Sandeep Bhalla and Ors. v. Reserve Bank of India and Ors.

VI. That pending and upon hearing this petition, this Hon'ble

Court be pleased to direct the Reserve Bank of India to allow depositors to withdraw amounts up to the interest on their deposits so as to enable many of the senior citizen depositors to make their living.

VII. That pending and upon hearing this petition and the completion of the investigation conducted by the EOW, the Hon'ble Court be pleased to prevent Respondent No. 2 from crediting full salaries to the accounts of staff members outside of the PMC Bank until the depositors are paid in full.

VIII. Ad-interim reliefs in terms of prayer clause (V) to (VII) above.

IX. For such other and further orders as this Hon'ble Court deems fit in the facts and circumstances of this case.

X. For the costs of this petition. ”

6. Mr. Sandeep Bhalla, petitioner No. 1, who appeared in person, advanced arguments on behalf of all the petitioners. He submitted that the impugned actions of the RBI have left innocent depositors, including senior citizens like petitioner Nos. 2 and 3, unable to access their own savings. He argued that the negligence and complicity of the RBI is evident from the following:a. Mr. Bhalla referred to affidavit of the petitioners dated 02.10.2020 to submit that a former employee of PMC Bank had brought fraudulent activities to the attention of the RBI by a letter dated 28.01.2011. According to Mr. Bhalla, instead of taking independent action on the said complaint, the RBI only forwarded the complaint to PMC Bank, and thus entrusted the action upon the complaint to the perpetrators themselves. b. Mr. Bhalla alleged that the RBI did not undertake statutory inspections under the BR Act as required and consequently, did not discover the mis-reporting of financial data, by which the management of PMC Bank was able to conceal its misfeasance. c. Mr. Bhalla submitted that Kamble, who was in-charge of regulation of UCBs at the relevant time and, in fact, assisted the expert committee looking into allegations against PMC Bank, resigned from the RBI and was thereafter employed by PMC Bank itself. d. Mr. Bhalla drew my attention to the fact that, even in the year 2018-19, well after the fraud was allegedly brought to the attention of the RBI in the year 2011, PMC Bank was given an Audit Classification ‘A’. He contended that during this period, PMC Bank managed to attract several deposits and its portfolio of deposits more than trebled from approximately ₹3,400 crores in 2011 to ₹11,000 crores in 2019. Mr. Bhalla submitted that such enhancement in the deposits held by PMC Bank would not have occurred if the RBI had been vigilant with exposing the risks associated with PMC Bank in a timely manner.

7. Mr. Bhalla also argued two grounds relatable to Article 14 of the Constitution:a. Mr. Bhalla submitted that the actions of the RBI suffer from the vice of arbitrariness, which is demonstrated inter alia by the fact that the maximum withdrawal amount was repeatedly enhanced by issuance of new circulars every few days. He contended that this sequence of events shows non-application of mind on the part of the regulator while setting the initial withdrawal limits. b. Mr. Bhalla’s second Article 14 argument was one of discrimination. He submitted that depositors in other banks – particularly Yes Bank Limited [hereinafter, “Yes Bank”] – have been protected by the timely implementation of reconstruction schemes with the active intervention of the Union of India [hereinafter, “UoI”] and the RBI. He further submitted that in the case of PMC Bank also, the concerned authorities ought to have intervened in good time.

8. Mr. Jayant Bhushan, learned Senior Counsel for the RBI, submitted at the outset that the grievances raised in the present petition are no longer res integra as the Bombay High Court has, in Haresh Tekchand Raisinghani and Ors. vs. Union of India and Ors.1, upheld the very same directives, holding that the RBI had rightly invoked its power under Section 35A of the BR Act to deal with the erosion in PMC Bank’s financial position. Mr. Bhushan submitted that the aforesaid judgment of the Bombay High Court has been upheld by the Supreme Court[2].

