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principles of natural justice

SANJAY DIXIT ,
  25 June 2008       Share Bookmark

Court :
SUPREME COURT OF INDIA
Brief :

Citation :

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4193 OF 2008
(arising out of SLP(C)No.15091 of 2008)

RESERVE BANK OF INDIA ... APPELLANT

VERSUS

SAHARA INDIA FINANCIAL CORPORATION LTD. & ANR. ...RESPONDENTS



ORDER
DR.ARIJIT PASAYAT,J.


Leave granted.

Heard the learned counsel for the parties.

The challenge in this appeal is to the order passed by the Division Bench

of the Allahabad High Court, Lucknow Bench granting interim protection to

Respondent No.1.

2. Briefly stated factual scenario is as follows:

A show cause notice was issued by the appellant on 09.05.2008 requiring

the Respondent No.1 to show cause as to why certain actions proposed to be taken

shall not be taken. A detailed reply, according to Respondent No.1, was filed on

02.06.2008. Respondent No.1 before the High Court took the stand that before the

show cause reply was submitted discussions were held on 20.5.2008. By the final

order dated 04.06.2008 Respondent No.1-Company has been restrained from

accepting deposits from the existing depositors and fresh depositors. These were the

main directions in addition to the other directions. In the writ petition filed before
2

the High Court, it was stated that the writ petitioner did not get a fair opportunity to

present its case before the present appellant and, therefore, it has affected a large

number of employees, agents, staffs and the depositors. The High Court passed the

impugned order on 05.06.2008 staying the operation and the enforcement of the

order dated 4.6.2008 impugned before it till further orders of the High Court. The

High Court has also indicated that since objection was taken to certain activities of

Respondent No.1, they were directed to complete all the requisite formalities and

follow the directions of the present appellant from time to time. The writ petitioner

was prevented from accepting any new deposit whose maturity will be beyond June,

2010. The matter was directed to be listed in the last week of July, 2008.

3. Mr. T.R. Andhyarujina, learned senior counsel appearing for the

Reserve Bank of India submitted that without even granting any opportunity to the

appellant to place its case, an interim order was passed by virtually allowing the writ

petition, as by interim order in essence final relief sought for in the writ petition was

granted. It was his stand that ample opportunities were granted to the writ petitioner

and the various infirmities committed by the writ petitioner were highlighted in the

show cause notice and the impugned order before the High Court which warranted

the action taken by the appellant. With reference to the show cause notice dated

09/05/2008 and order dated 04/06/2008 it is submitted that several illegalities have

been committed and there is total lack of transparency in the functioning of

respondent No.1. Several serious infirmities have been elaborately dealt with in the

show cause notice and order dated 04.06.2008.

4. Learned senior counsel appearing for Respondent No.1 on the other

hand submitted that had an opportunity been granted to Respondent No.1 to place
3

its case before the appellant before the order which was impugned before the High

Court was passed, after filing of the reply to the show cause on 02.06.2008 it would

have been in a position to show that no action as was contemplated in the show cause

was required to be taken and/or permissible.

5. After hearing learned counsel for the parties, we are of the view that in

view of the peculiar facts involved, it would be appropriate for the appellant Reserve

Bank of India to give an opportunity of hearing to Respondent No.1 so that it can, if

so advised, place materials to substantiate its stand taken in the reply to the show

cause notice. Learned counsel for the appellant is right in his submission that the

principles of natural justice have been followed in the present case. But an

opportunity of hearing would be appropriate, because of nature of proceedings. It

shall not be construed as if we have stated so to be applicable in all cases. Because of

the peculiar nature of the case, we are directing to be so done. We, therefore, direct

that Respondent No.1 shall appear without any further notice before the designated

authority of the Reserve Bank of India on 12.06.2008 when the matter shall be heard.

It is open to Respondent No.1 to place such material on which it proposes to rely

upon. Needless to say the authority shall consider all the relevant aspects of the case

and pass a fresh order. Till the matter is disposed of afresh by the Reserve Bank of

India, the order dated 04.06.2008 shall not be given effect to. At the same time, the

interim protection given by the High Court to Respondent No.1 shall also not be

operative. Since the entire matter is being disposed of in this appeal, there is no need

for the High Court to deal with the writ petition. We make it clear that we have not

expressed any opinion on merits.

6. The appeal is disposed of accordingly.
4




............................J.
( DR. ARIJIT PASAYAT )



............................J.
( P.P. NAOLEKAR )
NEW DELHI,
JUNE 09, 2008.
 
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