1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 01ST DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M. NAGAPRASANNA WRIT PETITION No.2991 OF 2023 (GM-RES) BETWEEN: G.K.GURURAJA RAO AGED ABOUT 66 YEARS SECRETARY SRI GURU RAGHAVENDRA SAHAKARA BANK THEVANIDARARA SANGHA (REGD.) 87, R.K.SWAMJI ROAD, 1ST BLOCK THYAGARAJANAGAR BENGALURU – 560 028 REGISTERED UNDER KARNATAKA SOCIETIES REGISTRATION ACT 1960. ... PETITIONER (BY SRI S.P.SHANKAR, SR. ADVOCATE A/W SRI R.RANGASWAMY, ADVOCATE) AND: 1 . UNION OF INDIA REPRESENTED BY ITS SECRETARY FINANCE DEPARTMENT FOURTH LEVEL, A-WING DELHI SECRETARIAT IP ESTATE, DELHI – 110 002. 2 . RESERVE BANK OF INDIA REPTD. BY THE REGIONAL DIRECTOR 2 PB NO.5467, NRUPATUNGA ROAD BENGALURU – 560 001. 3 . DEPOSIT INSURANCE CREDIT GUARANTEE CORPORATION RESERVE BANK OF INDIA REPRESENTED BY ITS GENERAL MANAGER 2ND FLOOR, OPP. MUMBAI CENTRAL RAILWAY STATION BYCULLA, MUMBAI – 400 008. 4 . SRI GURU RAGHAVENDRA SAHAKARA BANK NIYAMITHA NETKALLAPPA CIRCLE, BASAVANAGUDI BENGALURU – 560 004 REPRESENTED BY ITS ADMINISTRATOR. 5 . STATE OF KARNATAKA REPRESENTED BY REGISTRAR OF CO-OPERATIVE SOCIETIES M.S.BUILDING, AMBEDKAR VEEDHI BENGALURU – 560 001. ... RESPONDENTS (BY SMT. NAYANATARA B. G., CGC FOR R1; SRI. UDAYA HOLLA, SR. ADVOCATE A/W., SMT. KHUSHBOO KAPUR, ADVOCATE FOR R2; SRI. DHYAN CHINNAPPA, SR. ADVOCATE A/W., SMT. RASHMI SUBRAMANYA, ADVOCATE FOR R3; SRI. M.N.UMESH, ADVOCATE FOR R4; SMT. MAMATHA SHETTY, AGA FOR R5) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH OR STRIKE DOWN SECTION 18-A (5) AND SECTION 21(3) AND (4) OF THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961, TO THE EXTENT THE SAID SECTIONS AND ENABLE DICGC-R-3, TO 3 SEEK AND OBTAIN REIMBURSEMENT OF THE AMOUNTS PAID TO DEPOSITORS OF SRI GURU RAHAVENDRA BANK- R-4 AS BEING CONTRARY AND DEROGATORY TO SUB SECTIONS 1 AND 2 OF SEC.21 OF DICGC ACT 1961, REGULATION 22 OF DICGC REGULATIONS, BEING VIOLATIVE OF ARTICLES 14, 19, 21, 38, 43- B AND 300-A OF CONSTITUTION OF INDIA AND OR TO READ DOWN THE SAID PROVISIONS TO BRING THEM IN CONFORMITY WITH LAW OF INSURANCE, MAIN PURPOSE RULE AND LEGISLATIVE INTENT OF ACT 47 OF 1961 AND DIRECT AN ENQUITY AS TO WHETHER THE PAYMENTS BY R-3 DICGC THROUGH R-4 ARE MADE ONLY TO ELIGIBLE DEPOSITORS OF R-4 BANK; DIRECT AN ENQUIRY AGAINST R-4 ADMINISTRATOR AS TO WHAT HAPPENED TO FUNDS OF RS. 136.86/- CRORE SHOWN IN ANNEXURE-G RECOVERED FORM BORROWERS BY EARLIER ADMINISTRATOR-MR. DIWAKAR AND TO CONSTITUTE A BOARD OF ADMINISTRATORS TO R-4 BANK, TO RECOVER THE DUES OF BANK UNDER VARIOUS LOANS, MORTGAGES ETC. THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:- CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA CAV ORDER The petitioner/Secretary of Sri Guru Raghavendra Sahakara Bank Tevanidarara Sangha, a society registered under the Karnataka Societies Registration Act, 1960 is knocking at the doors of this Court seeking to strike down Section 18-A (5) and Section 21(3) and (4) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (hereinafter referred to as ‘the Act’ for short) 4 to the extent that those sections enable the 3rd respondent/Deposit Insurance Credit Guarantee Corporation (hereinafter referred to as ‘the Corporation’ for short) to seek and obtain reimbursement of the amount paid to depositors of Sri Guru Raghavendra Sahakara Bank/respondent No.4 (hereinafter referred to as ‘the Bank’ for short), as being contrary and derogatory to the afore-quoted provisions of the Act, all on the score that they are in violation of Articles 14, 19, 21, 38, 43-B and 300-A of the Constitution of India. As a consequential relief, the petitioner has sought an inquiry to be conducted with regard to the payments made by the 3rd respondent through the Bank are only to the eligible depositors and has also sought other incidental reliefs. 2. Facts, in brief, germane are as follows:- 2.1. Sri Guru Raghavendra Sahakara Bank Tevanidarara Sangha claims to be an Association formed inter alia for the purpose of protecting the interests of its members and is said to have been established for the purpose of alleviating the financial implications of members arising out of malfeasance, and 5 maladministration as also depleting funds of the 4th respondent/ Bank. It is said to have filed a public interest petition in Writ Petition No.25989 of 2022 seeking quashment of orders passed by the Corporation directing refund of the amount. The said writ petition having been disposed of as not maintainable, the petitioner is before this Court in the subject petition. A little backdrop to the controversy is required to be noticed. Between 2008 and 2019, the 2nd respondent/Reserve Bank of India (hereinafter referred to as ‘RBI’ for short) conducts annual inspections of the 4th respondent/ Bank. The RBI did not notice any adverse observation during annual inspections with regard to financial position of the 4th respondent/Bank. All inspection reports, up to 2019, showed no instance of any fraud detected in the 4th respondent/Bank. On 01- 02-2016 a complaint was filed by a whistle blower before the RBI stating that the Bank was involved in several unethical practices. Since this was not supported by any evidence or documents, it comes to be dismissed by the RBI without conducting any independent inquiry, dubbing it be a pseudonymous complaint. In 2017, the RBI conducts inspection as is done every year and issues 6 licences to 7 more branches to be opened and also confers several awards upon the 4th respondent for having a good annual report. 2.2. On 31-10-2019, a former Chief Executive Officer of the Bank writes a letter to the RBI regarding the manner in which fresh adjustment of loan accounts were created by the Bank to cover up NPA accounts and this was only known to the President or the Vice- President of the Bank who were operating in this manner for over four years. As an illustration, the complainant enclosed about 435 accounts amounting to ₹846.30 crores of such transactions. This triggers the issue with the RBI. The RBI then conducts an inspection and notices the aforesaid transactions not in ₹846.30 crores but in ₹1544 crores. The Bank did not have complete records and projected that it was known only to the President, Vice-President or the Chief Executive Officer of the Bank. On 06-01-2020, the RBI opines that the Bank did not have records relating to 1602 accounts and the growth projected by the Bank was on the basis of such fictitious accounts. On 10-01-2020, the RBI freezes banking activities of the Bank and issued directions under Section 35A r/w Section 56 of the Banking Regulation Act, 1949. According to the 7 communication of the RBI, the depositors were not allowed to withdraw more than a sum of ₹35,000/- and the Bank would not allow any transfer to the depositors without the permission of the RBI. On 24-04-2020, a requisition was sent to the 5th respondent/Registrar of Co-operative Societies by the RBI to suspend the Board of Directors of the Bank in terms of Section 30 of the Karnataka Co-operative Societies Act. On 18-05-2020, the Board of the 4th respondent comes to be suspended and an Administrator is appointed by the State Government to be in-charge of the affairs of the Bank for six months. 2.3. Two writ petitions spring before this Court after appointment of the Administrator in Writ Petition Nos. 7350 of 2020 and 8674 of 2020 wherein interim orders were passed monitoring investigations both civil and criminal by the Court. Those writ petitions do not form part of these proceedings. What has triggered for the prayer that is sought in the petition is, the act of the Corporation. When the Bank had to pay to its depositors, role of the Corporation had sprung. On 22-09-2021, the 1st respondent/Union of India amends the Act. Section 21 of the Act is amended by 8 incorporation of sub-sections (3) and (4) and Section 18A of the Act comes to be inserted through the amendment. Post the amendment, the insurance cover under the Act was increased from ₹1/- lakh to ₹5/- lakhs and the insurance amount that was paid was to be returned as and when demanded by the Corporation. On 03-01-2022, the Corporation communicates to the Bank that an amount of ₹677.82 crores was paid by the Corporation and the said amount was to be returned to the Corporation. On 19-12-2022 the Corporation again seeks repayment of the insured amount, since all efforts were being made to revive the Bank. The communications between the Bank and the Corporation galore and a communication then springs by the petitioner in reply to the Bank’s demand that they should refund the amount given to the beneficiaries. Here, the petitioner/Society enters into the litigation contending that the demand is contrary to the provisions of law, under which the Corporation is seeking the aforesaid demand of refund of the amount. On 2-02-2023 the present writ petition is filed challenging the vires of Sections 18-A(5) and 21(3) and 21(4) of the Act. 9 3. Heard Sri S P Shankar, learned senior counsel for petitioner, Smt Nayanatara B G, learned Central Government Counsel for respondent No.1, Sri Udaya Holla, learned senior counsel for respondent No.2, Sri Dhyan Chinnappa, learned senior counsel for respondent No.3, Sri M N Umesh, learned counsel for respondent No.4 and Smt Mamatha Shetty, learned Additional Government Advocate for respondent No.5. 4. The learned senior counsel Sri S.P.Shankar representing the petitioner would vehemently contend that the Act is a central enactment, an outcome of process of such enactment as obtaining under Article 245(1) of the Constitution of India. The provisions of the Act offend Articles 14, 19, 21, 43B and 300A of the Constitution of India. The provisions are in conflict with the main purpose of the enactment. They are unreasonable, unfair and would result in unfair trade practice. The insurer’s right is only of salvage or subrogation and nothing more. He would elaborate on this point to contend that the insurance amount paid cannot be asked back in the normal circumstance. The Corporation is a Deposit Insurance Guarantee Corporation. Therefore, if the Corporation has paid to 10 the depositors, they cannot have any priority over and above the claim of depositors. He would submit that the demand of money back by the Corporation hits the very dynamics of the concept of insurance. Therefore, the challenge to the vires of the enactment which permits such demand. On the claim, the learned senior counsel would contend that the financial elevation of the Corporation for the last 5 years is that it has deposits of ₹18,11,550/- crores . The amount that is sought to be paid to the petitioner is ₹753/- crores which is 5% of the total risk premium collected in one single year. He would quote an illustration of the year 2022-23 wherein the Corporation has collected ₹21,381/- crores as a risk premium and 5% or even less would be ₹750/- crores. 