Facts of the Case
- The Reserve Bank of India (RBI) has cancelled the banking license of KL Bank.
- KL Bank is aggrieved by the RBI’s decision and wishes to challenge the cancellation.
- The question arises as to the appropriate legal forum for appeal against such cancellation.
Issues in the Case
- Can a bank challenge the RBI’s decision to cancel its license?
- What is the legal remedy available to KL Bank under the Banking Regulation Act or other applicable laws?
- Which authority or court has jurisdiction to hear such an appeal?
Principles Associated With It
- Under Section 22 of the Banking Regulation Act, a banking license can be cancelled by the RBI if the bank fails to comply with conditions of operation.
- The Banking Regulation Act does not provide a specific appellate authority against cancellation of license.
- However, judicial review is available under Article 226 of the Constitution of India, allowing an aggrieved party to approach the High Court.
- Alternatively, the bank can approach the Supreme Court under Article 32, but typically matters of this nature are first dealt with at the High Court level.
Judgement
- KL Bank cannot appeal to any authority under the Banking Regulation Act itself.
- The bank’s remedy lies in filing a writ petition before the concerned High Court under Article 226 of the Constitution, challenging the RBI’s action.
- If fundamental rights are involved, it may also approach the Supreme Court under Article 32, but writ before High Court is the usual course.
- Therefore, KL Bank should file a writ petition in the High Court having jurisdiction over the matter.