High Court Dismisses Writ By Kerala Private Bankers' Assn Against RBI's Insistence Requiring Small Financiers To Not Describe Themselves As 'Bank'

The Kerala High Court recently dismissed a writ petition filed by All Kerala Private Bankers' Association against RBI's insistence requiring small financiers to not use the word 'Bank' as part of their names.

The Association, comprised of small financiers and unincorporated bodies registered under the Kerala Money Lenders Act, had also sought renewal of its members' licenses.

Justice V.G. Arun held that a writ petition by the Association would not be maintainable since the Association is not conducting money lending business on its own, and thus, could not amount to an 'aggrieved person'. 

"Here, the petitioner is resorting to the public law remedy and therefore the question is whether the petitioner is entitled to maintain the writ petition highlighting the grievance of its members. There cannot be any doubt that the petitioner Association is not an aggrieved person, since the Association on its own is not conducting money lending business and is not affected by the restriction imposed through Ext.P1. It may be that the members of the Association are aggrieved by the insistence on removing the words 'bank, 'banker', 'banking' and 'banking company' from their business names and in that sense, the Association might be interested in doing all that is necessary for getting reliefs for its members. But, that does not amount to legal grievance as far as the petitioner Association is concerned".

Court noted that use of words such as 'bank', 'banker', 'banking' and 'banking company' are regulated under Section 7 of the Banking Regulation Act, 1949. It further noted that 

It was contended on behalf of the petitioner by Advocate K.P. Sreekumar that Section 4 (3) of the Kerala Money Lenders Act stipulates reasons for refusing grant/renewal of registration and the same does not include the reasons stipulated in the RBI intimation.

On the other hand, it was contended by the respondents represented by Government Pleader Rashmita Ramachandran that the writ petition itself was not maintainable due to two reasons. Firstly, the petition was filed by an Association espousing the individual grievance of its members which could not be entertained, and even if it was so entertained, it could only be done by remitting court fee for each individual member. The counsel relied upon Rule 147A of the High Court Rules read along with Schedule II Article 11 (1)(iii) of the Kerala Court Fees and Suit Valuation Act, 1959, to emphasize that as per the provisions, Rs. 100 had to be paid as court fee for each individual member. Secondly, it was contended that the writ was not maintainable in view of the efficacious alternative remedy of appeal available under Section 60B of the Kerala Money Lenders Act.

The Court observed that although in Parayakattu Nalukulangara Devaswom v. Padmanabhan Harshas & Ors (1983), and Prem Kumar v. Sree Narayanan Bhaktha Paripalana Yogam (2018), it had been observed that a registered society enjoys the status of a legal entity and is capable of suing and being sued in its own name, however, in the instant case,

"There cannot be any doubt that the petitioner Association is not an aggrieved person, since the Association on its own is not conducting money lending business and is not affected by the restriction imposed...Going by the relief sought, it is evident that the declaration asked for, if granted, will entitle the individual members to get their licence renewed without complying the requirements...Being so, it is for the individual members to challenge the objectionable condition or rejection of application for renewal, as the case may be", it observed.

Taking note that some of the aggrieved persons had already approached the Court, and an interim order had been passed, the Court did not venture into the question as to whether the petitioner Association was bound to remit court fees for each individual member.

The Court also found merit in the contention that an alternate efficacious remedy was available. 

It perused Sections 4 and 16B of the Kerala Money Lenders Act and found that the said provisions indicated that an order refusing to renew licence is appealable under Section 16B. 

"It is settled law that the High Courts must not interfere, if an adequate efficacious alternative remedy is available to the petitioner and the writ petition is filed without availing such remedy unless an exceptional case warranting interference is made out or there exists sufficient grounds to invoke the extraordinary jurisdiction under Article 226".

The Court further said that the petitioner had not been able to point out any exceptional circumstance warranting interference under Article 226. 

The petition was thus dismissed. 

Case Title: All Kerala Private Bankers' Association v. The Commissioner of State Tax & Ors. 

Citation: 2022 LiveLaw (Ker) 647 

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