and banking· in India, its position as the issuing -bank, its power to license banking companies and cancel thei~ licences and the numerous powers, a law which empowered the Reserve Bank to come to a decision to wind up a tottering or unsafe banking company fo the interest of the depositors could not be challenged '\S ' 19o2 Joseph Kuruvilla VeUukwmet v. The Rese1ve Bank oj· lndia 1961 Jouph Kt"i;f.ti[l,, Y elluAunne( v ·r1ie Uenerue B,;nk vf Jndia 634 SUPREME COURT REPORTS [1962) SUPP. unreasonable, because even if the court were called upon to take in_in_iediate action it would almost always be guided by the op1n1on of the Reserve Bank. 1\ law may, with reason, leave the detcrminati')n of an iss11e to an expert body and such law is justified 011 the ground of expediency arising fro;n the respective opportunities for action. The exclusion of courts is however not to be lightly inferred or conceded. Held, further (per Sinha, C.J., Hidayatullah and Mudholkar, JJ.), that : ( 1) while ordinary companies dealt with the money of the stock holders, banking companies were in a different class as they dealt with the money of the depositors and had to be regulated differently ; and the Reserve Bank having been given by the Banking Companies Act the power and invested with the duty of watching the affairs, of every hanking cornpany with a vievi to ensuring the safety of the depositors' money, there "'as a valid clas.c;ification ; consequently ss. 38(1) and (3)(b)(iii) of the Banking Companies Act did not offend Art. 14 of the Comtitution. (2) ss. 38(1) and (3)(b)(iii) did n~t amount lo a convcr- ~io11 of a judicial procc5s into an executh-·e action. The sections only made the court ~uide itself frorn the decision or an outside agency and the judicial process cornn1cnced thereafter. (3) ss. 38( 1) and (3) :h)(iii) were not in breach of Art. 301 of the Constitution as they \\'ere in public interest and were protected by Art. 302. Per Kapur and Shah, JJ.-Sr.ction 3H of the llanki1,g Cornpanies Act, 1949, \Vas an unreasonable restriction on the right of a hanking company to carry on its business and was, thcre£ore, unconstitutional. The \'ice of the impugned pro,·ision Jay in (a) the power \'esteII as the R<.'serve Bank of India Act, prriodically inspected the Palai Bank. These insP"ctionH were ruade in J!li)J, July l!l53, February- )1arch ]!)56, Mar<"h 1958 and January-February, l 9(i0. Every time, the Reserve Bank found itre. 3 S.C.R. SUPREME COURT REPORTci. 637 gularities which were pointed out to the Bank, and special directions were iHsued. The· main defects were that the advances made by the Palai Bank were not sound that the bulk of the advances were either irrecoverable or "sticky" (which means, not easily recoverable), that the income taken into account represented to a great extent unrealised interest on these advances, that large advances were made to the Directors, their relations and Companies, in which they were interested, on · no security or inadequate security, and that the Bank was declaring dividends on the basis of profits which were computed without making provision for bad and doubtful debt and by using up the reserves at an alarming rate, while the deposits were going down. In the beginning, the Reserve Bank contended itself, by prohibiting further advances to Directors, their relations and individuals, firms or companies, in which the Directors were interested, advising the Palai Bank to reduce clean advances and to regularise others, warning the Bank that the Reserve Bank considered that the business of the Bank was being conducted in the manner detrimental to the interests of its depositors, and that if the directions were not carried out, action under the first proviso to sub-s. (2) of s. 22 of the Banking Companies Act would be ta.ken by issuing a notice that a licence could not be granted to the Bank. From theoorrespondence which has been filed in this case, it does appear that the l{eserve Bank was not satisfied at each following inspection that . the position had improved; rather it apprehended that it h'1d worsened, and that the directions had not been carried out. This was denied on behalf of the Bank, but nothing depends upon who is right and who is wrong, because no charge of nwla fide conduct is now made against the Reserve .Bank. As a result of the inspection in FebruaryMarch, 1956, the Reserve Bank avers, it was found 196! /oseph Kuruvilla Vellukunnel v. The Reserve Bank of India Hidavatu/lah J J962 J oseplr J{'u1ut1lla VeJlukWU1rl v. Tht! Resen-t Bank of India H kl ayatuU oh J. fi38 SUPREME COURT REPORTs [1962] SUPi>. that on December 31, 1955, the .advances stood at Ha, 355·02 lakha, of which llti. 171 ·"27 lakha were irrncoverable, and that the deposits of tho Bank had been impairer:! by Rs. l:)!J·I3 lakhs. The Roservo Bank also avers that