9. With regard to the specific allegations advanced by Mr. Bhalla, Mr. Bhushan submitted as follows:a. He submitted that the alleged complaint from an ex-employee of PMC Bank dated 28.01.2011, although stated to be from one Ms. Manpreet Kaur, was in fact in the nature of an anonymous complaint, upon which no action was required to be taken by virtue of prevailing guidelines of the Central Vigilance Commission [hereinafter, “CVC”]. Although PMC Bank had two employees by the same name at the relevant time, both Judgment dated 05.12.2019 in Writ Petition (L) No. 3030/2019 and connected matters Order dated 31.07.2020 in SLP (Civil) Diary No. 13047/2020 [Guru Nanak Vidhyak Society vs. Reserve Bank of India & Ors.]. have denied making the complaint in question. In such circumstances, Mr. Bhushan submitted that the RBI was not required to act thereupon. He relied upon CVC circulars dated 31.01.2002, 11.10.2002 and 25.11.2014 in this regard. b. Mr. Bhushan submitted that the aforesaid complaint was forwarded to the concerned officer of PMC Bank for their comments and not for disposal thereof. As the concerned records relating to the complaint have been weeded out of the RBI’s records under a circular dated 28.03.2014, Mr. Bhushan submitted that the RBI was not in a position to clarify at this stage, with regard to the comments received from PMC Bank, if any, or the action taken thereupon. c. Mr. Bhushan submitted that the petitioners’ claim for restitution from the RBI on account of negligence and performance of its statutory duties is not maintainable in the light of the judgment of the Supreme Court in Pramod Malhotra and Others vs. Union of India and Others[3]. d. With regard to the allegations regarding Kamble joining PMC Bank, Mr. Bhushan submitted that such allegations cannot be adjudicated in the present petition, as Kamble has not been impleaded as a party respondent in the writ petition. Without prejudice to this contention, Mr. Bhushan referred to the RBI’s affidavit dated 24.02.2022 to submit that a former employee is restricted from taking employment with any bank with which he or she had dealt with as an officer of the RBI. He submitted that

Kamble only provided secretarial assistance to the expert committee and was not dealing with the regulation of the banking affairs of PMC Bank in which he was later appointed as the General Manager (Human Resources). e. Mr. Bhushan submitted that the audit report in support of PMC Bank showed no adverse remarks which could have necessitated further scrutiny on part of the RBI. f. With regard to Mr. Bhalla’s arguments on discrimination, Mr. Bhushan submitted that PMC Bank, being a co-operative bank, is not similarly placed as Yes Bank, which is a scheduled bank. He submitted that the two kinds of entity are vastly different, in respect of their ability to attract potential investors and the consequent potential for reconstruction. Nevertheless, Mr. Bhushan pointed out that a scheme of reconstruction has, in fact, been approved in the case of PMC Bank, whereunder complete repayment of deposits is contemplated, albeit over a staggered period of time. g. Mr. Bhushan finally submitted that the Court’s interference with the regulatory functions of the RBI in exercise of Article 226 jurisdiction is extremely limited. He relied, for this purpose, upon the judgments of the Supreme Court in Peerless General Finance and Investment Co. Limited and Another vs. Reserve Bank of India[4], Shri Sitaram Sugar Company Limited and Another vs. Union of India and Others[5], and a Division Bench judgment of this Court in Holystar Natural Resources Pvt. Ltd. vs. Union of India[6].

10. With regard to the circumstances which led to the imposition of the directives upon PMC Bank, Mr. Bhushan drew my attention to the contents of the reply affidavit filed by the RBI, which notes that serious irregularities and mismanagement of the affairs of PMC Bank were reported, and that restrictions were imposed so as to avoid preferential payments by PMC Bank to any particular depositor or class of depositors. It is also submitted that by virtue of directions dated 05.11.2004 and 13.04.2020, limited additional withdrawal on the ground of hardship (for example, medical treatment, marriage, education, livelihood) have also been permitted.

11. Mr. Rakesh Kumar, learned Standing Counsel for the UoI, adopted the submissions of Mr. Bhushan. He additionally drew my attention to an affidavit dated 04.08.2020 filed by the UoI with regard to the distinction between the cases of PMC Bank and Yes Bank.

12. In rejoinder, Mr. Bhalla reiterated his challenge on the ground of negligence and discrimination. With regard to the first ground, Mr. Bhalla submitted that the RBI admittedly received the complaint dated 28.01.2011 and, even assuming that the complaint was anonymous or pseudonymous, did take action upon the complaint by referring it to PMC Bank. Relying upon the CVC circular dated 11.10.2002, Mr. Bhalla contended that the enquiry ought to have continued, albeit subject to CVC’s consent. He submitted that the RBI failed to follow its own procedure with regard to complaints of fraud by weeding out 2014 SCC OnLine Del 230: (2014) 207 DLT 396 the required material in the present case in three years rather than retaining it permanently, as required in correspondence related to fraud. Mr. Bhalla submitted that the RBI wrongly relied upon the absence of any adverse comments in the audit report relating to PMC Bank as the complaints were never referred to the internal auditor at all.

