The Bombay High Court recently held that notifications and circulars issued by the Reserve Bank of India are of statutory nature and therefore binding on all concerned parties.
The Court said that the banking companies cannot act as per their whims and fancies but are subject to Banking Regulations Act 1949. It said, “It is thus clear that the circulars/directives issued by the Reserve Bank of India from time to time for implementation of those directives by various banking companies are statutory in nature and are binding on all the banking companies including the petitioner.”
The Court further held that a party may be allowed to be added as an intervener at the admission stage itself and did not have to wait till the notice for final arguments.
The Court held “I am thus not inclined to accept the submission of the learned senior counsel for the petitioner that no prejudice would be caused to the respondent company or other set of creditors if they are not allowed to intervene at the admission stage of the company petition and they can be allowed to be heard or intervened after the petition is admitted and advertised. In my view, there is serious consequence of admission of the company petition and thus the Court has to apply its mind and consider the wishes of major creditors, workers and contributories if they intervene in the proceedings before passing an order of admission against the respondent company.”
The court further clarified that a holistic view was required and that the minority creditors could not act in deterrence to the majority creditors.