the Bank did not satisfy the requirements of the Banking Companies Act, particularly s. 11, about the minimum paidup capital and reserve6, and ss. 22(3) (a) and (b) about the ability of tho Bank to pay its depositors, present and future, in full or conducting its affair in a manner not detrimental to tho interesta of the d"positors, and did not satisfy the require· mentJaid that tho Reserve Bank itself thought well of the Palai Bank, because in tho year 19!i4, it allowed the opening of a new Branch at Madurai, and evc·n in itH last letter of July 21, 1960, -"' 3 s.c.R. SUPREME COuRT REPORTS 643 it gave the Palai Bank one yea.r to improve matters, and 30 days to show cause against the inspection reports, but took a hasty action before even the 30 days had expired. The action of the Reserve Bank was undoubtedly taken during the period of grace; but after July 21, the situation had altered so radically that delay might have defeated the very purpose of the law, under which action was taken. · Finally, it was contended that the Palai Bank began by being a rural Bank, which was making advances on the security of land, and such security, though "sticky" was capable of being realised. Reference was made to the Report of the Travancore Cochin Banking Enquiry Commission, which was appointed in 1956, where, in making a survey of banking in Travancore-Cochin State, it was pointed out that the Banks were "spread out into the rural interior of the State", and the main business of these banks was "to finance the rural people engaged in a small business-crop raising, produce processing, transporting, vending, etc." It was argued that to a rural Bank of this kind the standards of a commercial bank could not be applied and that the Reserve Bank should have made allowances in respect of the realisability of the advances, the worse of which belonged to a period prior to the extension of the Reserve Bank of India Act to this area. These advances given time, could have been cleared, and an attempt was, in fact, being earnestly made with the assistance of Mr. J. A. Frost, a retired senior grade Officer of the Imperial Bank of India, who was appointed an adviser. It was pointed out that 3 accounts were closed, 26 were sued upon, and in 13, substantial remittances were received. All this. may be true; but it is useless for us to speculate as to_ what would have happened if the depositors did not take a ' hand in the affairs by making a run; and the a?tion of the Reserve Bank was precipitated 1962 . J osejh KwuvUlo ~..,, _.,. V ellutunnel . ·· '· The Reserve Bank oj India Hitiayatu/lall J. 1961. ... Thi -R•Jer11 Bak Of lndiJ' I 64! SUPREME COUHT REPORTS [1962] SUPP. hy the exigencies of the situation, which had arisen. Those who wade a run for their money, were not going to wait till the Bank acquired sufficient funds to pay them afLer recovcrin~ its advance. Those advances, as conceded, could not so easily be realised as tho advance made by a commercial bank on security other than that of land. If this rural bank began to arrange its business like a commercial bank it must necessarily be judged by the same standard, and the affairs of the Palai Bank, in our opinion, had long left behind the rural character, and had emerged into those of a modern commercial bank. What we have said above is sufficient to show that then.> was not e110ugh material on which the action of the Heservc Bank could strictly be charactcri8tld as mc1lu fide. Indeed, the forbearance with which the Reservo Bank acted (and it proved unwise) has completely demonstrated the futility of granting time, and we are not surprised that the answering respondents in the High Court and tho appellant in this Court have not chosen to raise any iBBue about the honesty of the action. We are thus concerned with the contention that ss. 38(1) and (:i)(b)(iii) arc void, being a breach of Arts. 14 and 19 of the Constitution, and uUra vires being in conflict with Art. 30 I. Tho arguments anent Arts. 14 and 19 are based on tho same reasoning, but that under Art. 19 takes a few more facts into account. Shortly stated, the argument is that ss.38 (l) and (3)(b)(iii) make the Reserve Bank the sole judge to decide whether the affairs or a banking. company are being so conducted as to be prejudicial · to the interests of the depositors, and the Court has no option but to pass an order winding up the . banking company, when the application is ma.de Section 38 lays down : . "38(1 ), Xot.withsta.nding anything contained in sectfon 391, section '192, section 433 1md section .. • 3 S.C.R. SUPREME COUR'r REPOl\TS 645 583 of the Companies Act, 1956, but without prejudice to its powers under sub-section(l) of section 37 of this Act, the High Court shall order the 'Yinding up of a banking company-- ( a) if the banking company is unable to pay its debts ; or (b) if