1. Judgment of the Bombay High Court:

13. As the judgment of the Division Bench of the Bombay High Court in Haresh Tekchand Raisinghani[7] deals with a similar issue, it is appropriate to deal with the said judgment in some detail. The challenge therein was inter alia to the RBI directives dated 23.09.2019, 24.09.2019, 26.09.2019, 03.10.2019 and 14.10.2019. Directions were sought upon the RBI to withdraw the restrictions imposed upon withdrawal of deposits by the depositors. The contentions recorded in the judgment include contentions regarding hardship to consequential depositors, obligations and duties of the RBI and the scope of RBI’s powers under Section 35A of the BR Act. The Division Bench has adverted to the allegations of fraudulent transactions against the management of PMC Bank and consequent misreporting of the financial data.

14. The impugned directives have been issued under Section 35A of the BR Act, which has also been considered by the Bombay High Court in Haresh Tekchand Raisinghani[8]. The provision is set out Supra (note 1) below:- “Section 35A in BANKING REGULATION ACT, 1949 35A. Power of the Reserve Bank to give directions. — (1) Where the Reserve Bank is satisfied that— (a) in the [public interest]; or (aa) in the interest of banking policy; or (b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or

(c) to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions. (2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under subsection (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect.”

15. The Bombay High Court upheld the impugned directives holding inter alia as follows:-

16. The aforesaid judgment of the Bombay High Court was carried Emphasis supplied. to the Supreme Court10. While declining special leave to appeal, the Supreme Court11 observed as follows:-

17. It is evident from the judgment of the Bombay High Court in Haresh Tekchand Raisinghani12 that the High Court has repelled arguments relating to the power of the RBI to issue such directions under Section 35A of the BR Act, as also the challenge to the directions on the ground of public interest. The Court found that the materials placed before the RBI were sufficient to justify the action taken. The Bombay High Court also held that depositors, having entered into a contractual relationship with a particular bank on the incentive of higher interest rates, cannot blame the regulatory mechanism for subsequent failure of the bank, but are themselves partially to be blamed. This judgment has been upheld by the Supreme Court, expressly recording its approval of the reasoning of the High Court.

18. Faced with this legal position, Mr. Bhalla limited himself to the two aspects noted above, viz, negligence in dealing with the complaint of Ms. Manpreet Kaur, and discrimination vis-à-vis other banks.

2. Complaint of Ms. Manpreet Kaur: SLP(Civil) Diary Nos. 13047/2020 and 11767/2020 Supra (note 2)

19. As far as the allegations levelled by Ms. Manpreet Kaur are concerned, the petitioners first referred to this communication in an affidavit dated 02.10.2020. The communication was subsequently placed on record by an affidavit dated 22.03.2021. It is stated in these affidavits that Mr. Bhalla “has been forwarded a complaint dated 28.01.2011, issued by one Ms. Manpreet Kaur, a [former] employee of PMC Bank to RBI”13. He has also claimed to have received a copy of the alleged response issued by RBI on 07.03.2011, by which the complaint was marked to the Chief Executive Officer of PMC Bank. In the said affidavit, Mr. Bhalla specifically stated that he has received the documents as a forwarded message over WhatsApp Messenger and cannot attest to its authenticity or the veracity of its contents14.

20. Mr. Bhushan, in turn, referred me to the affidavit of RBI dated 07.12.2020, wherein it has been specifically averred that, on 28.01.2011, when the complaint was made, PMC Bank had two employees by the name of Ms. Manpreet Kaur. Both the employees have subsequently denied making the complaint.

21. The communication, as placed on record with the affidavit dated 22.03.2021, does not bear the signature of the sender. It does, however, bear a stamp which is apparently of the RBI. Be that as it may, the provenance of the document is uncertain. The petitioners have candidly disavowed responsibility for its contents. The affidavit of the RBI is that neither of the ex-employees by the name of Manpreet Kaur accept that they had made the complaint. In these Paragraph 5 of the affidavit dated 02.10.2020. Paragraph 8 of the affidavit dated 02.10.2020. circumstances, I do not consider it appropriate to rest a finding of negligence against the regulator on alleged actions or omissions arising out of this complaint.

22. Mr. Bhushan also drew my attention to a CVC circular dated 31.01.2002, which clearly provided that investigations should not be commenced or action initiated on anonymous/pseudonymous complaints. This direction was apparently explained by way of a further circular dated 11.10.2002 to the effect that, if any verifiable fact contained in such complaints are proposed to be looked into, that may be done with prior concurrence of the CVC. The second circular has not been placed on record, but is referred to in a circular dated 25.11.2014, which has been placed on record by the RBI. The circular dated 11.10.2002 was withdrawn by the circular dated 25.11.2004.