5. Now, I deem it appropriate to notice each one of the contentions of the respondents. The Union of India projects the issue of maintainability of the petition, as on behalf of the members of the Association, the Association cannot prefer the writ petition. Without prejudice to its rights, the Union of India contends, that the petitioner/Association consists of members of depositors of below 11 and above ₹5/- lakhs. Since vires of legislation is called in question, the Union of India would contend that any legislation is presumed to be constitutionally valid and can only be challenged on limited grounds of it being violative of the fundamental rights, lacking in legislative competence or violating any of the provisions of the Constitution. No such ground is said to be projected in the petition. The objectives of the Corporation are to protect deposits of small investors from failure of Banks to provide both deposits and credit insurance. The Corporation acts as the financial intermediary between the Bank and the depositor and is tasked with ensuring systemic stability, which is achievable only to make recoveries of the deposits on priority basis. 6. The 2nd respondent/RBI would contend that the RBI has not violated any of the fundamental rights of members of the petitioner. The direction of the RBI is strictly in consonance with Section 35A of the Banking Regulation Act and is binding on the 4th respondent/Bank and Courts should not interfere with the economic decisions or policies to regulate financial institutions. 12 7. The learned senior counsel Sri Dhyan Chinnappa representing the 3rd respondent, apart from contending the question of locus as is urged by others, would contend that the Corporation has a right to recover and claim the amount as provided under Section 21 of the Act. The Corporation has a preferential right over any depositor to recover money in terms of Section 21. There is no cause of action against the Corporation. Sections 14C and 72B of the Karnataka Co-operative Societies Act also recognizes the right of the Corporation to claim and be reimbursed of the amount paid under Section 21 of the Act. As per the Act, the eligible amount payable to a depositor depends on the amount of deposit outstanding in accordance with Section 18A of the Act. Sub-section (5) of Section 18-A, according to the learned senior counsel, mandates that any amount paid by the Corporation in respect of a deposit, shall to the extent of the amount so paid, be refunded. 7.1. It is his emphatic submission that Section 18A r/w Section 21 of the Act and Regulation 22 of the DICGC Regulations would empower the Corporation to seek refund of the amount paid 13 towards any liability at any time, as repayments are made as a temporary measure. The Corporation does not receive any funds from the Central Government or the RBI, but it is the insured amount that is credited as a Deposit Insurance Fund, which would be required at any point in time to any of the citizen or the depositors in any of the Banks. He would contend that bringing in the normal insurance law or practice is only to obfuscate the issue. There is substantial difference between normal insurance under an insurance contract and the deposit insurance under the Act. The settlement of claim under the Act is not ex-gratia or gratis, but it is refundable under the Act. The Bank is liable to pay to the Corporation to the extent the amount is paid by the Corporation under the Act. 8. The learned counsel appearing for the 4th respondent/Bank would contend that the Bank has made no demand to the Corporation to pay any amount to any depositor. It has paid on its own. Therefore, the funds of the Bank should not be used to refund the amount to the Corporation. Large number of fraudulent borrowers have dumped the Bank, recovery efforts would not yield 14 any result as happens to any normal banking institution in a banking activity. This cannot be said to be the reason for the aforesaid amount as projected by the RBI. The funds of the Bank cannot be made use of for refund of the amount paid to the depositors by the Corporation. 9. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 10. The issue now would be, consideration of the constitutional validity of the aforesaid provisions of the Act. To consider the submissions and contra submissions it becomes necessary to notice certain provisions of the Act. The Deposit Insurance and Credit Guarantee Corporation Act was enacted on 07-12-1961, an act to provide for the establishment of a Corporation for the purpose of insurance of deposits and guaranteeing of credit facilities and other matters connected thereto. Chapter-III of the Act deals with registration of Banking companies and co-operative Banks as insured Banks and liability of 15 the Corporation to depositors of such insured banks. Sections 13 to 21 and 50 of the Act read as follows: “13. Cancellation of registration.—(1) The registration of a banking company as an insured bank shall stand cancelled on the occurrence of any of the following events, namely:— (a) if it has been prohibited from receiving fresh deposits; or (b) if it has been informed by notice in writing by the Reserve Bank that its licence has been cancelled under Section 22 of the Banking Regulation Act, 1949 (10 of 1949), or that a licence under that section cannot be granted to it; or (c) if it has been ordered to be wound up; or (d) if it has transferred all its deposit liabilities in India to any other institution; or (e) if it has ceased to be a banking company within the meaning of sub-section (2) of Section 36-A of the Banking Regulation Act, 1949 (10 of 1949), or has converted itself into a non-banking company; or (f) if a liquidator has been appointed in pursuance of a resolution for the voluntary winding up of its affairs; or (g) if in respect of it any scheme of compromise or arrangement or of reconstruction has been sanctioned by any competent authority and the said scheme does not permit the acceptance of fresh deposits; or (h) if it has been amalgamated with any other banking institution. (2) The provisions of clauses (a), (c), (d) and (h) of sub-section (1) shall apply to a corresponding new bank as they apply to a banking company. (3) The provisions of clauses (a), (c), (d) and (h) of sub-section (1) shall apply to a Regional Rural Bank as they apply to a banking company. 16 13A. Registration of co-operative banks.—(1) No co-operative bank shall be registered under this section unless it is an eligible co-operative bank. (2) Subject as aforesaid— (a) the Corporation shall register every existing co- operative bank as an insured bank before the expiry of thirty days next following the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968; (b) the Corporation shall register as an insured bank— (i) every new co-operative bank [other than a primary credit society becoming a primary co- operative bank after the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968] as soon as may be after it is granted a licence under Section 22 of the Banking Regulation Act, 1949 (10 of 1949); (ii) a primary credit society becoming a primary co- operative bank after such commencement within three months of its having made an application for a licence under the said section: (iii) every co-operative bank which has come into existence after the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968 (56 of 1968), as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business, at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), or at any time thereafter, within three months of its having made an application for a licence under the said section. Provided that a bank referred to in clause (b) shall not be so registered if it has been informed by notice in writing by the Reserve Bank that such a licence cannot be granted to it. 17 13B. Registration of defunct co-operative banks.— Every co-operative bank, being a defunct co-operative bank at the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968 (56 of 1968), by reason of sub-clause (vii) or sub-clause (viii) of clause (ff) of Section 2 shall, unless it becomes a defunct co-operative bank under any other sub- clause of that clause, be registered by the Corporation as an insured bank as soon as may be after the termination of the order of moratorium, or as the case may be, the rejection or dismissal of the application for its winding up provided it is an eligible co-operative bank and it either holds a licence granted under Section 22 of the Banking Regulation Act, 1949 (10 of 1949), or having applied for such licence in accordance with that section, has not been informed by notice in writing by the Reserve Bank that a licence cannot be granted to it. 13C. Cancellation of registration of co-operative banks.—The registration of a co-operative bank as an insured bank shall stand cancelled on the occurrence of any of the following events, namely:— (a) if it has been prohibited from accepting fresh deposits; or (b) if it has been informed by notice in writing by the Reserve Bank that its licence has been cancelled under Section 22 of the Banking Regulation Act, 1949 (10 of 1949), or a licence under that section cannot be granted to it; or (c) if it has been ordered or directed to be wound up; or (d) if it has transferred all its deposit liabilities in India to any other institution; or (e) if it has ceased to be a co-operative bank within the meaning of sub-section (2) of Section 36-A of the Banking Regulation Act, 1949 (10 of 1949); or (f) if it has converted itself into a non-banking co-operative society; or (g) if in respect of it any scheme of compromise or arrangement or of reconstruction has been sanctioned 18 by a competent authority and the said scheme does not permit the acceptance by it of fresh deposits; or (h) if it has been amalgamated with any other co-operative society; or (i) if it ceases to be an eligible co-operative bank, that is, if the law for the time being governing such co-operative bank does not provide for all or any of the matters referred to in clause (gg) of Section 2. 13D. 13D. Circumstances in which Reserve Bank may require winding up of co-operative banks.—(1) The circumstances referred to in sub-clause (ii) of clause (gg) of Section 2 (being circumstances in which the Reserve Bank may require the winding up of a co-operative bank) are the following, namely:— (a) that the co-operative bank has failed to comply with the requirements specified in Section 11 of the Banking Regulation Act, 1949 (10 of 1949); or (b) that the co-operative bank has by reason of the provisions of Section 22 of the said Act become disentitled to carry on banking business in India; or (c) that the co-operative bank has been prohibited from receiving fresh deposits by an order under sub-section (4) of Section 35 of the said Act or under clause (b) of sub-section (3-A) of Section 42 of the Reserve Bank of India Act, 1934 (2 of 1934); or (d) that the co-operative bank having failed to comply with any requirement of the Banking Regulation Act, 1949 (10 of 1949), other than the requirements laid down in Section 11 thereof, has continued such failure or, having contravened any provision of that Act has continued such contravention beyond such period or periods as may be specified in that behalf by the Reserve Bank from time to time, after notice in writing of such failure or contravention has been conveyed to the co-operative bank; or 19 (e) that the co-operative bank is unable to pay its debts; or (f) that in the opinion of the Reserve Bank— (i) a compromise or arrangement sanctioned by a competent authority in respect of the co- operative bank cannot be worked satisfactorily with or without modifications, or (ii) the continuance of the co-operative bank is prejudicial to the interests of its depositors. (2) Without prejudice to the provisions of any other law for the time being in force, a co-operative bank shall, for the purpose of clause (e) of sub-section (1), be deemed to be unable to pay its debts:— (i) if, on the basis of the returns, statements or information furnished to the Reserve Bank under or in pursuance of the provisions of the Banking Regulation Act, 1949 (10 of 1949), the Reserve Bank is of opinion that the co- operative bank is unable to pay its debts; or (ii) if the co-operative bank has refused to meet any lawful demand made at any of its offices or branches within two working days, if such demand is made at a place where there is an office, branch or agency of the Reserve Bank, or within five working days if such demand is made elsewhere and, in either case, the Reserve Bank certifies in writing that the co-operative bank is unable to pay its debts. 