an application for its winding up has been made by the Reserve Bank under section 37 or this section. (2) The Reserve Bank shall make an application under tbis section for the winding up of a banking company if it is directed so to do by an order under clause (b) of sub-section · ( 4) of section 35. (3) The Reserve Bank may make an application under this section for the winding up pf a banking company- * * * (b) if in the opinion of the Reserve Bank- * * (iii) the continuance of the banking company is prejudicial to the interests of its depositors. It is said that the word "shall" in the first sub-section is mandatory, and compels the High Court to pass an order winding up a banking company when ever the Reserve Bank chooses to make an application. It is further pointed out that these powers exclude the operation of s. 433 of the Companies Act, under which companies are wound up. The power conferred ou the Reserve Bank by the section is said to be bad under .".rt. 14, because it enables a discrimination between a banking company and any other company by prescribing different laws for their respective winding up, and is . . ; . 'c"«1/16B Juaep~ Irunwilla · VetlUkunn.1 v~ The Ri'Urff Bani: of_ltitfia 196t ' ./~stph Kruuvilla Vt//ukunnel •• 'Tiu ReJtrDt Bank ·Of lndia Hkl•Jalul/:th ./, 646 SUPREME COURT REPORTS [ 1962] SUPP. bad under Arts. 19(1 )(f} and (g} aa amounting to an unreasonable restriction on the holding of-property and the right to carry on business ns a banking company. To amplify the first, it is_argued thats. 4:~a of the CompaniPs Act, when an application is made to wind up a company, the High Court has to be satisfied after n fair trial that an order to wind up the company is called for, and tho ,Tuduc, who is indcpcnde:•t of executive control, is completely free to rPach a decision after the Company has shown cause, and there is a right of appeal against the•· derision, if adverse to tho company. But under the procedure laid down in s. :is of the Banking Companies Act, the banking company proceeded against has no opportunity to show cause either before or after the winding up order, the Reserve Bank records no rea~ons in writing or communicates them, there is no access to Court aud no hearing b"fore the Court to dct<-nnino whether the proposed action is justified, and 110 rrdress if a mistake wero made. Under the exercise oi that power, it is said, any hanking company can be supprc"sed by thn Hcscrve lfank or by the Central Government and the Courts are powerless, since the opinion of the Hcserve Bank and/or the central Government is not justiciable and there is no appeal against tho decision of thn Rcsen•e Bank or of the Court acting on the application oft he Reserve Bank. It. is said that the umeasonablenel!s of the law arises further from the fact that t.he Reser\'o Bank is not an independent or impartial judg<>, the members of the .Central and Local Boards whereof, being all nominees of Govnnment with no security of tenure, such as is enjoyed by the High Court Judges. The Res••rve Bank is subject to directions from tho Central Government, and even if the Reserve Bank be of a contrary opinion, it has to filo an application (or the winding up of a banking company, if directed to do so bv the Central Government. It is further argued that. this drastic power under a law which is 3 S.C.R. SUPREME COURT REPORTS 647 characterised as 'Draoonic' is 'uncanalised', 'unconJ96f trolled' and 'despotic', and in its exercise, every prinJ .. eph Kumill• ciple of natural justice is set at nought, and the very · V1ttukrumt1 fundamental conception of it, namely, resort to Court The Re.;:;., 8 .. 11: is completely absent. Such a law, it is said, is so ' of lntlia patently, unreasonable as to be a gross violation of Hidayatu/lah J. all fundamental rights. Lastly, it is contended that in giving the Reserve Bank the power to elect to pro· ceed under the Companies Act or under the Banking Companies Act, there is fort.her room for discrimina- . ., tion. It is thus contended thats. 38(1) of the Banking Companies Act cannot be upheld as a valid law on any principle. The learned Attorney-General appearing for the answering respondents contends that the action of the Reserve Bank was fully supported and justified by the facts. According to him, the Palai Bank was inspected frequently for ten . years and the reports of the inspecting officers were made available to the Palai Bank not only for information but also for explanation and compliance. The action, says he, drastic though ·it may seem, was taken after numerous opportunities to the Palai -'Bank to mend matters, that even as late as 1960 the Reserve Bank gave a year's time for improvement, but immediate action had to be taken in view of the loss of confidence a.mong the depositors, a large number of whom made a run for