23. Mr. Bhalla suggested that the circular dated 11.10.2002 enabled RBI to carry out further investigation, which it failed to do. I am afraid this is too tenuous an argument to return a finding of negligence in performance of statutory functions, that too in the summary procedure of a writ petition. The clear policy laid down by the CVC was to avoid investigation on anonymous/pseudonymous complaints. The exception which was carved out in the circular dated 11.10.2002 was limited to a proposed enquiry into verifiable facts alleged in the complaint, that too with the concurrence of the CVC. There is no basis in the pleadings to arrive at a conclusion, one way or the other, as to whether such verifiable facts existed, whether RBI proposed to look into them further, whether the concurrence of the CVC was sought or whether it was granted. In any event, the writ petition does not lay a challenge on any of these aspects.

24. The factual uncertainty stems at least in part from RBI’s assertion that its records relating to this complaint have been weeded out. RBI has explained that it is unable to deal factually with the allegation of negligence due to the records having been weeded out. It may be noted in this connection that the alleged complaint is of January, 2011 whereas the writ petition pertains to directives issued in September, 2019. In the interregnum, the RBI issued a circular dealing with destruction of records on 28.03.2014, under which the correspondence was weeded out. While Mr. Bhalla sought to argue on the proper interpretation of this circular also, in view of the contentions recorded above, I do not consider it necessary to deal with this argument further.

25. The judgment of the Supreme Court in Pramod Malhotra15 cited by Mr. Bhushan, also militates against the submissions of Mr. Bhalla. The Court was considering a writ petition in which a challenge was originally laid to a scheme framed by the RBI in respect of Sikkim Bank Limited [hereinafter, “Sikkim Bank”]. Before the Supreme Court, the only relief pressed was for the respondents to repay the petitioners and other fixed deposit holders of Sikkim Bank in full, including principal and contractual interest. The challenge was inter alia upon the ground that RBI was required to monitor banking companies and safeguard the interest of depositors. An allegation was made that there were deficiencies and irregularities in the functioning of the banks of which RBI was aware. The Supreme Court rejected the Supra (note 3) challenge with the following observations:- “25. We have heard the submissions of both the parties. Whilst we sympathise with the depositors for their loss, we are unable to accept the submission of Mr Lalit that the principles laid down in cases relating to breach of Article 21 rights can be applied to cases of loss caused in financial transactions undertaken by individuals with open eyes. In our view the principles laid down in the cases of Yuen Kun-yeu v. Attorney General of Hong Kong [(1987) 2 All ER 705: 1988 AC 175: (1987) 3 WLR 776 (PC)] and Davis v. Radcliffe [(1990) 2 All ER 536: (1990) 1 WLR 821 (PC)] are fully applicable. In our view the principles laid down in Anns case [1978 AC 728: (1977) 2 All ER 492: (1977) 2 WLR 1024 (HL)] have no application to financial transactions. RBI is undoubtedly performing a statutory function. Undoubtedly, the general public interest has to be kept in mind by RBI. But that is not the only thing they have to keep in mind. They also have to balance general public interest with the interests and need of banks and financial institutions. They cannot easily close down a banking institution merely because there are a few irregularities. They have to keep in mind the implications of closing a bank or a financial institution. The closing of a bank or financial institution has its impact not just on that bank/financial institution and its customers and debtors but on the future of financial services in that region. Thus competing interests have to be weighed and balanced. In the hindsight it is easy to point fingers. However, at that stage it would not have been an easy decision for RBI to have closed SBL when it was a major bank in a small State like Sikkim. One may criticize the decision of RBI to grant SBL a licence to open a branch in Delhi when the licence under Section 22 had not yet been granted. But still that will not be sufficient to foist liability on RBI to repay all depositors. What the petitioners want is to foist on RBI liability for the default of SBL. Such liability will be rarely imposed. RBI did not have day-to-day management or control on SBL. Also the relationship of RBI with creditors or depositors of SBL is not such that it would be just or reasonable to impose a liability in negligence on RBI.