14. Intimation of registration.—(1) Where the Corporation has registered any banking company, Regional Rural Bank] or a co-operative Bank] as an insured bank, it shall, within thirty days of its registration, send an intimation in writing to the banking company, Regional Rural Bank or co- operative bank that it has been registered as an insured bank. (2) Every such intimation shall indicate the manner in which the premium payable by the bank under Section 15 may be calculated. 20 15. Premium.—(1) Every insured bank shall, so long as it continues to be registered, be liable to pay a premium to the Corporation on its deposits at such rate or rates as may with the previous approval of the Reserve Bank, be notified by the Corporation, from time to time, to the insured banks and different rates may be notified for different categories of insured banks: Provided that the premium payable by any insured bank for any period shall not exceed fifteen naye paise per annum for every hundred rupees of the total amount of the deposits in that bank at the end of that period or, where its registration has been cancelled during that period, on the date of its cancellation: Provided further that the Corporation may, having regard to its financial position and to the interests of the banking system of the country as a whole, and with previous approval of the Reserve Bank of India, from time to time, raise the aforesaid limit of fifteen paisa per annum for every hundred rupees of the total amount of the deposits in that bank: Provided also that where the registration of any insured bank is cancelled under Section 13 or under Section 13-C such cancellation shall not affect the liability of that bank for payment of premium for the period before such cancellation and of any interest due under the provisions of this section. (2) The premium shall be payable for such periods, at such times and in such manner as may be prescribed. (3) If an insured bank makes any default in payment of any amount of premium, it shall, for the period of such default, be liable to pay to the Corporation interest on such amount at such rate 71[not exceeding eight per cent over and above the bank rate as may be prescribed.] 15-A. Cancellation of registration of an insured bank for non-payment of premium.—(1) The Corporation may cancel the registration of an insured bank if it fails to pay the premium for three consecutive periods: 21 Provided that no such registration shall be cancelled except after giving to the concerned bank one month's notice in writing calling upon that bank to pay the amount in default. (2) The Corporation may restore the registration of a bank whose registration has been cancelled under sub-section (1), if the concerned bank requests the Corporation to restore the registration and pays all the amounts due by way of premia from the date of default till the date of payment together with interest due thereon on the date of payment: Provided that the Corporation shall not restore the registration unless it is satisfied, on an inspection of the concerned bank or otherwise, that it is eligible to be registered as an insured bank.] 16. Liability of Corporation in respect of insured deposits.—(1) Where an order for the winding up or liquidation of an insured bank is made, the Corporation shall, subject to the other provisions of this Act, be liable to pay to every depositor of that bank in accordance with the provisions of Section 17 an amount equal to the amount due to him in respect of his deposit in that bank at the time when such order is made: Provided that the liability of the Corporation in respect of an insured bank referred to in clause (a) or clause (b) of sub-section (1) of Section 13 or clause (a) or clause (b) of Section 13-C] shall be limited to the deposits as on the date of the cancellation of the registration: Provided further that the total amount payable by the Corporation to any one depositor in respect of his deposit in that bank in the same capacity and in the same right shall not exceed one thousand and five hundred rupees: Provided further that the Corporation may, from time to time, having regard to its financial position and to the interests of the banking system of the country as a whole, raise, with the previous approval of the Central Government, the aforesaid limits of one thousand and five hundred rupees. (2) Where in respect of an insured bank a scheme of compromise or arrangement or of reconstruction or amalgamation has been sanctioned by any competent 22 authority and the said scheme provides for each depositor being paid or credited with, on the date on which the scheme comes into force, an amount which is less than the original amount and also the specified amount, the Corporation shall be liable to pay to every such depositor in accordance with the provisions of Section 18 an amount equivalent to the difference between the amount so paid or credited and the original amount, or the difference between the amount so paid or credited and the specified amount, whichever is less: Provided that where any such scheme also provides that any payment made to a depositor before the coming into force of the scheme shall be reckoned towards the payment due to him under that scheme, then the scheme shall be deemed to have provided for that payment being made on the date of its coming into force. (3) For the purposes of this section, the amount of a deposit shall be determined after deducting therefrom any ascertained sum of money which the insured bank may be legally entitled to claim by way of set off against the depositor in the same capacity and in the same right. (4) In this section,— (a) “original amount” in relation to a depositor means the total amount due by the insured bank immediately before the date of coming into force of the scheme of compromise or arrangement or, as the case may be, of reconstruction or amalgamation to the depositor in respect of his deposit in the bank in the same capacity and in the same right: Provided that where under the proviso to sub- section (2), the scheme is deemed to have provided for any payment being made on the date of its coming into force, the amount of such payment shall be included in calculating the original amount; (b) “specified amount” means one thousand and five hundred rupees, or, as the case may be, the amount fixed by the Corporation under the third proviso to sub- section (1). 23 17. Manner of payment by Corporation in case of winding up of insured banks.—(1) Where an insured bank has been ordered to be wound up or to be taken into liquidation and a liquidator, by whatever name called, has been appointed in respect thereof, the liquidator shall, with the least possible delay and in any case not later than three months from the date of his assuming charge of office, furnish to the Corporation a list in such form and manner as may be specified by the Corporation showing separately the deposits in respect of each depositor and the amounts of set off referred to in sub-section (3) of Section 16. (2) Before the expiry of two months from the receipt of such list from the liquidator, the Corporation shall pay the amount payable under Section 16 in respect of the deposit of each depositor— (a) directly to the depositor, or (b) to the depositor through such agency as the Corporation may determine, or (c) to the liquidator. (3) Where the Corporation pays under sub-section (2), any amount in respect of the deposit of a depositor to the liquidator, the liquidator shall pay or cause to be paid that amount to the depositor and any expenses incurred by the liquidator in making such payment shall be treated as expenses incurred in the winding up of the insured bank. 18. Manner of payment by Corporation in case of scheme of compromise or arrangement or of reconstruction or amalgamation in respect of an insured bank.—(1) Where a scheme of amalgamation of any insured bank with any other banking institution (hereinafter referred to as the transferee bank) or a scheme of compromise or arrangement or of reconstruction in respect of such bank has been sanctioned and the Corporation has become liable to pay to depositors of the insured bank under sub-section (2) of Section 16, the transferee bank where the scheme is of amalgamation and the insured bank in any other case shall, with the least possible delay and in any case not later than three months from the date on which such scheme takes effect, furnish to the Corporation a list in such form and 24 manner as may be specified by the Corporation and certified to be correct by the chief executive officer of the transferee bank or, as the case may be, of the insured bank showing separately deposits in respect of each depositor and the amounts of set off referred to in sub-section (3) of Section 16 and also the amounts paid or credited or deemed to have been paid under the scheme. (2) Before the expiry of two months from the receipt of such list, the Corporation shall pay the amount payable under Section 16 either directly to depositor or to the transferee bank or the insured bank for being credited in his account. 18A. Liability of Corporation to make interim payment to depositors of insured bank.