their money. The learned Attorney-General thus says that there were many person who were of the opinion that the Reserve Bank should have acted earlier and that perhaps the Reserve Bank could be blamed for delaying the action but not for taking a precipitat(; action. He urgues that the Reserve Bank and not the Court was in a position to take prompt action bc9ause the Reserve Bank already possessed all the necessary information. He contends that the position of the Reserve Bank and its statue as a responsible body make it the proper authority to make such an important decision requiring immediate action ancrv~ Ba.nk could be charged with dbhonest.v (which is n')t the case) the aotion of tho Reserve Bank not only eannot he questionod, hut should not bo open to doulit. Accordincr to him, banking companies are in a class by th~m selve8, and special law dealing with their winding up cannot be descrihod as discriminatory. He contends !.hat the law is noithor discriminatory nor unreasonable, and that a prior judicial determination of :in issue of this kind is not a condition precedent to the making of a winding up order against a hank. He therefore, says that the appeal and the petition should be dismiSBed. Before we consider the arguments of the two sides in detail, we wish to say a fow words about the po~ition of tho lkserve Bank in the financial affairs· of India and also about its place in the scheme of tho law. The Reserve Bank of India was establibhed on April I, 1935, by the Reserve Bank of India Act, UJ34. Even before the establishment of the Reserve Bank, suggestions were made that there should be a cent.ral bank in India, and the Royal Commission on Indian Currency and Fi1iance had recommended in 1926 that the eurrcncy and credit of ~he country could only be put on a firm foundation, if a contra! bank was ostablished. The first Bill introduerd in Hl27 by Sir Basil Blaekett was dropped. The Indian Central Banking Inquiiy Committee, however, reported in rn:n that thcro was a need for a contra.I banking institution in India "for s<.>curing the de1•elopment of tho Indian banking and credit system on a sound and proper basis." The Committeo pointed out that Homo of the Provincial Committoes had also RUl!gested the eRtahlishmcnt of the Rernrve Hank. The Committ<'e ended by saying : "Wri accordingly consider it to be a p1<1tt,,r of supreme importance from the point 3 S.C.R. SUPREME COURT B.EPORTS _649 of view of the development of banking facilities in India, and of her economic advancement generally, that a Central or Heserve Bank should be created at the earliest possi,ble date. The establishment of such a bai1k would by mobilization of the banking and currency reserves of India in one hand tend to increase the volume of eredit available for trade, industry and agriculture and to mitigate the evils of fluctuating and high charges for the use of such credit caused by seasonal stringency." (Vol. I, Part I. Chap. XXII, para, 605) · The White Paper on Indian Constitutional Reforms also recommended the establishment of a Reserve Bank 'free from political influence'. As a result of these findings, when a fresh Bill was introduced by Sit' George Schuster on September 8, 1933, it was ac:i::pted and received the assent of the GovernorGewral on March 6, 1934. The functions of the Reserve Ba.nk were generally indicated in the preamble as the regulation of the issue of the Bank notes and the keeping the re3erl'es with a view to securing monetary stability in India and generally to operate 'the currency and credit systf'm of the country to its nd vantage. But to enable the Reserve Bank to function in this manner, it had to be given other powers, so that it may function effectively as .a C3utrnl bank. To this end, the Reserve Bank was given the right to hold the cash balances of important comm affairs of thH particular bank am not being conducted in a manner detrimental to the int.,rests of its depositors. The Reserve Bank has further the power to prohibit any scheduled bank from rec:civing, after ~ week, any fresh deposits. 3 S.C.R. SUPREME COURT REPORTS 651 The above analysis of some of the provisions of the Reserve Bank of India Act show that the Reserve Bank of India has been created as a cen· tral bank with powers of supervision, ad vice and inspection, over banks, particularly those desiring that they be included in the Second Schedule or those scheduled already. The Reserve Bank thus safoguards the economy aud the financial stability of the country. No doubt, the Board is composed of nominated members ; but from the nature of things, it could not be otherwise. Neither election nor competitive examinations can effectively take the place of nominations, if the Board is to be com· posed of men of proved worth and standing, and there is no other method which can even be contemplated.