26. Even otherwise, we find that there are no proper averments. There is absolutely no averment regarding bad faith. It was fairly admitted by Mr Lalit that there is no case made out on the basis of public misfeasance. He fairly stated that at the highest the case could only be that of a violation of statutory duties. However, as observed above, compensation for violation of a statutory duty to enable individuals to recoup financial loss has never been recognized in India. In our view the petitioners having chosen on their own to deposit amounts with SBL cannot claim to recover against RBI. In such a case the loss has to be allowed to fall where it falls.”16

26. Mr. Bhalla submitted that the judgment in Pramod Malhotra17 is distinguishable as the RBI had not made any representation regarding the safety and stability of Sikkim Bank. I am unable to agree with Mr. Bhalla on this count. The reasoning of the Supreme Court quoted above is not dependent on the absence of such a representation. In fact, the Supreme Court notices that the RBI had granted Sikkim Bank a licence to operate a branch in Delhi despite the fact that it had no licence under Section 22 of the BR Act. In my view, the judgment of the Court covers this aspect of the case against the petitioners.

27. Mr. Bhalla also submitted that the judgment in Pramod Malhotra has been impliedly overruled by the later judgment of the Supreme Court in Union of India and Others vs. Sancheti Food Products Limited18. This submission is also misconceived – the judgment in Sancheti deals with a claim of sovereign immunity raised as a defence in a suit, and not with a writ petition in which an allegation of breach of statutory duties is made. The facts in the present case are, in any event, much closer to the judgment in Pramod Malhotra, which cannot be bypassed on the grounds suggested.

28. Mr. Bhushan also relied upon the judgment of the Supreme Emphasis supplied. Supra (note 3)

Court in Peerless General Finance19, which cautions against judicial interference in economic matters, unless the impugned actions are found to be wholly unreasonable or violative of constitutional and statutory provisions.20 The particular role of the RBI as an important functionary in the economic and financial system of the country, with expertise in the matters entrusted to it, has also been emphasised.21 To similar effect are the decisions of the Supreme Court in Shri Sitaram Sugar Company Limited22 and of the Division Bench of this Court in Holystar Natural Resources23.

3. Allegation regarding Mr. Laxman Kamble:

29. Mr. Bhalla took pains to point out that Kamble, an employee of the RBI, took employment with PMC Bank after retirement. Although this assertion was made to suggest an element of mala fides in the conduct of the RBI, it may be noted that Kamble has not been joined as a party to the writ petition. Further, the allegation is based upon an acknowledgment contained in paragraph 1.11 of a report dated 18.08.2011 submitted by an Expert Committee on Licensing of New Urban Co-operative Banks to the RBI. In the report, the Committee acknowledges secretarial assistance provided by various officers, including Kamble, General Manager, Urban Banks Department of the RBI.

30. This is insufficient to lay the foundations of an allegation of mala fides. It may also be noted that the RBI, in its affidavit dated Supra (note 4) Paragraphs 31 and 36 of Peerless General Finance Paragraph 30 of Peerless General Finance Supra (note 5) Supra (note 6) 24.02.2022, has affirmed that Kamble was appointed as General Manager (HR) of PMC Bank, in-charge of organising training programmes for the bank’s employees and officers. He was granted permission by the RBI to take the said position on a contractual basis. It has also been stated that such permission is granted only subject to various conditions, including that the officer has not dealt with the prospective employer while in service of PMC Bank. It has been pointed out that in the criminal proceedings arising out of the affairs of PMC Bank, Kamble has not been implicated by the prosecuting agencies.

31. On the material placed before the Court, therefore, allegation of mala fides cannot be upheld.

4. Article 14 challenge:

32. This brings us to the challenge predicated on Article 14 of the Constitution.

33. The first ground of challenge on this aspect is that the rapid revision of the impugned directives, enhancing the maximum amounts of withdrawal, itself shows non-application of mind. I am afraid, this is a simplistic and self-defeating argument. The original directives dated 23.09.2019 were issued in an emergent situation. The restrictions placed upon the depositors, such as the petitioners herein, were severe. If, upon further examination, the RBI found it possible to relax the limits and issue subsequent circulars to do so, that shows responsiveness to the plight of depositors, such as the petitioners. The exercise of such administrative agility with the objective of reducing hardship to the depositors cannot be criticised on the ground that it betrays non-application of mind. In fact, a reading of the directives dated 26.09.2019, 03.10.2019, 14.10.2019 and 05.11.2019 shows that the liquidity position of PMC Bank was being reviewed, and consequent enhancements were being offered to the depositors. The last of the circulars [05.11.2019] also notes that by virtue of the relaxation, more than 78% of the bank depositors would be able to withdraw their entire balance.