—(1) Where, in respect of an insured bank,— (i) any direction is issued or any prohibition or order or scheme is made under any of the provisions of the Banking Regulation Act, 1949 (10 of 1949); and (ii) such direction, prohibition, order or scheme provides for restrictions on depositors of such bank from accessing their deposits, then, without prejudice to the provisions of Sections 16 to 18, the Corporation shall, on the date on which such direction, prohibition, order or scheme takes effect, become liable to pay to every such depositor an amount equivalent to the amount payable by the Corporation to the depositor under Section 16. (2) A list showing the outstanding deposits of each depositor of the insured bank, as on the date on which the direction, prohibition, order or scheme referred to in sub- section (1) takes effect, shall be furnished by such insured bank within forty-five days of such date of effect, in such form and manner as may be specified by the Corporation and certified to be correct by the chief executive officer of the insured bank. (3) The Corporation shall, within thirty days of the date of receipt of the list under sub-section (2), verify, through an online platform, to the extent possible, or in accordance with such procedure, as may be prescribed, the genuineness and 25 authenticity of the claims made therein, and ascertain the willingness of each depositor to receive the amount due to him out of his deposit in the insured bank. (4) Subject to the provisions of sub-section (7), the Corporation shall, before the expiry of fifteen days from the date of completion of the verification under sub-section (3), pay to the depositors who have affirmed their willingness thereunder, the amount payable under sub-section (1) either directly, or get it credited in the account of the depositors through the insured bank: Provided that the total period of time between the date when the Corporation becomes liable to pay to the depositor and the date of payment to the depositor shall not, subject to the provisions of sub-section (7), exceed ninety days: Provided further that any amount paid by the insured bank to the depositor during the period between the date on which the direction, prohibition, order or scheme referred to in sub-section (1) takes effect and the date of payment to the depositor, shall be appropriately reckoned by the insured bank before crediting such amount in depositor's account. (5) Any amount paid by the Corporation under sub-section (4) in respect of a deposit shall, to the extent of the amount so paid, discharge the insured bank from its liability to the depositor in respect of that deposit, but the insured bank shall become liable to the Corporation in respect of the amount paid by the Corporation. (6) Where, in respect of an insured bank,— (i) any direction, prohibition, order or scheme under any of the provisions of the Banking Regulation Act, 1949 (10 of 1949) providing for suspension of business of the insured bank is already in force as on the date of commencement of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021; and (ii) such direction, prohibition, order or scheme provides for restrictions on the amounts to be paid by the insured bank to each of its depositors, then, notwithstanding anything contained in any 26 other law for the time being in force, the Corporation shall, on and from the date of commencement of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021, become liable to pay to each depositor of such insured bank, an amount equivalent to the amount payable by the Corporation to the depositor under sub-section (1) of Section 16, and the time limit specified in sub-sections (2) to (4) herein for such payment shall be computed from that date. (7) Notwithstanding anything contained in sub-sections (1) to (6), in cases where,— (a) the Reserve Bank finds it expedient in the interest of finalising a scheme of amalgamation of the insured bank with other banking institution or a scheme of compromise or arrangement or of reconstruction in respect of such insured bank, and communicates to the Corporation accordingly, the date on which the Corporation shall become liable to pay every depositor of such insured bank may further be extended by a period not exceeding ninety days; (b) the restrictions on payment to depositors are removed by the Reserve Bank at any time before payment to depositors by the Corporation under sub-section (4), and the insured bank or the transferee bank is in a position to make payments to its depositors on demand without any restrictions, the Corporation shall not be liable to make payment to the depositors of such insured bank.] 19. Discharge of the liability of Corporation.—Any amount paid by the Corporation under Section 17 or Section 18 or Section 18-A in respect of a deposit shall, to the extent of the amount paid, discharge the Corporation from its liability in respect of that deposit. 20. Provision for unpaid amounts.—Where any depositor to whom any payment is to be made in accordance with the provisions of Section 17 or Section 18 or Section 18-A 27 cannot be found or is not readily traceable, adequate provision shall be made by the Corporation for such payment and the amount of such provision shall be accounted for separately in its books. 21. Repayment of the amount to Corporation.—(1) Where any amount has been paid under Section 17 or Section 18 or Section 18-A or any provision therefor has been made under Section 20, the Corporation shall furnish to the liquidator or to the insured bank or to the transferee bank, as the case may be, information as regards the amounts so paid or provided for. (2) On receipt of the information under sub-section (1), notwithstanding anything to the contrary contained in any other law for the time being in force,— (a) the liquidator shall, within such time and in such manner as may be prescribed, repay to the Corporation out of the amount, if any, payable by him in respect of any deposit such sum or sums as make up the amount paid or provided for by the Corporation in respect of that deposit; (b) the insured bank or, as the case may be, the transferee bank shall, within such time and in such manner as may be prescribed, repay to the Corporation out of the amount, if any, to be paid or credited in respect of any deposit after the date of the coming into force of the scheme referred to in Section 18 or the direction, prohibition, order or scheme referred to in Section 18-A, such sum or sums as make up the amount paid or provided for by the Corporation in respect of that deposit. (3) The Corporation may defer or vary the time limit for receipt of repayments due to it from the insured bank or the transferee bank, as the case may be, for such period and upon such terms, as may be decided by the Board in accordance with the regulations made in this behalf: Provided that such regulations shall also provide for prudential principles to assess the capability of the bank to make repayment to the Corporation and for prohibition of specified other classes of liabilities from being discharged by the insured bank or the transferee bank till such time as repayment is made to the Corporation. 28 (4) In case of any delay in repayment to the Corporation beyond the time period prescribed under sub- section (2) or extended under sub-section (3), the Corporation may charge penal interest at a maximum rate of two per cent. above the repo rate per annum for the amount to be repaid to the Corporation and such penal interest shall rank equally for priority with the amount to be repaid under sub-section (2). … … … 50. Regulation.—(1) The Board may, with the previous approval of the Reserve Bank, by notification in the Official Gazette, make regulations not inconsistent with this Act to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for— (a) the times and places of the meetings of the Board or of any committee constituted under this Act and the procedure to be followed at such meetings including the quorum necessary for the transaction of business; (b) the number of directors constituting an Executive Committee, and the functions that such committee shall discharge; (c) the functions which any other committee may discharge under this Act; (d) the fees and allowances that may be paid to the members of a committee other than directors of the Board; (e) the fees and allowances that may be paid to the directors of the Board; (f) the periods for which, the times at which and the manner in which premium may be paid by any insured bank; (g) the interest which may be charged from an insured bank where it makes default in payment of premium; 29 (h) the manner in which and the time within which the amounts referred to in Section 21 may be paid; (i) the form and the manner in which the balance-sheet and the accounts of the Corporation shall be prepared or maintained; and (j) any other matter which is to be, or may be prescribed; (3) Any regulation which may be made by the Board under this Act may be made by the Reserve Bank within three months of the establishment of the Corporation; and any regulation so made may be altered or rescinded by the Board in the exercise of its powers under this Act. (4) Every regulation shall, as soon as may be after it is made under this Act by the Board, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation, or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.” (Emphasis supplied) Section 50 empowers the Board of any Bank with the prior approval of the Reserve Bank to make Regulations for the purpose of giving effect to the provisions of the Act. Certain regulations are necessary to be noticed. Chapter-V of the Regulations deals with insured banks. Regulations 21 to 22A read as follows: 30 “21. Waiver of interest due to the Corporation.-The Corporation may at any time waive any payment due to it by way of interest on such conditions and for such period or periods as it may deem fit. 21-A. Claim submission procedure.—(1) The insured bank, while furnishing the list and the certification under sub- section (2) of Section 18-A, shall submit in such form as specified by the Corporation, the name and account details of depositors who have affirmed their willingness to receive the insured amount in respect of their deposit in the insured bank, and that form shall also contain a declaration signed by the chief executive officer/the person in charge as to the correctness of the contents thereof along with a confirmation as to availability of the declarations signed and submitted by the depositors, and an undertaking to preserve and submit the said declarations to the Corporation, within such time and in such manner as specified by the Corporation. (2) The insured bank shall obtain willingness of the depositors in such form as may be specified by the Corporation, which shall necessarily include an express declaration of willingness signed by the depositor to receive the insured amount along with a certification by the chief executive officer/the person in charge as to the correctness of the contents thereof. and the forms so obtained shall be submitted to the Corporation within such time and in such manner specified by the Corporation. (3) where the insured bank receives willingness of a depositor after submission of the Form under sub-regulation (1) but within the period specified in the first proviso to sub- section (4) of Section 18-A, it shall submit the details thereof in the same format specified under sub-regulation (1) within such time and in such manner specified by the Corporation in the same format specified under sub-regulation (1). (4) The claim settlement procedure adopted by the Corporation with the approval of the Board, for verifying the genuineness and authenticity of the claim made by the liquidator under Section 17 and the transferee/insured bank under Section 18 shall mutatis mutandis be applied for verification of the genuineness and authenticity of the— 31 (a) claim made in the list furnished by the insured bank under sub-section (2) of Section 18-A; and (b) the forms and declarations referred to in sub- regulations (1), (2) and (3), for ascertaining the willingness of the depositor. 