Single Judge Justified in Issuing Directions to RBI for Intervention as Regulator Overlooked Company’s Wrongdoing | HC

Case Details: Achal Kumar Jindal v. Evaan Holdings (P.) Ltd. - [2025] 171 taxmann.com 827 (HC-Delhi)

Judiciary and Counsel Details

• Chandra Dhari Singh & Anoop Kumar Mendiratta, JJ.
• Ms. Ranjeeta Rohtagi, Avishkar Singhvi, Keshav Sehgal, Shivam Gaur, Kshitiz Joshi, Aryan Kumar & Ms Nandita Kumar, Advs. for the Appellant.
• Rajiv Nayyar, Sr. Adv., Ms Devika Mohan, Ms Manya Chandok, Prabhav Bhaguna, Saurabh Seth, Ramesh Babu & Ms Nisha Sharma, Advs. for the Respondent.

Facts of the Case

In the instant case, the Respondent was the holder of compulsorily convertible preference shares (CCPS) in the appellant company ‘ECL’, a non-deposit taking NBFC registered with the RBI.

The Respondent filed a writ petition alleging that the management of ECL violated the RBI regulations. The Single Judge vide the impugned order issued directions to the RBI to intervene in the matter and to ensure the enforcement of binding regulations provided under the RBI Act.

Aggrieved by the impugned order, instant letters patent appeal (LPA) were filed by the appellant seeking setting aside of the same on the ground that the RBI had been conducting its enquiry and was seized of the instant matter, therefore, additional directions given by the Single Judge was unwarranted.

It was noted that the impugned order had been passed by the Single Judge on basis of clear findings of the RBI that there have indeed been violations of mandatory regulations by ECL. Further, these findings recorded by an Apex expert body like RBI, certainly warrant for the issuance of protective ad-interim orders.

High Court Held

The High Court held that the NCLT has no jurisdiction to issue prerogative writs to the RBI to exercise such powers under the RBI Act.

The High Court, further held that once a regulatory authority finds a wrong doing on the part of an entity, it was duty bound to act and take corrective measures. However, the RBI, in the instant case, despite noting wrongdoings of ECL, had chosen not to act, which appears to be a clear case of failure to exercise its public duty.

In these circumstances, the respondent could not be left out remediless and therefore, the Single Judge was well within its power to give interim directions. Thus, the impugned order by the Single Judge was to be upheld.

List of Cases Reviewed

• Order dated 23.10.2024 passed by the Single Judge in W.P. (C) No. 9877 of 2024 (Para 76) affirmed.

List of Cases Referred to

• IFB Agro Industries Ltd. v. SICGIL India Ltd. & Ors (2023) 4 SCC 209 (para 35)
• CAG v. K. S. Jagannathan & Anr. 1986 2 SCC 679 (para 60).