Writ Petition Dismissed: NBFC’s Registration Cancellation Challenge Left Open for Revival

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Case Name

Ranchi Finance Company Pvt. Ltd. vs. Union of India & Others (High Court of Jharkhand)

W.P.(C)No.1781 of 2020

Date: 23rd September 2024

Key Takeaways

• Petitioner’s Challenge: The company contested the cancellation of its Certificate of Registration as a Non-Banking Financial Company (NBFC) by the RBI, and the subsequent dismissal of its appeal by the Ministry of Finance.
• Court’s Approach: The High Court did not decide on the merits due to the petitioner’s counsel being unable to get instructions from the client.
• Liberty to Revive: The court disposed of the petition but allowed the petitioner to revive the case within six months if the issue still exists.
• No Final Ruling: The court did not quash the cancellation order or the appellate order, leaving the matter open for future litigation.

Issue

Central Legal Question:

Should the cancellation of Ranchi Finance Company Pvt. Ltd.’s NBFC registration by the RBI, and the dismissal of its appeal by the Ministry of Finance, be quashed by the High Court?

Facts

• Parties:
• Petitioner: Ranchi Finance Company Pvt. Ltd., a company registered under the Companies Act, 1956.
• Respondents: Union of India (Ministry of Finance), Reserve Bank of India (RBI), and officials from the Department of Non-Banking Supervision.
• Background:
• The RBI cancelled the company’s NBFC registration (Certificate No. B.15.00046 dated 18.03.2002) via an order dated 27.06.2018, under Section 45-IA(6) of the Reserve Bank of India Act, 1934.
• The company appealed to the Ministry of Finance (Appellate Authority for NBFC Registration under Section 45-IA(7) of the RBI Act), but the appeal was dismissed on 13.03.2020.
• The company then filed a writ petition in the Jharkhand High Court seeking to quash both the cancellation and the appellate orders.
• Proceedings:
• Despite several adjournments, the petitioner’s counsel could not obtain instructions from the client regarding the current status of the dispute.

Argrments

• Petitioner’s Arguments:
• Sought quashing of the Ministry of Finance’s order dismissing their appeal (dated 13.03.2020).
• Sought quashing of the RBI’s order cancelling their NBFC registration (dated 27.06.2018).
• Requested any other reliefs the court deemed fit.
• Respondents’ Arguments:
• The judgment does not detail the respondents’ arguments, as the case was disposed of on procedural grounds (lack of instructions from the petitioner).

Key Legal Precedents

• Statutory References:
• Section 45-IA(6) of the Reserve Bank of India Act, 1934: Empowers the RBI to cancel the Certificate of Registration of an NBFC.
• Section 45-IA(7) of the Reserve Bank of India Act, 1934: Provides for an appeal to the Central Government against the RBI’s cancellation order.
• Case Laws:
• The judgment does not cite any specific case law precedents by name; it relies solely on the statutory provisions mentioned above.

Judgement

• Decision:
• The High Court disposed of the writ petition without deciding on the merits, due to the petitioner’s counsel being unable to get instructions from the client.
• The court granted liberty to the petitioner to revive the petition within six months if the cause of action still survives.
• No orders were made regarding the cancellation or the appellate order; the status quo remains unless the petition is revived.
• Order Text (Key Excerpt):

“In that view of the matter, the present writ petition is, hereby, disposed of liberty reserving with the petitioner to revive the same within six months if the cause of action still survives.”

FAQs

Q1: What was the main dispute in this case?

A: The main dispute was whether the cancellation of Ranchi Finance Company Pvt. Ltd.’s NBFC registration by the RBI, and the dismissal of its appeal by the Ministry of Finance, should be quashed.

Q2: Did the court decide if the cancellation was valid or not?

A: No, the court did not decide on the validity of the cancellation. The case was disposed of on procedural grounds, with liberty to revive.

Q3: Can the company challenge the cancellation again?

A: Yes, the company can revive the writ petition within six months if the issue is still unresolved.

Q4: What legal provisions were involved?

A: The case involved Section 45-IA(6) and Section 45-IA(7) of the Reserve Bank of India Act, 1934.

Q5: What happens if the company does not revive the petition within six months?

A: If the petition is not revived within six months, the opportunity to challenge the cancellation in this writ petition may be lost.