22. Repayment to the Corporation. — The amounts repayable to the Corporation under sub-section (2) of Section 21 of the Act shall be paid from time to time by,- (a) the liquidator as soon as the realisations and other amounts in his hands, after making provision for expenses payable by that time, are sufficient to enable him to declare a dividend of not less than one paisa. in the Rupee to each depositor. (b) the insured bank or the transferee bank, as the case may be, as soon as the realisations and other amounts in its hands, after making provision for expenses payable by that time in respect of such realisations or other amounts in its hands are sufficient to enable it after the date of coming into force of the scheme referred to in section 18 of the Act, to pay or credit in respect of each depositor a sum not less than one paisa in the Rupee. 22-A. Repayment time period.—1. Notwithstanding anything contained in Regulation 22, where the Corporation is satisfied about the financial position of the insured bank or the transferee bank, as the case may be, and keeping in view the expected time period that would be sufficient to generate cash flows, capital infusion, liquidity, business profits, sale of assets, restructuring of the insured bank, to pay the stakeholders including uninsured depositors and other creditors, makes an assessment that the bank is not capable of making repayment to the Corporation, then it may defer or vary the time limit for receipt of repayments due to it for such period and upon such terms as the Board may specifically decide. 32 2. The decision of the Board referred in sub-regulation (1) shall be binding on the bank and till such time as repayment is made to the Corporation, the insured bank or the transferee bank, as the case may be, shall be prohibited from discharging the classes of liabilities, other than those specified in terms of the decision of the Board. 3. The Corporation may, for the purpose of assessment of the financial position and the capability of the bank to make repayment, call upon the bank, from time to time or periodically, to submit such records or statements and furnish such information as the Corporation considers it necessary and expedient and the bank shall comply with the same.” (Emphasis supplied) The aforesaid Regulations are the ones that are necessary to be considered in the case at hand particularly Regulation 22. Regulation 22 empowers the amounts repayable to the Corporation under sub-section (2) of Section 21 of the Act to recover the amounts. Therefore, the statute empowers the Corporation to recover the amount in terms of the Act and the Regulations subsisting. 11. The right of the Corporation to recover the amount need not detain this Court for long or delve deep into the matter. The Apex Court in the case of DEPOSIT INSURANCE AND CREDIT 33 GUARANTEE CORPORATION v. RAGUPATHI RAGAVAN1, considers the very provisions that are now put to question before this Court and recognizes the right of the Corporation to recover the amount by holding as follows: “…. …. …. 17. Upon hearing the learned counsel appearing for the parties and looking at the facts of the case, we are of the view that this appeal deserves to be allowed. We note the fact that Writ Petitions Nos. 6768 and 7372 of 2005 had been finally disposed of at an admission stage. In the said petitions, the present appellant Corporation was not made a party, though it was stated before the learned Single Judge that according to the statutory provisions of the Act, the Official Liquidator had to make payment to the Corporation. In view of the said submission, in our opinion, it would have been better if the Corporation had been impleaded as one of the respondents. In that event, the stand of the Corporation and the provisions of the Act could have been known in detail by the learned Single Judge. 18. Be that as it may, now we are concerned with a direction given by the High Court to the Official Liquidator and the Special Officer of the Bank, which is in liquidation, whereby they have been directed to pay the unpaid amount to the depositors instead of paying the same to the Corporation. 19. The object with which the Act has been enacted has been stated hereinabove in a nutshell. The object was to insure the depositors so that they may not have to stand in a queue before the Official Liquidator for every paisa deposited by them with the bank concerned. As on today, as per the provisions of Section 16(1) of the Act, a sum of Rs 1 lakh is being insured or guaranteed in respect of each depositor. So a depositor is safe and he has not to wash his hands off his deposit if the amount 1 (2015)9 SCC 629 34 deposited by him is less than Rs 1 lakh. The Official Liquidator, as per the provisions of the Act, has to give details about the depositors and the amount deposited by them in a prescribed form within three months from the date on which the liquidation order is passed or from the day on which he takes charge, whichever is later and within two months from the date on which the details are submitted to the Corporation, the Corporation has to make payment to the above extent either to the depositors directly or to them through the Official Liquidator. 20. Thus, as per the abovereferred scheme, each depositor, including each original petitioner, must have received Rs 1 lakh from the Official Liquidator. Initially, upon the bank being ordered to be wound up, the original petitioners and other depositors had a right to recover Rs 1 lakh or the amount deposited, whichever was less, from the Official Liquidator and the said amount must have been paid to them when the petitions were filed. 21. According to the provisions of the Act, after payment to the above extent is made to each depositor, if any amount is available at the disposal of the Official Liquidator, which he might have recovered from the borrowers or from other sources, he has to pay the said amount to the extent to which the amount had been paid by the Corporation as per the provisions of Section 21 of the Act. Section 21 of the Act reads as under: “21.Repayment of the amount to Corporation.— (1) Where any amount has been paid under Section 17 or Section 18 or any provision therefor has been made under Section 20, the Corporation shall furnish to the liquidator or to the insured bank or to the transferee bank, as the case may be, information as regards the amounts so paid or provided for. (2) On receipt of the information under sub-section (1), notwithstanding anything to the contrary contained in any other law for the time being in force— (a) the liquidator shall, within such time and in such manner as may be prescribed, repay to the 35 Corporation out of the amount, if any payable by him in respect of any deposit such sum or sums as make up the amount paid or provided for by the Corporation in respect of that deposit; (b) the insured bank or, as the case may be, the transferee bank, shall, within such time and in such manner as may be prescribed, repay to the Corporation out of the amount, if any, to be paid or credited in respect of any deposit after the date of the coming into force of the scheme referred to in Section 18, such sum or sums as make up the amount paid or provided for by the Corporation in respect of that deposit.” It is pertinent to note that when the Corporation had paid to the depositors as per the insurance scheme under the Act, the Corporation gets a right under the aforestated Section 21 of the Act to get money from the Official Liquidator. 22. One has to look at sub-section (2) of Section 21, which in unequivocal terms, directs the Official Liquidator to make the payment to the Corporation as it has been stated in the said sub-section, notwithstanding anything to the contrary contained in any other law for the time being in force. Thus, the Official Liquidator, as per sub- section (2)(a) of Section 21 of the Act, has to repay the amount to the Corporation. The aforestated Section 21 not only makes it obligatory on the part of the Official Liquidator to repay the said amount to the Corporation, but it also clarifies that there shall not be any other preferential creditor who would be getting any amount from the Official Liquidator till the amount payable under Section 21 of the Act is paid to the Corporation. 23. In view of the aforestated clear legal position, in our opinion, the High Court was not right when it directed the Official Liquidator to determine the mode of payment by ignoring the aforestated statutory provision. 24. The Corporation was not represented before the learned Single Judge, but at least before the Division Bench, the learned counsel appearing for the Official Liquidator had drawn 36 attention of the Bench to the aforestated legal provisions of the Act. Moreover, provisions of Regulation 22 of the Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961 (hereinafter referred to as “the Regulations”) had also been referred to by the learned counsel. 25. The said Regulation 22 reads as under: “22. The amounts repayable to the Corporation under sub-section (2) of Section 21 of the Act shall be paid from time to time by— (a) the liquidator as soon as the realisations and other amounts in his hands, after making provision for expenses payable by that time, are sufficient to enable him to declare a dividend of not less than one paisa in the rupee to each depositor. (b) the insured bank or the transferee bank, as the case may be, as soon as the realisations and other amounts in its hands, after making provision for expenses payable by that time in respect of such realisations or other amounts in its hands are sufficient to enable it after the date of coming into force of the scheme referred to in Section 18 of the Act, to pay or credit in respect of each depositor a sum not less than one paisa in the rupee.” The aforestated Regulation 22 also provides that the Official Liquidator, after making necessary provision for the expenses in relation to the liquidation proceedings and for declaration of dividend, as prescribed in the Regulations, has to make payment to the Corporation. 26. In view of the aforestated statutory legal provision, in our opinion, the High Court should not have given the direction which, if complied with, would run contrary to the statutory provisions incorporated in the Act. 27. Even if one looks at the entire issue from different point of view, one would believe that all the depositors have by and large equal right. If the amount deposited is less than Rs 1 lakh, each depositor gets the amount in full, but if the deposit is exceeding Rs 1 lakh, then only the amount which is in excess of Rs 1 lakh may 37 not be given to the depositor, unless the bank in liquidation is having sufficient funds which can be given to all on pro rata basis after providing for expenditure in the liquidation proceedings and after repaying the amount to the Corporation as per the provisions of the Act. The Act in a way guarantees repayment of Rs 1 lakh to each depositor. The High Court or any other authority has no power to direct payment in excess of Rs 1 lakh by ignoring the statutory provisions of the Act and the Regulations made thereunder. 28. For the aforestated reason, we are of the view that the High Court had exceeded its authority while giving a direction to the Official Liquidator, which is not in consonance with the statutory provisions and therefore, we set aside the judgment and order delivered by the learned Single Judge as also by the Division Bench and direct the Official Liquidator and the Special Officer to act in accordance with the statutory provisions.” (Emphasis supplied) The Apex Court renders its judgement on 07-09-2015 at which point in time, the recovery by the Corporation was permissible only on the liquidation of a Banking company. Therefore, it was interpreted that the Corporation has every right to recover the amount from the Official Liquidator and it has precedence over any other payment to be made to any other person. 