34. I am also unpersuaded by Mr. Bhalla’s argument that the UoI and the RBI were obliged to participate in the restructuring scheme for PMC Bank in line with the scheme in the case of Yes Bank. The RBI in its affidavit dated 16.07.2020 has drawn a distinction between a cooperative bank such as PMC Bank, and a scheduled bank such as Yes Bank. It is specifically mentioned that, as of the date of that affidavit, no bank or investor had shown interest in investing in PMC Bank. The relevant part of the said affidavit reads as follows:-

16. That the Securities Contract (Regulation) Act, 1956 provides for listing of shares of only body corporates and the definition is drawn as appearing in the Companies Act which does not include Cooperative societies. In the case of cooperative banks, there is no provision of listing. This is a huge disincentive for any prospective investors in cooperative banks who even would not get any dividend income till regulatory Capital to Risk (Weighted) Assets Ratio (CRAR) is achieved and the cooperative bank concerned starts making profits.

17. That in case of Yes Bank Limited Reconstruction Scheme, 2020, the equity shareholding of the investor bank (i.e. SBI) was subject to a cap of 49% of total equity shares of the reconstructed bank, whereas for the Multistate Cooperative Banks, the cap for shareholding by an individual entity is 20% of paid up capital of the urban cooperative bank as per section 33 of MSCS Act, 2002. Furthermore, capital of a cooperative bank is withdrawable unlike in case of limited companies. To deal with a situation where a large shareholder decides to withdraw his capital thereby straining the capital adequacy of the bank adversely, UCBs have been required to adhere to the 5% ceiling on individual share-holding as a percentage of the total paid up share capital as per para 3 of RBI Master Circular DCBR.BPD.(PCB). MC.No.10/09.18.201/2015-16 dated July 1, 2015 on “Prudential Norms and Capital Adequacy- UCBs”.

18. That in the case of PMC Bank, the net-worth and CRAR had year-on year plummeted from positive figures of Rs 706.20 crore and 12.7% as on March 31, 2018 to huge negative figures of Rs (-) 5278.21 crore and (-) 198.7% with significant deposit erosion of 45.43% as assessed on March 31, 2019, whereas in the case of Yes Bank, at the time of drawing the reconstruction scheme, the Net-Worth was positive and CRAR remained above 9%. That the main issue with Yes Bank was of liquidity, with the bank’s Liquidity Coverage Ratio being way below the required level of 100% and the bank was defaulting in maintenance of Statutory Liquidity Ratio (SLR). The level of Gross Non-performing Assets (GNPAs) for Yes Bank projected at the time of drawing its reconstruction scheme was estimated to be around 22% by March 31, 2020 whereas in the case of PMC Bank, the level of GNPAs was 78.06% as on March 31, 2019.

19. That in light of the above, it is evidently clear that the cases of Yes Bank and PMC Bank are fundamentally different in so far as the basic constitutional structure of the two entities as also the financial position. As observed by the Supreme Court in Re: Special Reference No. 1 of 2012 [2012 (10) SCC 1] with reference to precedents, “each case entails a different set of facts” and matching "the colors of the case at hand against the colors of many sample cases" would not be correct. PMC Bank has really precarious financials and due to reasons explained above, it has not attracted any interest from any prospective investor for its reconstruction or amalgamation. Nevertheless, efforts are still on for a satisfactory resolution of the PMC bank. It is for this reason that the directions on the PMC bank are being extended from time to time. Further, COVID 19 situation and the uncertainties around the post COVID scenario has slowed down the process. The PMC Bank is exploring the feasibility of revival/ reconstruction of the bank and is engaging with various stakeholders.”

35. It may be mentioned that during the pendency of the petition, a scheme was, in fact, approved with regard to PMC Bank as well. Mr. Bhalla has criticised the terms of the scheme, but that is a matter beyond the scope of the present proceedings.

36. Mr. Bhalla submitted that the difference in the mechanism of constitution of these two banks has no nexus with the objective of protecting depositors. He compared the terms of the reconstruction schemes in the two cases to submit that PMC Bank depositors were being unfairly treated. I am unable to proceed on this basis. The reasonableness of the reconstruction scheme is not the subject matter of this writ petition. I am called upon in this case only to examine whether the RBI has been able to explain the distinction between the two cases, and the effect of that distinction upon the potential for reconstruction of each of the banks. To this extent, I am satisfied that it has been able to do so.

37. For the aforesaid reasons, despite sympathising with the position in which the petitioners find themselves, I am unable to grant the relief sought in this petition. The petition, alongwith the pending application, is therefore dismissed, but without any orders as to costs.

PRATEEK JALAN, J. NOVEMBER 30, 2022 ‘pv’/“sid”