Madras HC to hear cases filed across the country challenging validity of Banking Regulation Act of 2020

The Supreme Court has ordered that the writ petitions filed in various High Courts shall stand transferred to Madras for a common hearing

The Supreme Court has ordered that the Madras High Court shall hear all writ petitions filed in various High Courts across the country challenging the validity of the Banking Regulation (Amendment) Act of 2020 which empowers the Reserve Bank of India (RBI) to deal with incorporation, regulation and winding up of cooperative banks.

Justices Dhananjaya Y. Chandrachud and Hima Kohli passed the orders while disposing of a petition moved by RBI for a common hearing of the cases filed and pending in the High Courts of Allahabad, Andhra Pradesh, Bombay, Chattisgarh, Karnataka, Kerala, Madhya Pradesh, Madras, Punjab and Haryana, Rajasthan and Uttarakhand.

While the 2020 Act itself had been challenged in some of the writ petitions, a consequent circular issued by the RBI on June 25, 2021 was under challenge in the others. Senior counsel Rakesh Dwivedi and advocate Chevanan Mohan, representing the RBI, insisted on transferring all the cases to one High Court to avoid contradictory orders.

Accepting their request, the Bench led by Justice Chandrachud wrote: “Having regard to the common questions which are involved in the writ petitions, it would be appropriate, in the interests of justice, to transfer all the writ petitions to one High Court for final disposal... They shall stand transferred to the High Court of Madras.”

The Bench requested the Chief Justice of Madras High Court to assign all the writ petitions to one Bench for expeditious disposal and also said that the Division Bench concerned could permit the counsel from other parts of the country to argue the case through the virtual mode if they desire to do so, instead of appearing in person.

It was also made clear that any future petitions filed in any of the High Courts challenging either the 2020 Amendment Act or the RBI circular would also stand transferred to the Madras High Court.

The petitioners before the Madras High Court had questioned the legislative competence of the Parliament to bring the cooperative banks too under the control of RBI. However, the Centre as well as RBI had contended that they were empowered to regulate all kinds of banking operations with the aim of protecting the interests of depositors.