12. Long before the judgement of the Apex Court, A Division Bench of the Bombay High Court in the case of KARAD MERCHANT SAHAKARI CREDIT SANSTHA MARYADIT v. 38 RESERVE BANK OF INDIA2, considering the right of the Corporation to recover the amount has held as follows: “…. …. …. 15. Since the issue of interpretation and validity of Sections 16, 17 and 19 of the said Act arise, the provisions contained therein are transcribed below for convenience of reference: “16. Liability of Corporation in respect of insured deposits.- (1) Where an order for the winding up or liquidation of an insured bank is made, the Corporation shall, subject to the other provisions of this Act, be liable to pay to every depositor of that bank in accordance with the provisions of section 17 an amount equal to the amount due to him in respect of his deposit in that bank at the time when such order is made: Provided that the liability of the Corporation in respect of an insured bank referred to in clause (a) or clause (b) of sub-section (1) of section (13) or clause (a) or clause (b) of section 13C shall be limited to the deposits as on the date of the cancellation of the registration: Provided further that the total amount payable by the Corporation to any one depositor in respect of his deposit in that bank in the same capacity and in the same right shall not exceed *one lakh rupees. Provided further that the Corporation may, from time to time, having regard to its financial position and to the interests of the banking system of the country as a whole, raise, with the previous approval of the Central Government, the aforesaid limits of one thousand and five hundred rupees. (2) Where in respect of an insured bank a scheme of compromise or arrangement or of reconstruction or amalgamation has been sanctioned by any competent authority and the said scheme provides for each depositor being paid or credited with, on the date on which the 2 2014 SCC OnLine Bom 266 39 scheme comes into force, an amount which is less than the original amount and also the specified amount, the Corporation shall be liable to pay to every such depositor in accordance with the provisions of Section 18 an amount equivalent to the difference between the amount so paid or credited and the original amount, or the difference between the amount so paid or credited and the specified amount, whichever is less: Provided that where any such scheme also provides that any payment made to a depositor before the coming into force of the scheme shall be reckoned towards the payment due to him under that scheme, then the scheme shall be deemed to have provided for that payment being made on the date of its coming into force. (3) For the purposes of this section, the amount of a deposit shall be determined after deducting therefrom any ascertained sum of money which the insured bank may be legally entitled, to claim by way of set-off against the depositor in the same capacity and in the same right. (4) In this section, (a) “original amount” in relation to a depositor means the total amount due by the insured bank immediately before the date of coming into force of the scheme of compromise of arrangement or, as the case may be, of reconstruction or amalgamation to the depositor in respect of his deposit in the bank in the same capacity and in the same right: Provided that where under the proviso to subsection (2), the scheme is deemed to have provided for any payment being made on the date of its coming into force, the amount of such payment shall be included in calculating the original amount: (b) “specified amount” means one thousand and five hundred rupees, or as the case may be, the amount fixed by the Corporation under the third proviso to subsection (1). 17. Manner of payment by Corporation in case of winding up of insured banks.- (1) Where an insured bank has been ordered to be wound up or to be taken into liquidation and a liquidator, by whatever name called, has been appointed in respect thereof, the liquidator shall, with 40 the least possible delay and in any case not later than three months from the date of his assuming charge of office, furnish to the Corporation a list in such form and manner as may be specified by the Corporation showing separately the deposits in respect of each depositor and the amounts of set off referred to in sub-section (3) of Section 16. (2) Before the expiry of two months from the receipt of such list from the liquidator, the Corporation shall pay the amount payable under Section 16 in respect of the deposit of each depositor: (a) directly to the depositor, or (b) to the depositor through such agency as the Corporation may determine, or (c) to the liquidator. (3) Where the Corporation pays under subsection (2), any amount in respect of the deposit of a depositor to the liquidator, the liquidator shall pay or cause to be paid that amount to the depositor and any expenses incurred by the liquidator in making such payment shall be treated as expenses incurred in the winding up of the insured bank. 19. Discharge of the liability of Corporation.- Any amount paid by the Corporation under Section 17 or Section 18 in respect of a deposit shall, to the extent of the amount paid, discharge the Corporation from its liability in respect of that deposit.” 16. In our opinion, the provisions contained in the aforesaid Sections do not admit of any ambiguity as such. The DICGC, in terms of Section 16(1) of the said Act, is no doubt liable to pay ‘every depositor of that bank an amount equal to the amount due to him in respect of his deposit’ in that bank when order of liquidation or winding up of such bank is made. The second proviso to Section 16(1) of the said Act, however, limits the liability in that the ‘total amount’ payable by DICGC ‘to any one depositor in respect of his deposit in that bank in the same capacity and in the same right’ upto Rs. 1,00,000/-. This means that if the deposits held by a depositor in the insured bank as on the date of winding up or liquidation 41 is less than or upto Rs. 1,00,000/-, then such depositor is entitled to avail insurance indemnity upto the entire extent of his deposit. However, if the deposits held exceed Rs. 1,00,000/- in the same capacity and in the same right, then the insurance indemnity shall extend upto Rs. 1,00,000/- only. 17. The reference and emphasis in the aforesaid provisions is clearly to the ‘depositor of the bank which is being wound up or under liquidation’ and to ‘his deposit’. The phraseology employed in the second proviso like ‘any one depositor’, ‘in respect of his deposit’ and ‘in the same capacity and in the same right’ clarifies the position that the DICGC is no way concerned with the investors or depositors who may have invested or deposited with the Petitioners. The Petitioners, are no doubts depositors with the insured bank, which in the present case is the Respondent No. 6. Therefore, in view of the liquidation of Respondent No. 6 bank, the DICGC is liable to offer insurance indemnity to the Petitioners to the extent of Rs. 1,00,000/-. There is no further obligation towards depositors/investors who may have made deposits/investments with the Petitioners. In the light of the clear provisions, it is futile to suggest any other interpretation either by resort to verbal semantics or by invitation to refer to the legislative intent and on the said basis press the mischief rule of interpretation. The pre- conditions for resort to the mischief rule of interpretation is that there must arise some ambiguity in the interpretation of statutory provisions. As observed earlier, the provisions under consideration, do not admit of any ambiguity. 18. The circumstance that premium is levied upon the entire body of deposits, in our opinion, makes no difference to the statutory interpretation. It must be remembered that such levy is a part of a statutory insurance scheme under the provisions of the said Act. The Scheme levies a meagre premium as compared to what might have been levied under a general insurance policy. The scheme is statutorily designed taking into consideration not just the financial position of the DICGC, but also ‘the interest of the banking system of the 42 country as a whole.’ This is clear from the third proviso to Section 16(1) of the said Act, which makes special reference to such parameters in the context of increasing the limits of insurance cover to depositors of insured bank under liquidation. The interpretation suggested by the Petitioners was rejected by this Court in the case of Bharatmata (supra) whilst dealing with a plea that a set off be permitted against the amounts payable by the borrowers of the credit societies before any liability in terms of Sections 16, 17 and 18 of the said Act is determined. This Court ruled that liability of DICGC is to each depositor of the bank under liquidation and upto the extent of Rs. 1,00,000/- only. If the contention regards set off is accepted, then the same would virtually amount to grant of undue priority or preference to depositors/investors of credit societies contrary to the provisions of the said Act. 19. The circumstance that some hardship may occasion in individual cases, is not strictly speaking relevant to statutory interpretation. Such hardship in individual cases has to be juxtaposed against the benefit which the statutory insurance scheme imparts to numerous small depositors with banks, where said banks are ordered to be wound up or liquidated. The observations of the Supreme Court in the case of FatehchandHimmatlal v. State of Maharashtra3, are apposite. “Every cause claims its martyr and if the law, necessitated by practical considerations, makes generalizations which hurt a few, it cannot be helped by the Court. Otherwise, the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors, frustrating through endless litigation, the instant relief to the indebted which is the promise of the legislature.” 20. For all the aforesaid reasons, we see no merit in the Petitioners first contention regards interpretation of the provisions of Sections 16, 17 and 19 of the said Act. 21. The Petitioners second contention revolves around the meaning and true purpose of insertion of a ‘proviso’. According to the Petitioners, a proviso ought not to nullify the 43 provisions contained in the main enactment. If it does so, then the proviso does not serve its proper purpose and ought to be struck down as ultra vires, arbitrary, unconstitutional, null and void. 22. In the present case, we are of the opinion that the proviso in question does not completely cut down or nullify the provisions contained in the main enactment. The main enactment contained in Section 16(1) provides that the DICGC shall be liable to pay every depositor of the bank an amount equal to the amount due to him in respect of his deposit in that bank when an order of winding up or liquidation of that bank is made. The proviso does not wipe out the said liability. The proviso only restricts such liability upto the extent of Rs. 1,00,000/-. The proper function of a proviso is to accept and deal with a case which would otherwise fall within the general language of the main enactment. In the case of Sundaram Pillai v.Pattaboraman, the Supreme Court held that by and large the proviso may serve the following four different purposes:— (1) qualifying or excepting certain provisions from the main enactment; (2) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; (3) it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and (4) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision. 