The Bombay high court (HC) last week refused to stay the Reserve Bank of India’s (RBI) decision to cancel the licence of the troubled CKP Co-op Bank Ltd.
A two-judge division bench of the court, comprising Justices Nitin Jamdar and SP Tavade, rejected the plea filed by Thane resident Vishwas Utagi and upheld the central bank’s April 28 order.
“Prima facie, we don’t find that there is any fundamental error in the approach of RBI,” the bench said.
The court cited that RBI is entrusted with powers to take necessary steps in the interests of depositors, banks and public, and the banking regulator’s measures would benefit CKP Co-op Bank’s depositors.
Earlier, Utagi had moved the court on behalf of 500 shareholders, account-holders, depositors, employees and other stakeholders of CKP Co-op Bank, while challenging RBI’s April 28 order.
Utagi had argued that RBI passed the order on the basis of two show-cause notices issued on June 11, 2015, and again on August 23, 2017, but those notices have become infructuous and are in violation of the basic principles of natural justice and due process of law.
The petitioner contended the RBI order was an attempt to cover-up the failures of the members of the Board of Administrators, who were nominated by Maharashtra government to run the CKP Co-op Bank from May 31, 2012.
He also alleged that RBI overlooked the interests of the bank’s depositors and other stakeholders while passing its order.
However, the bench observed that the audits conducted by RBI revealed several irregularities, and the bank was in poor financial health, prompting the banking regulator to issue the first show-cause notice on June 11, 2015.
Though CKP Co-op Bank submitted its action plans in July, 2016, and then again in November, 2016, it’s financial woes were far from over.
RBI authorities carried out an inspection in March, 2019, which showed further worsening of its financial health and that led to the issuance of the April 28 order seeking the termination of its licence, which the HC upheld.