23. Based on the aforesaid Authority of the Supreme Court, it can be said that the proviso in the present case qualifies or excepts certain provisions from the main enactment. There is nothing arbitrary or ultra vires in the proviso. The proviso, particularly when read in the context of the Statement of Objects and Reasons of 44 the said Act, makes clear the legislative intent that the liability of DICGC was to extend upto the limit to be prescribed in the proviso and not any further. In such circumstances, we are unable to see any merit in the Petitioners contention that the proviso is either ultra vires, arbitrary, illegal, unconstitutional, null and void. 24. The third challenge relates to the alleged breach of the doctrine of reasonable classification, which by now is accepted as one of the concomitants of the equality clause enshrined in Article 14 of the Constitution of India. In our opinion however, the classification between depositors having deposits of less than Rs. 1,00,000/- and beyond is certainly based upon an intelligible differentia. Such classification is neither artificial nor can it be said that there is any ambiguity about the same. Further, if the objective of the said Act is to protect the interests of the small depositors when the banks in which their deposits are held go into liquidation, then the differentia adopted, certainly has a rational nexus with the objective. The charge of breach of the doctrine of reasonable classification therefore does not appeal to us. 25. In the return filed by the DICGC it is pointed out that at the time when the said Act was enacted, the insurance cover provided was only upto Rs. 1,500/-. However, consistent with the provisions contained in the third proviso to Section 16(1) of the said Act, the DICGC from time to time, having regard to its financial position and to the interest of banking system of the country as a whole, with the previous approval of the Central Government has raised the limit of insurance cover which presently stands at Rs. 1,00,000/-. The classification between depositors having deposits of less than Rs. 1,00,000/- and depositors having deposits of more than Rs. 1,00,000/- is therefore based upon the principle referred to in the third proviso. Besides, in effecting such a classification, the DICGC also relies upon empirical data in its possession. In the return, it is pointed out that by the present limit of insurance cover of Rs. 1,00,000/-, almost 89% of deposit accounts as on 31.03.2009 in the banking system as a whole, stand fully protected. This level of insurance cover works out to 2 : 2 times the per capita GDP of India, when in fact the international bench mark in this regards is between 1 to 2 times the per capita GDP. Again it 45 must be noted that there is difference between a general insurance scheme and the statutory insurance scheme designed under the said Act. The insurance premia under the deposit insurance scheme is determined by statute and the same is quite meagre as compared to any premia which may have been charged under a general insurance scheme should such scheme be designed upon general commercial principles. Under the deposit insurance scheme, DICGC is not under any realistic liberty to decline insurance cover to banks registered with it under the provisions of the said Act. Thus, the entire purpose of the deposit insurance scheme is to afford some cover to small depositors by providing them with a safety net so that the entirety of their deposits are not wiped out, when the banks in which they are held, go into liquidation. The provisions of the said Act therefore, have to be construed, not in the context of any particular bank or particular fact situation, but rather from the context of protection afforded to numerous small depositors and the entire banking system in the country. Thus, viewed and construed, there is no merit in the charge of violation of Article 14 of the Constitution of India. 26. The principle underlying the guarantee of Article 14 of the Constitution of India is not that the same rules of law should be applicable to all persons irrespective of the differences or the circumstances. The principle, only means that all persons similarly circumstanced should be treated alike. By resort to classification, the State has the undoubted power to determine which group should be regarded as a class for the purposes of classification. In order to pass the test of valid classification, two conditions have to be fulfilled. The first is that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from the others that are left out. Secondly, the differentia must have a rational nexus with the object which the legislation seeks to achieve. In our opinion, both the conditions stand fulfilled in the present case. 27. Again, it must be noted that it is for the legislature to determine the policy in the matter of classification. The economic criteria is accepted as the basis for classification. It is for the legislature to 46 determine the manner and extent of classification. For this purpose some cut off point has to be settled and unless the cut off point is ex facie absurd or arbitrary, there is no warrant for any judicial interference with such legislative measures. Every legislation, particularly in economic matters is essentially empiric and is to a great extent based upon experimentation or what one may call the trial and error method. There may be crudities and inequities in competent experimentation of legislations. But on that account alone, such legislations cannot be struck down as arbitrary and invalid. The Constitutional Courts are expected to adjudge the validity of such legislations by the generality of its provisions and not by its crudities or inequities or possibility of abuse of any of its provisions. 28. There is absolutely no merit in the challenge to the provisions contained in Sections 19 and 21 of the said Act and sub Section 10 of Section 43A of the B.R. Act. The provisions merely grant a priority to the DICGC in the matter of recovery of the amounts which it may have paid by way of insurance indemnity to the depositors, from out of any recoveries which the Liquidator may make by liquidating the assets of the insured bank. This is not a case of the legislature taking away with one hand what it may have given with the other. In fact it should not be lightly assumed that the Parliament takes away with one hand what it gives with the other. The provisions must be read as parts of an integral whole and as being inter dependent. An attempt should always be made at harmonious construction. In the present case, it needs to be noted that the DICGC is concerned with the entire banking system in the country. In the circumstances, it is not expected that the DICGC offers insurance indemnity to a few insured banks and thereafter is unable to recover the insurance indemnity amount from the said banks in a preferential manner. This would result in virtual collapse in the functioning of the DICGC. This would possibly have a deleterious effect upon the banking system in the country. This cannot have been the intention of the Parliament. In the circumstances there is absolutely nothing arbitrary, illegal, or unconstitutional in 47 the provisions contained in Sections 19 and 21 of the said Act or sub Section 10 of Section 43A of the B.R. Act. 29. The issue of constitutional validity of the provisions of this Act came up for consideration before this Court in the case of N. Arun Swamy (supra). The constitutionality of the provisions was upheld. It is settled position in law that once the constitutionality of the provisions of the Act have been upheld, it is impermissible to approach the very Court with the same challenge, but by urging some different grounds. This is an additional consideration for not entertaining the present Petitions.” (Emphasis supplied) The Division Bench of Bombay High Court before whom even the constitutional validity of certain provisions of the Act were challenged repels that challenge on the score that the constitutional validity has already been upheld by the said Court in Writ Petition No.651 of 2007 decided on 16-08-2007. The Bombay High Court also recognizes the right of the Corporation to recover the amount. Both these judgments were rendered when the provisions of the Act were originally enacted. 13. The Act undergoes an amendment. DICGC bill was placed before Parliament in 2020 called the Deposit Insurance and Credit 48 Corporation (Amendment) Bill 2021. The objects and reasons for the amendment are as follows: • “The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 was introduced in Rajya Sabha by the Minister of Finance, Ms. Nirmala Sitharaman, on July 30, 2021. The Bill seeks to amend the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The Act established the Corporation to provide insurance for bank deposits and guarantee credit given by banks and financial institutions. The Bill seeks to provide depositors time-bound access to their insured deposit amount, in case they are restricted from accessing their bank deposits. • Under the Act, the Corporation is liable to pay the insured deposit amount to depositors of an insured bank. Such liability arises when an insured bank undergoes: (i) liquidation, i.e., sale of all assets on closing down of the bank, (ii) reconstruction or any other arrangement under a scheme, or (iii) merger or acquisition by another bank, i.e., transferee bank. Once the Corporation makes the payment to the depositors, the liquidator or the insured or transferee bank (as the case may be) becomes liable to repay the same amount to the Corporation. The amount paid by the Corporation in respect of a deposit reduces its liability against the deposit by that amount. • Interim payment to depositors: The Bill adds that the Corporation will be liable to pay the insured deposit amount to depositors on an interim basis. The liability will arise on the date the depositors are restricted from accessing their bank deposits. This liability will arise if such restrictions get imposed under any order or scheme under the Banking Regulation Act, 1949. This will also apply if such order or scheme is made before the enactment of the Bill, but the business of the insured bank remains suspended at the time of enactment. • The Corporation will not be liable to make the interim payment if: (i) the Reserve Bank of India (RBI) removes the restrictions put on the bank for payment to depositors, and (ii) the insured 49 or transferee bank is in a position to pay the depositors without any restrictions. • Once the Corporation makes the interim payment to a depositor, the value of his deposit in the insured bank will reduce by the amount paid. The insured bank will then be liable to pay that amount to the Corporation. • Timeline for interim payment: The Bill mandates the Corporation to pay the insured amount to the depositors within 90 days of the date such liability arises. Within the first 45 days, the insured bank must furnish the details of all outstanding deposits to the Corporation. Within 30 days of the receipt of details, the Corporation will verify the authenticity of the claims and check with each depositor if they are willing to receive the insured deposit amount. Within 15 days of the verification, the Corporation must make the payment to such depositors. • The date on which the Corporation becomes liable to pay the depositors may be extended by an additional 90 days. The extension may be given if RBI finds it expedient for finalising a scheme for the reconstruction, arrangement, merger, or acquisition of the insured bank. • Premium paid by banks to the Corporation: Under the Act, insured banks are required to pay a premium to the Corporation on their deposits. The rate of premium for a bank is notified by the Corporation with the prior approval of RBI. The Act limits the rate of premium (per annum) for a bank at 0.15% of its total outstanding deposits. The Bill allows the Corporation to increase this maximum limit with the prior approval of RBI. It may increase the limit considering its financial position and the interests of the banking system of the country. • Repayment by the bank to the Corporation: Under the Act, once the Corporation makes a payment to the depositors, the insured or transferee bank, as the case may be, becomes liable to repay the same amount to the Corporation. The bank is required to repay within such time as prescribed by the Board of Directors of the Corporation. The Bill adds that the Corporation may 50 change this time limit for such period and on such terms as prescribed by the Board through regulations. These regulations must also provide for: (i) prudential principles to assess the capability of the bank to repay the Corporation, and (ii) prohibition on the bank to discharge other specified liabilities until repayment. • The Bill provides that the Corporation may charge a penal interest for delay in repayment. The penal interest rate may be up to two percent points higher than the repo rate (the rate at which RBI lends money to banks).” (Emphasis supplied) The amendment was introduced to make the Corporation liable to pay the insured deposit amount to depositors on an interim basis. The liability was on several circumstances – when the insured Bank undergoes liquidation, reconstruction or any other arrangement under a scheme, merger or acquisition and not limiting those circumstance. The premiums paid by the Banks to the Corporation were to be utilized in the said manner. The amendment introduced Section 18A quoted supra. Sub-Section (5) of Section 18A directs that any amount paid by the Corporation under sub-section (4) of a deposit shall to the extent of the amount paid, discharge the insured Bank from its liability to the depositor in respect of that deposit, but the insured Bank will become liable to the Corporation in respect of the amount paid by the Corporation. Section 21 51 further mandates recovery of the amount to the Corporation. It is Section 21 that had been interpreted by the Apex Court. Section 21 now recognises when amount is paid under Sections 17, 18 and 18A, such sum or sums which make up the amount paid or provided for by the Corporation in respect of such deposit which is to be paid. 14. The submission of the learned senior counsel for the petitioner is, the right of the Corporation to recover the amount would spring only after the Bank gets into liquidation. The Bank/4th respondent is yet to go into liquidation. Therefore, the amount should not be demanded from the Bank is the plea of the petitioner who is the erstwhile Secretary of the 4th respondent Bank. This submission is unacceptable. The Apex Court has noticed the Corporation’s right to recover the amount. Sections 18A(5) and 21 do recognize such right permitting the Corporation to recover the amounts to generate its funds and to discharge its functions. The submission that the amount will be repaid only on liquidation is unacceptable. The Corporation is not endowed with a function that it should protect the deposits of this Bank alone. The Corporation 52 has a duty to protect every depositor i.e., every citizen who has deposited the amount into a Bank that is insured and those Banks get into problems. Therefore, the contention that only after the 4th respondent/Bank is liquidated and from the corpus of liquidation amount the Corporation should be paid is a submission that is noted only to be rejected. The Corporation steps in to salvage the cases of partial loss where a portion of the insured property becomes jeopardy. The learned senior counsel tries to import contract of insurance under the motor vehicle law to the subject provisions. This again is an effort to obfuscate the issue. The Corporation is sui generis. Its financial measure is not fully an insurance, as insurance companies exist and function. The Corporation is a statutory guarantee for small depositors. It is for this reason that Section 43 of the Act is given overriding effect to the Act over any other enactment. 15. The Corporation, as observed, steps in, to protect the vulnerable group. The Bank cannot now come and project that the provisions of the Act are ultra vires the Constitution. Plea to strike down several provisions are untenable. The provisions have already 53 been considered by the Apex Court or the Division Bench of the High Court of Bombay and right to recover has been recognized thereon. 16. Submissions were made with regard to the Bank being in the process of revival and, therefore, these amounts should not be demanded, as they have already been now paid to the depositors. The learned counsel appearing for the 3rd respondent/Reserve Bank of India has placed certain communications of the Bank with the RBI which clearly demonstrate that revival of the Bank has become difficult. The communications read as follows: “DOR.MON.S6391/12-23.283/2022-23 January 24, 2023 Shri Anshuman Joshi, Chairman, Dhanvarsha Group Corporate Office, Avanta, 4th Floor, Statesman House, Barakhamba Road, Connaught Place, New Delhi-110 001 Dear Sir, Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka (under AID) – Proposal for Revival of the Bank. Please refer to your letter dated January 12, 2022, on the captioned subject. 54 2. In this connection, it is informed that the proposal for revival of the Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka submitted by you, has been examined at our end. 3. It is observed that keeping in mind the level of negative net worth and accumulated losses of the captioned bank, your proposals are not found to be adequate for the revival of the Bank. Further, your proposal was not feasible in terms of the extant instructions as direct/indirect foreign investment is not permissible in cooperative banks. Yours faithfully, Sd/- (Deepak Gogia) General Manager. -- “DOR.MON.S7674/12-23.283/2022-23 March 02, 2023 Administrator, Sri Guru Raghavendra Sahakara Bank Niyamitha 15, Subbarama Chetty Road, Basavanagudi Bengaluru, Karnataka-560 004 Dear Sir, Sri Guru Raghavendra Sahakara Bank Niyamitha, (SGRSBN), Bengaluru, Karnataka – Revival proposal from Razorpay Software Private Limited (RSPL). Please refer to your letter dated February 01, 2023, on the captioned subject. 2. In this connection, the proposal for the revival of SGRSBN submitted by RSPL has been examined at our end and was found to be not feasible for the following reasons: i. The commitment to bring in only ₹100 crore initially without specific proposals and willingness to bring in 55 additional amounts is not considered to be substantive considering the accumulated losses of the Bank which was ₹2669.21 crore as on March 31, 2021. Further, there is no clarity on the source of funding for the capitalization plan of the new entity. ii. As per the details submitted along with the proposal, the financial strength of RSPL does not inspire confidence that it would be able to bring in sufficient capital for wiping out the losses of the Bank and for ensuring reasonable growth in the medium term. iii. The regulatory forbearances sought from RBI and DICGC are also not responsible considering the inadequate amount of capital committed by the applicant. Yours faithfully, Sd/- (Deepak Gogia) General Manager. -- “DOR.MON.S7507/12-23.283/2023-24 March 21, 2024 The General Secretary, Sri Guru Raghavendra Sahakara Bank (N) Tevanidarara Sangha (DA) 87, Swamiji Road, I Block, Thyagararajanagara, Bangalore-560 028. Dear Sir, Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka (under AID) – Suggestions for Revival of the Bank by the Depositor Association. Please refer to your letter dated October 09, 2023 and e-mail dated December 07,2023 on the captioned subject as well as subsequent face to face discussions on October 19, 2023 and February 20, 2024. 56 2. The precarious financial parameters of the Bank as on March 31, 2022 include negative net worth at (-) ₹2584.65 crore; CRAR at (-) 4277.74%; accumulated losses of ₹2761.81 crore and Gross NPA of 100%. Based on a detailed examination of your suggestions vide above reference and as observed during discussions, the reliability of the facts provided, and the probability of projected recovery do not present an adequate financial position capable of revival of the bank in near term. Yours faithfully, Sd/- (Deepak Gogia) General Manager. As late as on 21-03-2024, on examination of revival of the Bank, the RBI holds that the projected recovery does not indicate adequate financial capacity, capable of revival of the Bank. 17. In the light of the preceding analysis, the following conclusions would emerge: (i) The provisions of the Act so challenged cannot be declared ultra vires the Constitution, in the light of the Apex Court and the Division Bench of the High Court of Bombay considering right of recovery of the Corporation and the constitutional validity being challenged only qua recovery. (ii) The Corporation has a right to recover and need not wait till the Bank or the insurer gets liquidated. (iii) The submission that insurer’s right is only to salvage the situation and nothing more is unacceptable, particularly with the reason for 57 establishment of the Corporation and the manner in which the Corporation functions. (iv) The impugned provisions cannot be held to be unreasonable or in conflict with the Act. (v) If the Bank is being restored to its position, which would be revival of its functions, it is open to the RBI and the Corporation to decide on the amount to be recovered from the hands of the 4th respondent. (vi) The right of recovery is recognized and upheld, which would not mean that the Corporation is precluded from considering the present situation and answering representations of the Bank with regard to immediate recovery or deferment of recovery. For the aforesaid observations, finding no merit in this petition, the petition stands rejected. Consequently, pending applications also stand disposed. Sd/- (M.NAGAPRASANNA) JUDGE bkp CT:SS